VietNam Holding

27 November 2023

VietNam Holding Limited

("VNH" or the "Company")

Continuation Vote and introduction of an annual redemption facility

1            Introduction

The Company is pleased to announce that it has today convened its annual general meeting for 21 December 2023, which includes its 5-yearly continuation vote, together with an extraordinary general meeting to follow immediately after the AGM.

Having reached the end of the current five-year continuation period, it is worth summarising the achievements of the Company since the last continuation vote.  The Board appointed Dynam Capital, Ltd., as the Company's new Investment Manager in June 2018. In the period from June 2018 until 30 September 2023, the Company's net asset value per share has risen 43 per cent., outperforming the Vietnam Index by 30 per cent. and the Vietnam All Share Index by 20 per cent. Furthermore, the Company's average discount is currently the narrowest of the three London listed funds which invest in Vietnam. Finally, in the past five years the Company has returned over $150 million to Shareholders through a combination of tender offers and share buybacks. 

Looking forward, your Board is recommending the Continuation Resolution alongside an innovative redemption structure that will give Shareholders an annual opportunity to realise their holding in the Company at fair market value. The Board believes that this modernisation of the closed-end fund structure should lead to a narrower discount over time. 

To this end the Board has today announced Proposals, subject to Shareholder approval at the EGM convened for 21 December 2023 and to the passing of the Continuation Resolution at the AGM also convened for the same date, to introduce a Redemption Facility.  The Redemption Facility, if implemented, would enable qualifying Shareholders to redeem some or all of their holding of Ordinary Shares in the Company on an annual basis.

This announcement describes the Proposals for which the Board is seeking the approval of Shareholders with further details set out in the Circular sent to shareholders today which will shortly be available on the Company's website, together with the reasons why the Directors are recommending that Shareholders vote in favour of the Resolutions to implement the Proposals.

The Circular convenes the EGM for the necessary Resolutions to be voted on by Shareholders to give effect to the Proposals.  The Proposals are conditional on the passing of the Resolutions at the EGM, to be held on 21 December 2023.

The Circular also convenes the Company's next AGM, also to be held on 21 December 2023 immediately prior to the EGM.  In addition to the usual business to be considered at the AGM, this year's meeting will consider the Continuation Resolution.  In accordance with the Company's Articles, the Board is required to seek Shareholder approval at the AGM to be held in 2023 for the Company to continue in existence for a further five years.

The Proposals are conditional on the passing of the Continuation Resolution at the AGM. The Continuation Resolution is conditional upon Shareholder approval of the Proposals described in the Circular.

2            Background to the Proposals

Following consultation with Shareholders, the Board has determined that it would be in the interests of Shareholders to introduce the Redemption Facility.  The facility should, subject to the Directors' discretion in the operation of the facility, allow those Shareholders who wish to realise some or all of their holding in the Company for cash the opportunity to do so. 

3            The Proposals

The key elements of the Proposals are that:

§ the rights of the Ordinary Shares be amended so as to allow Shareholders to request the redemption of part or all of their shareholding on an annual basis (the "Redemption Facility");

§ the Ordinary Shares be converted into shares that are redeemable in accordance with the provisions of the New Articles and applicable law, in order to facilitate the operation of the Redemption Facility; and

§ the Articles be amended in order to implement the Proposals.

The first Redemption Point is expected to be on 30 September 2024.  Shareholders should note that this will not be their only opportunity to apply for redemption of their holding in the Company.  Subsequent opportunities will occur annually thereafter.  In addition, the Company anticipates that there will remain an active secondary market in the Ordinary Shares.

4            Benefits of the Proposals

The Directors believe that the Proposals will provide the following benefits to Shareholders:

§ the establishment of a mechanism by which Shareholders may be able to dispose of some or all of their shareholding, should they wish to do so, which is not dependent on the market liquidity of the Ordinary Shares;

§ an additional mechanism to allow the Company to seek to address, through share redemptions, buybacks and new issuance from time to time, market imbalances in the supply of, and demand for, the Ordinary Shares;

§ minimising the discount at which the Ordinary Shares trade compared to NAV per Ordinary Share; and

§ an uplift in NAV per Ordinary Share for the Company and continuing Shareholders as a result of the Redemption Charge applied when Ordinary Shares are redeemed after being held for less than 2 years.

5            The New Articles

In order to give effect to the Proposals, it will be necessary to amend the Articles to include provisions relating to the Redemption Facility and to provide that the Ordinary Shares are redeemable.  

