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Establish an insurance joint stock company in Vietnam

The need for financial protection for Vietnamese people and businesses is increasing, leading to a potential insurance market. Vietnam has issued many legal documents to manage private insurance business activities, creating a favorable environment for businesses to participate in the market. This is a conditional business regulated by separate regulations compared to normal businesses. In the article below, Viet An Law will present the conditions and procedures for licensing to establish an insurance joint stock company in Vietnam, helping businesses to refer and implement a convenient way.

joint stock company

Legal basis

  • Law on Insurance Business 2022;
  • Decree 46/2023/ND-CP guiding the Law on Insurance Business.
  • Circular 110/2002/TT-BTC guiding the collection, payment, management, and use of fees and charges in the fields of banking, securities, and insurance, as amended and supplemented by Circular 150/2016/TT-BTC.

What is an insurance joint stock company in Vietnam?

Insurance business is the activity of insurance business entities, insurance enterprises, and branches of foreign non-life insurance enterprises, based on the insurance buyer paying insurance premiums for insurance business entities to carry out insurance business. Currently, mutual organizations provide compensation microinsurance, paying insurance money when an insured event occurs as agreed in the insurance contract.

Insurance companies can be organized under many different types of businesses, including limited liability companies and joint stock companies. This article focuses on the form of insurance joint stock company, including life insurance joint stock company and non-life insurance joint stock company.

Conditions to establish an insurance joint stock company in Vietnam

The insurance business is a conditional business line, operating under the establishment and operation license issued and regulated by the Ministry of Finance (Department of Insurance Management and Supervision). To be licensed, the requested entities must meet the following legal conditions:

For organizations and individuals contributing capital

  • Not belonging to the prohibited subjects as prescribed in Clause 2, Article 18 of the Law on Enterprises, such as officials, civil servants, public employees, state agencies, and people without civil act capacity.
  • Must contribute charter capital in Vietnamese Dong and must not use loan capital or investment trust capital of other organizations or individuals to contribute capital.
  • Individual shareholders are not allowed to contribute more than 10% of the charter capital of an insurance joint stock company.

In addition to the general conditions, specifically for the type of joint stock company, Article 64 of the Law on Insurance Business 2022 also requires a minimum of 02 institutional shareholders contributing 10% or more of the charter capital of the insurance enterprise, reinsurance business.

For groups of institutional shareholders contributing capital from 10% of charter capital, they must meet the financial conditions specified in the Law on Insurance Business 2022 guided in Article 11 of Decree 46/2023/ND-CP as follows:

  • Legal and profitable business operations for the last three (03) consecutive financial years up to the time of submitting the license application;
  • Insurance enterprises and reinsurance enterprises that have been licensed to establish and operate in Vietnam contribute capital to establish new insurance enterprises and reinsurance enterprises that need to meet the capital adequacy ratio.
  • Organizations participating in capital contribution operating in business lines that require legal capital must ensure that the owner’s capital minus the legal capital is at least equal to the expected capital contribution;

For foreign organizations shareholders

  • Being an insurance enterprise, reinsurance enterprise, foreign financial or insurance corporation;
  • Confirmed by a foreign competent authority that there has been no serious violation of the provisions of the law on insurance business of the country where the enterprise is headquartered within the last 3 consecutive years up to the time of submission. license application dossier;
  • Have at least 07 years of operating experience in the field expected to be conducted in Vietnam;
  • Have total assets of at least 02 billion USD in the year immediately preceding the year of applying for the license;
  • Commitment to support in finance, technology, corporate governance, risk management, operations, and operations for insurance businesses and reinsurance businesses expected to be established in Vietnam;
  • It is possible to authorize a subsidiary specializing in performing the function of investing abroad to meet the minimum total assets conditions to establish an insurance enterprise or reinsurance enterprise in Vietnam.

For Vietnamese organizations shareholder

Have total assets of at least 2,000 billion VND in the year immediately preceding the year of applying for the license.

For insurance businesses expected to be established

Enterprises applying for a license must ensure the amount of legal capital (or minimum charter capital) as prescribed in Article 35 of Decree 46/2023/ND-CP, specifically:

Type Minimum charter capital
Life insurance business 750 billion VND
  Include unit-linked insurance or pension insurance 1000 billion VND
  Include unit-linked insurance and pension insurance 1300 billion VND
Insurance and health insurance businesses 400 billion VND
  Include aviation insurance or satellite insurance 450 billion VND
  Includes aviation insurance and satellite insurance 500 billion VND
Health insurance business 400 billion VND

Thus, compared to the old regulations in Decree 73/2016/ND-CP, the minimum charter capital has increased with an average increase of 100 billion VND for each type of insurance business.

