Investment Structure
& Contract Framework
How the Dong Nai Sportkation deal is structured under Vietnamese law — the capital split, the legal instrument options, the regulatory hurdles, and the contract package.
High-level overview — not legal advice
This page explains the intended structure at a high level. Vietnamese foreign-exchange controls and foreign-investment rules differ significantly from French law (which allows freer capital movement and flexible vehicles like the SAS). Final agreements must be drafted by a licensed Vietnamese corporate lawyer.
Section 1
The Deal at a Glance
Investors contribute 9.2B VND as patient growth capital — a 12-month grace, then an 8% interest-only annual yield paid monthly, with principal returned at the expansion refinance (or rolled into Location 2). Because a monthly yield is promised, this is debt financing (a loan) — or a debt/equity hybrid — rather than pure equity. Under Vietnamese law dividends can only be paid from actual, audited annual profits, so a guaranteed monthly yield cannot be structured as ordinary shares.
3B VND
Founders (Equity)
9.2B VND
Investors (mostly Debt)
12 months
Grace Period
At refinance
Principal
8% / yr interest-only
Interest Rate
≤ 20% / yr
Legal Rate Cap
Section 2
Legal Instrument Options
Because monthly interest is promised, this cannot be standard company shares. Three structures are possible under Vietnamese law:
Shareholder Loan
Set up a Limited Liability Company (LLC). Founders hold their equity (the 3B). Investors hold a small equity stake — for voting rights and visibility — and inject the remaining 9.2B as a shareholder loan.
Strengths
Clean separation of equity and debt; the monthly yield is contractual rather than profit-dependent; investors keep board visibility.
Watch-outs
A foreign shareholder loan over 12 months must be registered with the State Bank of Vietnam.
Business Cooperation Contract (BCC)
A uniquely Vietnamese contract: the parties jointly conduct business and share profit and liability without forming a new legal entity. Highly flexible and common for specific projects.
Strengths
No new entity required; very flexible profit and liability sharing.
Watch-outs
“Guaranteed interest” can be scrutinised by tax authorities as a disguised loan.
Convertible Loan
Investors lend the 9.2B to the company. If the company cannot pay the monthly interest or principal, the debt converts into company shares.
Strengths
Downside protection for investors; aligns incentives when cash flow is tight.
Watch-outs
Conversion dilutes founders; still subject to SBV registration for foreign lenders.
Section 3
Vietnamese Law Constraints
Coming from French law, plan for three major regulatory hurdles — especially with foreign investors:
Interest Rate Cap — Article 468, Civil Code 2015
Interest rates cannot exceed 20% per year. A higher rate makes that portion of the agreement legally void and can even trigger criminal liability for usury. The planned 6% sits well within the cap.
Foreign Exchange & SBV Registration
A loan from a foreign investor with a term over 12 months (here, multi-year until the expansion refinance) must be registered with the State Bank of Vietnam (SBV). Capital must flow through a Direct Investment Capital Account (DICA) or a foreign borrowing/repayment account at a licensed Vietnamese bank — otherwise the bank will block the outward remittance when you repay foreign investors.
Foreign Investment Registration (FIE)
If foreigners hold equity, the company is a Foreign-Invested Enterprise and needs an Investment Registration Certificate (IRC) and an Enterprise Registration Certificate (ERC) — typically 1–3 months to process.
Section 4
Proposed Contract Package
Practically, the legal package consists of two main documents:
Joint Venture / Shareholders’ Agreement (JVA)
Governs the relationship between founders and investors.
- Capital contributions: founders 3B (equity); investors 9.2B (mostly debt, a nominal amount as equity).
- Governance: founders run daily operations; defined investor approval rights (e.g. selling assets, taking on more debt).
- Dispute resolution: designate the Vietnam International Arbitration Centre (VIAC) — faster, more reliable, English-friendly — rather than local courts.
Loan Agreement (the 9.2B)
Dictates the repayment mechanics.
- Grace period: no investor yield due for the first 12 months post-launch (Year 1 builds the treasury).
- Yield schedule: 8% annual, interest-only, paid monthly from Month 13; principal is not amortised but returned at the expansion refinance.
- Interest: fixed at a set rate, under 20% per annum (planned 8%).
- Principal: returned at the Location-2 refinance (Year 3–5), or rolled forward at 8% with upside; early return allowed without penalty if cash flow permits.
Section 5
Next Steps
Move forward in this order:
- 1
Gather the investors and agree a Term Sheet first — the 3B/9.2B split, the 8% interest-only rate, and the 12-month-grace patient-capital terms.
- 2
Hand the signed Term Sheet to a Vietnamese law firm to draft the LLC incorporation documents and the loan agreements.
- 3
Open the DICA / foreign-loan account and register the loan with the State Bank of Vietnam before any funds move.
Want the full term sheet?
Return to the investor overview to register your interest and request the draft term sheet and contract package.