A summary of the provisions in the proposed New Articles relating to the Redemption Facility is set out in Part 2 of the Circular. 

A copy of the proposed New Articles, shown as a comparison against the Company's existing articles, will shortly be available for inspection on the Company's website and on the FCA's National Storage Mechanism from the date of the Circular, and at the EGM for the duration of the meeting and for at least 15 minutes prior to the EGM.

In accordance with the Companies Law, the adoption of the New Articles requires Shareholder approval at the EGM.

6            Dividend policy

If the Proposals are approved by Shareholders and the Redemption Facility is implemented, it is expected that this will result in the Company being treated as an "offshore fund" for the purposes of UK taxation.  UK resident Shareholders should note that the Company expects to apply to HMRC for approval as a "reporting fund" for the purposes of the Offshore Fund Rules, which would have consequences that are discussed at paragraph 8 below and in Part 3 of the Circular.  For so long as it is a reporting fund, the Company intends to make dividends to Shareholders at least equal to reported income for each reporting period.  Shareholders should note that this cannot be guaranteed and the level of distributions for any period remains a matter to be determined at the discretion of the Board. 

However, the Board does not expect to amend the formal dividend policy of the Company which remains as stated in the prospectus issued by the Company in 2018 and is restated below.

The Board may from time to time declare any such dividends to Shareholders as appropriate. No dividend may be declared or paid other than from funds lawfully available for distribution including share premium.  The Company's income from investments will be applied first to pay the fees and other expenses of the Company.  The Company's net income (excluding capital gains), if any, may be distributed to Shareholders, subject to retention of sufficient funds to meet anticipated fees and other expenses and subject to the ability to convert Dong income into foreign currency for purposes of paying such dividends.  Any dividends unclaimed after a period of six years after having been declared will be forfeited and revert to the Company.  No dividend payable by the Company on or in respect of any Ordinary Share will bear interest against the Company.

To date, no dividends have been distributed by the Company.

7            The Takeover Code

Given the introduction of the Redemption Facility, and the ability of the Company to conduct share buybacks, there are certain considerations that Shareholders should be aware of with regard to the Takeover Code.

Under Rule 9 of the Takeover Code, any person who acquires shares which, taken together with shares already held by him or shares held or acquired by persons acting in concert with him, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining shareholders to acquire their shares. Similarly, when any person or persons acting in concert already hold more than 30 per cent. but not more than 50 per cent. of the voting rights of such company, a general offer will normally be required if any further shares increasing that person's percentage of voting rights are acquired.

Under Rule 37 of the Takeover Code when a company purchases its own voting shares, a resulting increase in the percentage of voting rights carried by the shareholdings of any person or group of persons acting in concert will be treated as an acquisition for the purposes of Rule 9 of the Takeover Code. A Shareholder who is neither a Director nor acting in concert with a Director will not normally incur an obligation to make an offer under Rule 9 of the Takeover Code.

However, under note 2 to Rule 37 of the Takeover Code where a shareholder has acquired shares at a time when he had reason to believe that a purchase by the company of its own voting shares would take place, then an obligation to make a mandatory bid under Rule 9 of the Takeover Code may arise in certain circumstances.

The Redemption Facility and buyback powers could have implications under Rule 9 of the Takeover Code for Shareholders with existing significant shareholdings. The Redemption Facility and buyback powers should enable the Company to anticipate the possibility of such a situation arising. Where such a situation is identified, the Board would seek to take steps to advise accordingly any Shareholder(s) who might otherwise become obliged to make a mandatory offer: to take appropriate action which may include selling down an existing holding of Ordinary Shares in the market, redeeming an existing holding of Ordinary Shares such that the obligation to make an offer did not arise, or to taking such other action as the Takeover Panel may decide. However, neither the Company, nor any of the Directors, nor the Investment Manager will incur any liability to any Shareholder(s) if they fail to identify the possibility of a mandatory offer arising, or if having identified such a possibility they fail to notify the relevant Shareholder(s) or if the relevant Shareholder(s) fails to take appropriate action.

8            Taxation

A general guide to certain aspects of the tax treatment for UK resident Shareholders of redemptions of Ordinary Shares under the Redemption Facility and of the consequences of the Company becoming an "offshore fund" for the purposes of the Offshore Fund Rules can be found in Part 3 of the Circular. This summary is intended only as a general guide and does not constitute tax advice. 

