Establish a company in Vietnam providing insurance business

Legal basis

• Schedule of commitments on trade and services of Vietnam in the WTO;
• The Law on Insurance Business 2022;
• Decree 46/2023/NĐ-CP on details of implementation of certain articles of the Law on Insurance Business;
• Circular 150/2016/TT-BTC providing for fees for issuance of license for establishment and operation of credit institutions; license for establishment of foreign banks’ branches, representative offices of foreign credit institutions or other foreign organizations having banking activities; license for provision of intermediary payment services by non-bank institutions, and the collection and transfer thereof.

Vietnam’s commitment to establish a company in Vietnam providing insurance business

According to Vietnam’s commitments within the WTO framework, Vietnam commits to allow open a company insurance business with foreign investment capital in Vietnam (1-100% foreign capital). Currently, foreign insurers have been allowed to establish branches of non-life insurance or branches of reinsurance enterprises in Vietnam.

Conditions for establishing a company in Vietnam providing insurance business

General conditions for being granted the establishment and operation license of an insurance enterprise

For organizations and individuals which contribute capital

• Not falling into the prohibited categories specified in Clause 2, Article 18 of the Law on Enterprise;
• Organizations and individuals participating in capital contribution must contribute capital in cash and may not use borrowed capital or investment trust capital of other organizations and individuals to contribute capital;
• Organizations contributing 10% or more of charter capital must have profitable business activities for 03 consecutive years preceding the year in which the application for a license is submitted and have no accumulated losses up to the time of application submission;
• In case the capital contributing organization is an insurance enterprise or a reinsurance enterprise that has been granted a license for establishment and operation in Vietnam, contributing capital to establish an insurance enterprise, the reinsurance enterprise must do business in Vietnam. be profitable in the last 03 consecutive financial years up to the time of submitting the application for a license and satisfy the capital adequacy ratio as prescribed by this Law.

For insurance enterprises and insurance broking enterprises to be established:

• The charter capital is contributed in Vietnam Dong and not less than the minimum amount prescribed by the Government. Established shareholders and capital contributors may not use borrowed capital or investment trust capital of other organizations or individuals to contribute capital.
• Having the type of enterprise, the company’s charter (for insurance enterprises and insurance brokerage enterprises), in accordance with the provisions of law. According to regulations, insurance business organizations include: Joint stock insurance companies; Insurance limited liability company ; Insurance cooperatives; Mutual insurance organization.
• Having a manager or controller of the enterprise or the proposed branch (Chairman of the Board of Directors or Chairman of the Members’ Council, Director or General Director, legal representative, actuary) comply with the provisions of the law. Specifically:

General conditions and standards:

• Having the right to manage the enterprise in accordance with the Law on Enterprises;
• Not be sanctioned for administrative violations in the field of insurance business, not be disciplined in the form of dismissal for violating internal processes for 03 consecutive years before the time of appointment; not be prosecuted by a competent authority as prescribed by law at the time of being elected or appointed

In addition, for the Chairman of the Board of Directors, the Chairman of the Members’ Council, a member of the Board of Directors, a member of the Members’ Council, it is required to meet:

• General conditions and standards;
• Having a university degree or higher;
• The Chairman of the Board of Directors, the Chairman of the Members’ Council has at least 5 years directly working in the fields of insurance, finance, banking or has at least 3 years holding the position of manager, operator; management and control at enterprises operating in the fields of insurance, finance and banking; members of the Board of Directors, members of the Members’ Council with at least 03 years directly working in the fields of insurance, finance, banking or having at least 03 years holding the position of manager, executive, control at enterprises operating in the fields of insurance, finance and banking.

For the Director or General Director, the legal representative needs to meet the following conditions;

• General conditions and standards;
• Having a university degree or higher in insurance major. If you do not have a university degree or higher in an insurance major, you must have a university degree or higher in another major and an insurance certificate issued by an insurance training institution that is legally established and operating in the insurance industry. domestic or foreign supply;
• Having at least 05 years of working experience in the fields of insurance, finance and banking, of which at least 03 years are holding the position of manager or controller of an insurance enterprise or reinsurance enterprise. insurance, foreign branches;
• Reside in Vietnam during the incumbent period.

For directors other than two separate cases specified above of an insurance enterprise, reinsurance enterprise or foreign branch in Vietnam, the following requirements must be met:

• General conditions and standards;
• Having a university degree or higher in insurance major. If you do not have a university degree or higher in a major in insurance, you must have a university degree or higher in another major and an insurance certificate suitable for the type of insurance that the business is allowed to deploy. insurance training established and operating legally in the country or abroad;
• Having at least 03 years of working experience in the fields of insurance, finance, banking or the expected professional field. Particularly for heads of professional divisions, having at least 03 years of working experience in the insurance field or the expected professional field;
• Reside in Vietnam during the incumbent period.

The controller of an insurance enterprise, reinsurance enterprise or foreign branch in Vietnam must satisfy general conditions and standards and other conditions and standards as prescribed by the Government.

At the same time, an enterprise manager must not be one of the subjects banned from managing an enterprise as prescribed in Clause 2, Article 18 of the Law on Enterprises, specifically:

For 03 consecutive years before the appointed time:

• Not be sanctioned for administrative sanctions in insurance business in the form of being forced to remove an administrator title approved by the Ministry of Finance or forcibly suspend a title already approved by the insurer, insurance broking enterprises, foreign branches appointed;
• Not be disciplined in the form of dismissal for violating internal procedures on exploitation, assessment, compensation, internal control, financial and investment management, reinsurance program in insurance enterprises, foreign branches or insurance broking professional processes, internal control, professional ethics rules in insurance broking enterprises;
• Not directly related to the case that has been prosecuted by a competent agency in accordance with law at the time of appointment.

