Analyzing GSM’s IPO Structure in Hong Kong

Analyzing Xanh SM’s IPO Structure in Hong Kong: Governance Leverage Techniques and the FOL Compliance Puzzle

The recent establishment of Xanh SM Holding has sparked lively discussions within legal and financial advisory circles regarding the IPO roadmap on the Hong Kong Stock Exchange (HKEX) for this green-mobility “unicorn.”

Based on the current ownership structure (Vingroup and the Chairman’s family holding approximately 70%), the core question is: To whom does the remaining 30% belong, and what transaction structure will be applied to take this enterprise global? Will the market witness a recurrence of the VIE (Variable Interest Entity) structure—a model previously utilized by VNG—or will it be a complex variation of Share Swap/P-Notes, similar to the VinFast precedent?

1. Predicting Capital Flow Structure Scenarios: Optimization Between SPV and VIE via Xanh SM’s IPO Structure

If the ultimate goal is listing Xanh SM via an IPO in Hong Kong, the enterprise must solve the puzzle of the 49% Foreign Ownership Limit (FOL) in Vietnam’s passenger transport sector. To overcome this barrier, it is highly likely that a Special Purpose Vehicle (SPV) based in Singapore or Hong Kong will be established with a complex structural roadmap:

• Ownership Separation at GSM Vietnam: The SPV will hold the maximum direct stake (likely at 49%) in the operating company (GSM Vietnam). This helps GSM Vietnam maintain its status as a “domestic enterprise,” ensuring the validity of core taxi business licenses.

• Dual-Class Shares at Xanh SM Holding: This is an extremely sophisticated governance leverage technique. Charter capital could be divided into two tiers:

  • (i) 35% Common Shares: Holding 100% of voting rights, intended for transfer to the SPV to position it as the parent company.

  • (ii) 65% Preferred Shares: Holding the majority of economic interests (subject to certain conditions) belonging to the Vietnamese shareholder group. Per the roadmap, the maximum economic interest will be transferred to the SPV following M&A Approval and Merger Filing Clearance from the National Competition Commission.

• Indirect Holding Mechanism: By owning 30-49% of Xanh SM Holding, the SPV can indirectly regulate the economic benefits of the entire ecosystem without violating the foreign ownership cap.

• VIE Linkage (Control Agreements): To seal the structure, a system of management contracts, technology licensing, and call options will be executed. The objective is to shift all economic benefits from the operating entity in Vietnam to the offshore Holding. Consequently, international investors on the HKEX will purchase “beneficial rights” rather than direct assets in Vietnam.

2. Consolidation of Financial Statements (IFRS 10) and Listing Requirements Based on Xanh SM’s IPO Structure

The structure above is fundamentally qualified to establish a Parent-Subsidiary relationship for listing purposes. Under IFRS 10 international accounting standards, an entity (SPV) is considered a parent company if it meets three criteria: power over the investee, exposure to variable returns, and the ability to use its power to affect those returns.

• At Xanh SM Holding: The SPV holds only 35% of the capital but captures 100% of voting rights. This grants the SPV absolute power to appoint the Board of Directors and determine strategy. If the 65% preferred shares held by Vietnamese shareholders are Non-voting shares, the SPV fully establishes itself as the Parent Company in terms of governance.

• At GSM Vietnam: The SPV directly holds 49% of common shares. The remaining 51% is held by Xanh SM Holding. By controlling Xanh SM Holding, the SPV indirectly controls this 51%, raising total voting rights to 100%.

However, lawyers and independent auditors will require clarification on the risk of “economic interest leakage.” To list, the SPV (Listing Co) must consolidate financial statements. In this structure, despite holding 100% voting rights, the SPV’s “Economic Interest” is significantly diluted (only 35% in Holding and approximately 67% in GSM Vietnam). Rigorous international exchanges like the HKEX often require the listed company to retain the majority of economic interests to ensure stock attractiveness to investors.