Shareholders are advised to consider their investment objectives and their own individual financial and tax circumstances.  Shareholders should seek independent professional tax advice and advice from their own independent financial adviser authorised under the Financial Services and Markets Act 2000 as appropriate.

9            Costs and expenses of the Proposals

The costs and expenses relating to the Proposals will be borne by the Company.  Such costs and expenses are expected be approximately £150,000 (plus VAT where applicable). 

It is intended that the costs and expenses of the operation of the Redemption Facility will be borne by redeeming Shareholders, as further described in paragraph 8 of Part 2 of the Circular.

10          The Board

Sean Hurst and Damien Pierron have decided to step down from the Board at the AGM and will therefore not put themselves forward for re-election.  The Board extends their thanks to them for their support and contribution to the development of VNH since their appointment in 2017 and wishes them every success for the future.

11          Annual General Meeting

Notices of the AGM, to be held at the offices of Stephenson Harwood AARPI, 48 Rue Cambon, 75001 Paris, France at 10.00 a.m. (Paris time) on 21 December 2023, and the EGM, to be held at the same location and on the same date at 10.30 a.m. (Paris time), have been despatched to Shareholders. 

The business of the AGM will consist of the following Resolutions, each of which is explained below.

Ordinary business

Resolutions 1 to 7 (inclusive) comprise the ordinary business of the AGM and will each be proposed as an ordinary resolution.

§ The Directors are required to present the audited accounts, Directors' report and Auditors' report for the year ended 30 June 2023 to the AGM.  The Director's report and the audited accounts have been approved by the Directors and the report of the Directors has been approved by the Auditors.  Resolution 1, therefore, is to receive the audited accounts, Director's report and Auditors' report for the year ended 30 June 2023 (the "2023 Annual Report").

§ Resolution 2 is to approve the Directors' remuneration report for the year ended 30 June 2023, as set out in the 2023 Annual Report.  The vote on this Resolution is advisory only and the Directors' entitlement to remuneration is not conditional on its being passed.

§ Resolutions 3 to 5 (inclusive) are to re-elect Hiroshi Funaki, Philip Scales and Saiko Tajima as Directors, each of whom shall retire in accordance with the Articles of the Company and offer themselves for re-election at the AGM.

§ Resolution 6 concerns the re-appointment of KPMG Channel Islands Limited, as the Company's Auditors.

§ Resolution 7 is to authorise the Directors to determine the remuneration of KPMG Channel Islands Limited, in respect of their appointment as the Company's Auditors subject to the passing of Resolution 6 above.

Special business

Resolutions 8 to 10 (inclusive) comprise the special business of the AGM.  Resolutions 8 and 9 will be proposed as ordinary resolutions and Resolution 10 will be proposed as an extraordinary resolution.

Share Buyback Programme

§ Resolution 8 seeks authority for the Directors to continue to be authorised to buy back Ordinary Shares in relation to the Company's discount management programme.  Any buyback of Ordinary Shares will be subject to the conditions set out in Resolution 8.

The Board believes that maintaining the availability of the Share Buyback Programme is in the best interests of Shareholders as a whole and should continue to allow the Company to manage the Ordinary Share price discount to NAV per Ordinary Share where the Board considers this to be appropriate.  The Board is proposing the renewal of the buyback authority which will allow for the repurchase of up to 14.99 per cent. of the Company's issued share capital as at the date of the AGM.  Shareholder approval will be sought at each subsequent annual general meeting of the Company to renew such authority, and potentially more frequently if such authority is likely to be fully utilised sooner.

The Directors will only make such repurchases through the market at prices (after allowing for costs) below the relevant prevailing NAV per Ordinary Share under the guidelines established from time to time by the Board.  Purchases of Ordinary Shares may be made only in accordance with applicable law, the Disclosure Guidance and Transparency Rules and the Market Abuse Regulation.

The Board's current policy is to cancel any repurchased Ordinary Shares.

Shareholders should note that the purchase of Ordinary Shares by the Company is at the discretion of the Directors and is subject, amongst other things, to the amount of cash available to the Company to fund such purchases. Accordingly, no expectation or reliance should be placed on the Directors exercising such discretion on any one or more occasions.

Continuation Resolution

§ Resolution 9 is the Continuation Resolution that the Company continue as currently constituted until such time as a further continuation vote is required by the Articles.  The next such vote is expected in 2028. Resolution 9 is conditional upon the passing of the EGM Resolutions.