Having a dossier applying for a License according to Decree 46/2023/ND-CP

  • Documents with foreign signatures, titles, and seals in the license application file must be consular legalized;
  • Vietnamese copies and translations from foreign languages into Vietnamese must be certified by a Vietnamese notary agency according to legal regulations on notarization;
  • Organizations and individuals applying for a License must be responsible for the accuracy of the license application dossier.

Licensing dossier

Organizations and individuals applying for a license submit 03 sets of documents (01 original set, 02 copies) specified in Article 13 of Decree 46/2023/ND-CP to the Ministry of Finance. Particularly for dossiers of foreign organizations and individuals, each set includes 01 Vietnamese copy and 01 English copy.

  • Application for a License according to the form prescribed by the Ministry of Finance according to the form Appendix 1 of Decree 46/2023/ND-CP.
  • Draft company charter as prescribed in Article 25 of the Enterprise Law.
  • The first 5-year operation plan is suitable for the insurance business field in which the License is requested;
  • Copies of legal documents; Criminal record card according to the form or equivalent documents of foreigners prescribed by foreign law; Curriculum vitae, copies of diplomas, certificates, and other documents proving that they meet the conditions and standards of the person expected to be appointed as Chairman of the Board of Directors, Director or General Director, Legal Representative, Actuary of an insurance company;
  • List of founding shareholders and legal documents of individuals or organizations, accompanied by confirmation of account balance for individuals or copies of audited financial statements for 03 years immediately preceding the year of application for the organization to prove financial capacity and documents proving meeting the conditions prescribed by law;
  • Document from the competent authority of the country where the insurance enterprise, reinsurance enterprise, foreign financial or insurance corporation with capital contribution is headquartered confirming the satisfaction of the conditions;
  • Confirmation from the bank licensed to operate in Vietnam regarding the amount of charter capital deposited in the blocked account opened at the bank;
  • Written commitment of shareholders to meet the conditions to be granted a License;
  • Minutes of the meeting of shareholders on capital contribution to establish an insurance joint stock company with a list of shareholders and founding shareholders and approval of the draft company charter.
  • Document from a competent state agency on the capital contribution by a Vietnamese organization that meets financial safety conditions and is allowed to contribute capital to establish an insurance enterprise or reinsurance enterprise following the law.
  • Power of Attorney for Viet An Law to carry out procedures for applying for an establishment and operation license.

Licensing procedures

  • Step 1: Organizations and individuals submit applications for licensing
    • Submit directly at the headquarters of the Ministry of Finance;
    • Or send via the postal system;
    • Submit via the online public service system if eligible.
  • Step 2: The Ministry of Finance (Department of Insurance Management and Supervision) reviews and appraises the dossier and issues a written request to the investor to supplement or amend the dossier (if any).
  • Step 3: Investors supplement or amend documents. In case the dossier is not complete and valid, within 30 days, the Ministry of Finance will issue a written notice requesting additions or amendments to the dossier. The investor amends and supplements documents within 06 months from the date of notification. Additional notifications may be required multiple times but the maximum total period for amendment is 12 months. After 12 months from the application date, if the amendment dossier is still incompetent, the application will be invalid.
  • Step 4: The Ministry of Finance reviews and appraises the dossier and grants an establishment and operation license to the enterprise
    • In case the dossier is complete and valid: 60 days (Ministry of Finance issues establishment and operation license)
    • In case the dossier is invalid and has a deadline for amendment but the investor does not amend or makes unreasonable amendments, the Ministry of Finance will issue a written refusal to grant the License.

Fees for licensing and insurance operations

According to the provisions of Circular 110/2002/TT-BTC, current licensing fees are prescribed as follows:

  • Life insurance enterprise: 140 million VND
  • Non-life enterprises: 70 million VND

Insurance joint stock company establishment service of Viet An Law

  • Consulting on conditions for the establishment and operation of insurance joint stock companies;
  • Drafting documents to apply for a license to establish and operate an insurance joint stock company;
  • Representing customers to carry out procedures for establishing and operating an insurance joint stock company.

Clients wishing to establish an insurance joint stock company in Vietnam, please contact Viet An Luat for the best support.

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