3. Defining the Nature of the 65% Preferred Shares: The Boundary of Control

A critical point that international legal advisors will scrutinize closely is the nature of the 65% preferred shares regarding Xanh SM’s IPO Structure. To be approved by the HKEX, the advisory team must prove that the SPV has absolute “full operational control.” This means that the 65% preferred shares cannot be accompanied by veto rights that hinder essential decisions such as asset sales, mergers, or changes in business lines. If domestic shareholders have overly deep intervention rights, the SPV’s control will be deemed invalid for listing purposes.

4. Legal Challenges Ahead for Xanh SM’s IPO Structure

Beyond the ingenuity of the FOL-evasion technique, the roadmap for Xanh SM’s IPO structure will face significant legal barriers:

• Cross-border Cash Flow Monitoring: Profit repatriation in the form of service/consulting fees via the VIE model is under strict scrutiny by regulatory bodies concerning anti-transfer pricing and foreign exchange control.

• Investor Risk Appetite: Following legal volatility involving Chinese companies using VIE structures (such as Didi), investors on the HKEX have become extremely cautious regarding the sustainability of this model.

• Legal Due Diligence Timeline: The enterprise will spend considerable time on M&A approval procedures and Merger Filings in Vietnam.

If all legal structures are set up perfectly and pass rigorous vetting rounds, experts predict that as early as September or December 2026, we may see Xanh SM successfully ringing the bell on the Hong Kong Stock Exchange.

Professional Perspective P/s: It is certain that the Vietnamese Legal Counsel team “entrusted” with this deal will face an incredibly high-pressure journey. The volume of Transaction Documents and economic contracts required to complete this Xanh SM IPO Structure is enormous, demanding extreme sophistication to ensure both enforceability and the optimization of benefits for the Issuer.

Let us wait and see the next “move” by billionaire PNV on the international financial chessboard.

Contact IVLF Advisors LLC If your enterprise is seeking in-depth legal support regarding international capital market advisory, particularly concerning international IPOs, foreign investment, or restructuring, our team is always ready to accompany you.

IVLF Advisors LLC

• Core Services: M&A Advisory, Capital Markets (IPOs and Bonds), Cross-border Financial Structuring, Business Establishment (FDI).

• Contact: info@ivlf-advisors.com / (+84) 936 726 065

• Address: House R1.7, Eden Rose Urban Area, Alley 908 Kim Giang, Thanh Liet Ward, Hanoi, Vietnam.

Key Legal References

• Foreign ownership limits (FOL): determined by Vietnam’s market-access commitments and sector regulations, applied to public companies under Decree 155/2020 as amended by Decree 245/2025/ND-CP.
• Law No. 56/2024/QH15 amending the Securities Law (effective 1 January 2025): stricter offering conditions, audited paid-up capital reports for IPOs, and automatic professional-investor status for foreign investors.
• Offshore structures: outbound investment registration and SAFE-style approvals remain required for Vietnamese shareholders participating in offshore holding structures.

Need advice on a similar transaction?

IVLF Advisors advises investors and enterprises on M&A and capital transfers, financing and debt restructuring and capital markets transactions in Vietnam. Contact us for a confidential discussion.

Xanh SM IPO Hong Kong: Questions for a Governance Analysis

An Xanh SM IPO Hong Kong assessment should separate confirmed public information from forward-looking scenarios. Corporate governance, ownership rights, funding arrangements and any foreign-ownership considerations should be examined together because a change in one part of the structure may affect the others.

1. Which entity would be the listing vehicle?
2. How would voting, economic and management rights be allocated?
3. Which operating activities require a separate regulatory analysis?
4. What disclosures would investors need to understand the structure?
5. How would cross-border funding and approvals be documented?

This article is a legal-structuring discussion, not a statement that an Xanh SM IPO Hong Kong transaction has been announced or will occur. Any live transaction should be assessed against its actual documents, approvals and market disclosures.

IPO Structure: a disciplined review framework

This section treats the IPO structure as a review framework, not as evidence that a listing, timetable or transaction has been announced. A disciplined IPO structure review separates verified public information from assumptions, then identifies which corporate, ownership and disclosure questions require confirmation.