Shareholders should note that the Proposals described in the Circular are conditional upon the Continuation Resolution being passed at the AGM.  The Board recommends that Shareholders vote in favour of the Continuation Resolution.

In the event that the Continuation Resolution is not passed, the Board will be obliged under the Articles to, at an extraordinary general meeting to be held within six months of the AGM, propose a resolution either to wind up the Company or to implement a reconstruction, amalgamation or other material alteration to the Company or its activities or any other appropriate alternative based on current circumstances as the Board thinks fit.

Disapplication of pre-emption rights on issue of Ordinary Shares

§ Resolution 10 seeks authority for the Directors to disapply pre-emption rights in respect of the allotment and issue to any person or persons of further Ordinary Shares for cash, up to a maximum that is equivalent to 10 per cent. of the Company's issued share capital as at the date of the Circular plus any Ordinary Shares that may be held in treasury from time to time.

THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOUR OF ALL 10 RESOLUTIONS TO BE PROPOSED AT THE AGM.

The quorum requirement for the AGM is two Shareholders present in person or by proxy (or, in the case of a corporate Shareholder, by a duly authorised corporate representative) and entitled to attend and vote.

To be approved, each of the Resolutions 1-9 (inclusive), which are being proposed as ordinary resolutions, must be passed by a simple majority of the votes of Shareholders who vote in person or by proxy or, in the case of a corporate Shareholder, by a duly authorised corporate representative, at the AGM.

To be approved, Resolution 10, which is being proposed as an extraordinary resolution, must be passed by a majority of not less than 75 per cent. of the votes of Shareholders who vote in person or by proxy or, in the case of a corporate Shareholder, by a duly authorised corporate representative, at the AGM.

12          Extraordinary General Meeting

The implementation of the Proposals requires the approval of Shareholders.  A notice convening an Extraordinary General Meeting of the Company, which is to be held at 10.30 a.m. on 21 December 2023 at the offices of Stephenson Harwood AARPI, 48 Rue Cambon, 75001 Paris, France, is set out in Part 6 of the Circular.

The Resolutions to be proposed at the EGM are as follows:

§ Resolution 1 is to approve amendments to the Articles to incorporate the provisions relevant to the Redemption Facility.  Resolution 1 is conditional upon the passing of the Continuation Resolution at the AGM.

§ Resolution 2 is to convert the Ordinary Shares into shares that are redeemable in accordance with the provisions of the New Articles and applicable law, in order to facilitate the operation of the Redemption Facility.

Shareholders should note that the Continuation Resolution is conditional upon the passing of the EGM Resolutions.  The Board recommends that Shareholders vote in favour of the EGM Resolutions.

In the event that these EGM Resolutions are not passed, the Continuation Resolution also shall not have been passed, in which case the Board will be obliged under the Articles to, at an extraordinary general meeting to be held within six months of the AGM, propose a resolution either to wind up the Company or to implement a reconstruction, amalgamation or other material alteration to the Company or its activities or any other appropriate alternative based on current circumstances as the Board thinks fit.

The quorum requirement for the EGM is two Shareholders present in person or by proxy (or, in the case of a corporation, by a duly appointed representative) and entitled to attend and vote.

To be approved, Resolution 1, which is being proposed as a special resolution, must be passed by a majority of not less than 75 per cent. of the votes of Shareholders who vote in person or by proxy or, in the case of a corporate Shareholder, by a duly authorised corporate representative, at the EGM.

To be approved, Resolution 2, which is being proposed as an ordinary resolution and is conditional on the passing of Resolution 1, must be passed by a simple majority of the votes of Shareholders who vote in person or by proxy or, in each case the case of corporations, by their duly authorised representatives, at the EGM.

13          Recommendation

The Directors consider that the Resolutions to be proposed at the AGM and the EGM are in the best interests of the Company and its Shareholders as a whole and recommend that you vote in favour of them, as they intend to do in respect of their own beneficial shareholdings which total 44,920 Ordinary Shares (representing 0.16 per cent. of the voting rights in respect of Ordinary Shares as at the date of the Circular).

Enquiries:

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

The times and dates set out in the expected timetable and mentioned throughout the Circular may, in certain circumstances, be adjusted by the Company, in which event, details of the new times and dates will be notified, as required, to the London Stock Exchange and, where appropriate, to Shareholders and an announcement will be made through a Regulatory Information Service.

All references to times in the Circular are to Paris time unless otherwise stated.

PART 4
DEFINITIONS