There are dossiers of application for licensing as prescribed.

Specific conditions for each type of insurance enterprise (with foreign investment):

Special conditions for branches of foreign insurance enterprises in Vietnam

Conditions of foreign enterprises to have the right to establish branches

• Head office: the head office of the enterprise is located in a country that has signed an international treaty with Vietnam related to the agreement on the establishment of a branch in Vietnam; the foreign insurance state management agency where the enterprise’s head office is located has signed an international agreement with the Ministry of Finance of Vietnam on management and supervision of the branch’s operations;
• Licensing: being permitted by the host country management agency to set up a branch in Vietnam to operate within the scope of insurance operations in which the enterprise is allowed to do business;
• Experience: at least 07 years of experience in the field in which the license is proposed to be applied in Vietnam;
• Minimum total assets: at least 2 billion USD in the year immediately preceding the year of submitting the application for an establishment and operation license;
• Business performance: have financial statements recognizing profits for the last 3 consecutive financial years up to the time of submission of audited dossiers with fully accepted opinions;
• Commitment to guarantee and take responsibility for all obligations and commitments of the foreign branch in Vietnam.

Operating conditions

• Capital: granted in Vietnam Dong, not lower than the prescribed minimum;
• Source of capital: legal, not using loan or investment trust capital in any form;
• Personnel: There is a branch director, actuaries expected to meet the conditions and standards of management capacity, experience and professional expertise as prescribed above.

Procedures to establish a company in Vietnam providing insurance business:

Required documents:

Note:

• A dossier of application for a license is made in 2 sets, of which 1 is the original and 1 is a copy;
• For the application file for a license of a foreign organization or individual, each set includes 01 copy in Vietnamese and 01 in English;
• Documents with foreign signatures, titles and seals in the application for a License must be consularly legalized;
• Documents that are copies must be copies from the original book or certified;
• Vietnamese copies and translations from foreign languages ​​into Vietnamese must be certified by a Vietnamese notary public in accordance with the law on notarization. Organizations and individuals applying for a license must be responsible for the accuracy of the application file for a license.

Location: Ministry of Finance (in person / by post / online public service system if eligible to apply). license must be responsible for the accuracy of the application file for a lic

Duration:

• Within 30 days from the date of receipt of the application for a license, if the application is incomplete and invalid, the Ministry of Finance shall notify in writing of the request for supplementation or modification of the application. The maximum time limit for supplementing or amending the investor’s dossier is 06 months from the date of notification. In case the investor fails to supplement or amend the dossier within the prescribed time limit, the Ministry of Finance will refuse to consider and grant the License.
• The maximum time for organizations and individuals to supplement or amend their dossiers is 12 months from the date of the first notice by the Ministry of Finance. Past the above time limit, the Ministry of Finance has the right to refuse to consider and issue a License.
• Within 60 days after receiving a complete and valid dossier, the Ministry of Finance shall issue a License. In case of refusal to grant a License, the Ministry of Finance shall issue a written explanation clearly explaining the reasons therefor.
• In case of issuance of establishment and operation license, the Ministry of Finance shall concurrently issue a written approval in principle to the proposed manager of a foreign insurance enterprise/branch in Vietnam.

State fees: 70,000,000/license

Procedures after insurance / reinsurance enterprises are granted establishment and operation licenses

• At least 30 days before the date of official operation, insurance enterprises, reinsurance enterprises, foreign branches in Vietnam that have been granted establishment and operation licenses must disclose the contents of the license and the date of operation. is expected to officially operate on 01 printed newspaper in 03 consecutive issues or on Vietnam’s electronic newspaper with the following main contents:
  • Name and address of the head office, branch and representative office of the insurance enterprise or insurance brokerage enterprise; name and address of the foreign branch;
  • Content, scope and duration of activities;
  • Level of charter capital and contributed charter capital of insurance enterprises and insurance brokerage enterprises; allocated capital of the foreign branch;
  • Full name of the legal representative of the insurance enterprise, foreign branch or insurance brokerage enterprise;
  • License number and date;
  • Licensed insurance and insurance brokerage services.
• Within 60 days from the date of issuance of the License, the insurance enterprise must use part of the contributed charter capital or the allocated capital to make a deposit at a commercial bank operating in Vietnam. The deposit level is equal to 2% of the legal capital.
• Within 12 months from the date of issuance of the License, an insurance enterprise or an insurance broker enterprise must complete the following procedures in order to officially operate:
  • Convert the capital deposited in the escrow account into charter capital (or allocated capital);
  • Build the organizational structure, management apparatus, internal control, internal audit, risk management system in accordance with the form of operation in accordance with this Law and other relevant laws. mandarin; elect and appoint a legal representative; elect and appoint positions approved by the Ministry of Finance;
  • Promulgating internal management regulations on organization and operation, internal regulations on risk management and basic professional processes in accordance with the law;
  • Make a full deposit in accordance with this Law at a commercial bank operating in Vietnam;
  • Having a head office, physical and technical facilities, and a technological system suitable to the professional process of insurance business;
  • To publish the contents of the license for establishment and operation.

Notes: If within 12 months from the date of issuance of the License, the insurance enterprise, foreign branch, or insurance brokerage business fails to complete the prescribed procedures to commence operation, the Ministry of Finance License will be revoked.

If Clients have any inquiry about establishing a foreign-invested insurance business in Vietnam or have demand for conduct this procedure, please don’t hestitate to contact Viet An Law to approach the best support and advice.