For advisers and stakeholders, a defensible IPO structure analysis begins with the proposed issuer, its operating entities, material agreements and decision-making rights. It should also distinguish commercial commentary from information that is actually available through formal disclosures.

IPO Structure and governance questions

• IPO structure and issuer scope: identify which assets, contracts and operating activities would sit within a potential issuer group.
• IPO structure and control: map voting rights, board appointments, related-party arrangements and the practical allocation of decision-making authority.
• IPO structure and investor protections: review how minority interests, transfer restrictions and information rights would be documented and monitored.
• IPO structure and funding: consider whether historic funding, intercompany arrangements and capital commitments can be explained consistently.

IPO Structure and disclosure readiness

In a Hong Kong context, the IPO structure is typically assessed alongside governance, financial reporting and disclosure considerations. The relevant legal position depends on facts, applicable rules and the final transaction design. For general reference, readers may consult Hong Kong Exchanges and Clearing and the Securities and Futures Commission.

A well-organised IPO structure workstream records the source of each key fact, identifies open points and assigns ownership of follow-up. This makes the IPO structure easier to test against corporate records and reduces the risk of treating preliminary discussion as a concluded plan.

Ultimately, the IPO structure should be reviewed with appropriate legal, accounting and regulatory input. This article provides general information only and should not be read as a statement about any proposed listing or a substitute for advice on a specific transaction.

IPO Structure: an evidence-based checklist

An IPO structure is easier to assess when the team maintains a simple evidence map. The map should identify the legal entity to be reviewed, the source documents for each ownership statement, and any point that remains subject to confirmation. This approach avoids presenting assumptions as completed steps and creates a clearer record for later legal, accounting and regulatory review.

For each entity in the proposed group, the IPO structure review can record its incorporation details, business role, ownership chain, directors, material contracts and funding arrangements. Where information is incomplete, the gap should be described as an open question rather than filled with inference. This is especially important where public commentary may be based on an early-stage corporate arrangement.

Core workstreams

• Issuer perimeter: the IPO structure should show which assets, operations and personnel would be inside or outside the reviewed group.
• Ownership and control: the IPO structure should distinguish economic interests from voting rights, appointment rights and contractual control.
• Funding trail: the IPO structure should be supported by records of capital contributions, loans, security arrangements and material intercompany transactions.
• Information controls: the IPO structure workstream should identify who validates key facts and how updates are approved before they are shared externally.

Sequencing the review

A useful IPO structure review starts with a current corporate chart, then tests that chart against constitutional documents, registers and material agreements. The next step is to identify dependencies: for example, whether a transfer, refinancing, consent or regulatory filing would be required before a particular arrangement could be implemented. Sequencing prevents a well-drafted chart from concealing an unresolved condition.

The team can then prepare a short issue list with an owner, supporting document, consequence and anticipated next action for every material point. In practice, this means keeping a clear distinction between facts that have been verified, facts that are reported by management, and matters that require specialist input. The same discipline helps an IPO structure remain intelligible when several advisers are reviewing related corporate and financial materials.

It is also sensible to consider how historic arrangements would be explained to an independent reader. Questions may arise about related-party dealings, changes in shareholder rights, group reorganisations, use of proceeds or the treatment of non-core activities. The appropriate response depends on the documents and transaction context; there is no one-size-fits-all legal conclusion.

Fact-specific questions before relying on an IPO Structure

Before relying on an IPO structure analysis, decision-makers should verify the intended issuer, the applicable market rules, the ownership position at the relevant time and the source of each material fact. They should also assess whether any rights or obligations arise outside the corporate chart, including contractual arrangements, financing documents and regulatory approvals.

This article is not an announcement of any transaction and does not state that a listing will occur. It is a general framework for considering the issues that may be relevant to an IPO structure discussion. Professional advice should be obtained on the specific facts, the relevant jurisdiction and any actual transaction documents.