Here’s what foreign investors should know about nominee shareholder services in Vietnam

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• In finance, a nominee refers to a person or company who has been entrusted with the safekeeping of investors’ securities or property; all of your investments are held in its name, while you retain control.

• The securities are held in trust and the nominee is the legal owner, but you hold on to real ownership as the beneficiary.

• The broker can buy and sell on your behalf, but your funds are protected if the brokerage goes out of business or your broker tries to swindle you.

Vietnam is currently one of the most attractive places in the world for foreign investment. With an investment-focused political climate, the country is currently drawing entrepreneurs and large, established companies alike. One controversial method that investors employ to enter Vietnam is investment through a local nominee.

Also referred to as nominee stockholder or ostensible stock holder, they are a Registered stock holder of a company’s shares on behalf of the legitimate owner under a custodial agreement.

The roles and obligations of the nominee in Vietnam?

The Law on Enterprises of Vietnam requires all companies to have at least one shareholder who is either an individual or a corporation. It is not necessary for the shareholder to be a Vietnam resident as 100% foreign shareholding of a company is allowed in the republic.

When incorporating your company or acquiring another company in Vietnam, you can become the shareholder of the company. Alternatively, GBS, a business and legal services company in Vietnam can provide you with a Nominee Shareholder, which helps you secure your corporate privacy.

Appointing a local nominee as owner or shareholder of the company can avoid restrictions on foreign investment and shorten the time required to establish the company.

The nominee or trustee structure also protects the identity of the beneficial owner as only the name of the Vietnamese nominee will be officially registered in the company.

The Vietnamese individual will be appointed by the foreign investors is registered as owner of the capital or shares of the target company. Further, to ensure administrative compliance as registered owner or shareholder, the nominee can also hold key managerial positions if required by the investors.

Why take up a Nominee Shareholder Service?

It is not uncommon for clients to engage the Nominee Shareholder Service for the purpose of confidentiality. The service entails the Nominee Shareholders holding the shares on trust for the beneficial owners. Only the Nominee Shareholder’s name will be identified on the Register of Shareholders.

Things you should know about the Nominee Shareholder Agreement

• The Nominee Shareholder Service provides each client with a signed declaration of trust in which the appointed Nominee Shareholder holds shares on behalf of the beneficial owner.
• The Nominee Shareholder is not the legal owner of the shares and the shares shall be returned to the beneficial owner when the service is terminated or transferred to another party as per beneficial owner’s request.
• All income and capital gains on the shares held belong to the beneficial owner.

The Nominee Shareholder Service guarantees complete confidentiality. Your identity as Beneficial Owner is only known to the services provider and not placed on public record at the Company’s Registry.