Conditions for establishing an insurance business joint stock company

Establishing an insurance business joint stock company plays an important role in ensuring transparency, financial safety, and sustainable development of businesses in the insurance sector. Full compliance with legal regulations not only helps businesses operate legally but also creates trust for customers and partners. With the joint stock company model, businesses have the advantage of flexibly mobilizing capital, expanding markets, and improving competitiveness.

Regulations on form and content of activities

Pursuant to the provisions of Article 62 and Article 63 of the Law on Insurance Business 2022, insurance enterprises must be joint stock companies or limited liability companies.

The activities of an insurance enterprise include:

• Insurance business, reinsurance business, reinsurance transfer;
• Manage funds and invest capital from insurance business activities;
• Providing insurance auxiliary services;
• Other activities directly related to insurance business activities.

Current conditions for establishing an insurance business joint stock company

Conditions for shareholders

When establishing an insurance business joint stock company, one of the first conditions that need to be met is the shareholder condition, specifically stipulated in Clause 1, Article 64 of the Law on Insurance Business 2022 guided by Article 11 of Decree 46/2023/ND-CP as follows:

1. Shareholders must be organizations or individuals with the right to establish and manage enterprises in Vietnam according to the provisions of the current Law on Enterprise;
2. Organizations contributing 10% or more of charter capital must meet the following financial conditions:

• Capital contribution organizations operating in business lines requiring minimum legal capital or charter capital or minimum capital must ensure that equity capital minus legal capital or minimum charter capital or minimum capital is greater than or equal to the amount of capital expected to be contributed;
• In case capital contribution organizations are organizations established and operating under the provisions of the Law on Credit Institutions, Law on Insurance Business, Law on Securities, these organizations must ensure to maintain and meet financial safety conditions and be approved by competent authorities to participate in capital contribution according to the provisions of law. In case the relevant law does not require a competent authority to have written approval, the capital contributing organization must have a written confirmation of this;
• In case the capital contributing organization is an insurance enterprise, reinsurance enterprise, foreign financial or insurance corporation, it must ensure to maintain and meet financial safety conditions and be permitted by the competent authority of the country where these organizations are headquartered to establish an insurance enterprise or reinsurance enterprise in Vietnam. In case the regulations of the country where this organization is headquartered do not require written approval, there must be written confirmation from a competent agency, organization or individual according to the provisions of that country’s law;
• Have financial statements for 03 years immediately preceding the year of submitting the application for establishment and operation license audited with full approval.

3. Shareholders who are insurance enterprises or reinsurance enterprises that have been licensed to establish and operate in Vietnam contribute capital to establish a new insurance enterprise or reinsurance enterprise that must have been profitable for the last 3 consecutive financial years up to the time of submitting the application for license and meet the capital adequacy ratio according to the provisions of the Law on Insurance Business 2022.

Conditions on the structure of shareholders contributing capital to establish a joint stock company

1. There are at least 02 institutional shareholders and each shareholder meets the following conditions:

• Must contribute 10% or more of charter capital.
• Conditions specified in Article 65 of the Law on Insurance Business.

2. An individual shareholder may not contribute more than 10% of charter capital.

Pursuant to: Article 66 of the Law on Insurance Business 2022.

Capital conditions

According to Clause 2, Article 64 of the Law on Insurance Business 2022, Article 35 of Decree 46/2023/ND-CP, capital conditions are prescribed as follows:

1. Charter capital is contributed in Vietnam Dong and is not lower than the minimum level as prescribed by the Government. Accordingly, the minimum level is specified as follows:

Case 1: Minimum charter capital of a life insurance enterprise:

• Life insurance business (except unit-linked insurance, pension insurance) and health insurance: 750 billion VND;
• Life insurance business as above and unit-linked insurance or pension insurance: 1,000 billion VND;
• Life insurance business as above, unit-linked insurance and pension insurance: 1,300 billion VND.

Case 2: Minimum charter capital of a non-life insurance enterprise:

• Non-life insurance business (except aviation insurance, satellite insurance) and health insurance: 400 billion VND;
• Non-life insurance business as above and aviation insurance or satellite insurance: 450 billion VND;
• Non-life insurance business as above, aviation insurance and satellite insurance: 500 billion VND.

Case 3: Minimum charter capital of a health insurance enterprise: 400 billion VND.

Case 4: Minimum charter capital of a reinsurance enterprise:

• Reinsurance business, accepting non-life reinsurance or both types of non-life reinsurance and health reinsurance: 500 billion VND;
• Reinsurance business, life reinsurance ceded or both life reinsurance and health reinsurance: 900 billion VND;
• Reinsurance business, accepting reinsurance concessions for all three types of life reinsurance, non-life reinsurance and health reinsurance: 1.400 billion VND.

Note: Insurance enterprises and reinsurance enterprises established, organized and operating before the effective date of Decree 46/2023/ND-CP with a charter capital lower than the minimum charter capital prescribed above must complete the addition of charter capital and deposit according to regulations before January 1, 2028.

2. Shareholders are not allowed to use loan capital or investment trust capital from other organizations or individuals to contribute capital.

Personnel conditions

Personnel conditions are specified in Clause 3, Article 64, Article 81 of the Law on Insurance Business 2022 as follows:

1. General conditions and standards:

• Have the right to manage the enterprise according to the Law on Enterprise;
• Not being sanctioned for administrative violations in the field of insurance business, not being disciplined in the form of dismissal for violating internal procedures for 03 consecutive years before the time of appointment; Not be prosecuted by competent authorities according to the provisions of law at the time of election or appointment.

2. Conditions and standards for Chairman of the Board of Directors, Chairman of the Board of Members, members of the Board of Directors, members of the Board of Members:

• Meet the general conditions and standards in section 1;
• Have a university degree or higher;
• Chairman of the Board of Directors, Chairman of the Board of Members has at least 05 years directly working in the field of insurance, finance, banking or has at least 03 years holding the position of manager, executive, and controller at an enterprise operating in the field of insurance, finance, banking; Members of the Board of Directors, members of the Board of Members have at least 03 years of directly working in the field of insurance, finance, banking or have at least 03 years holding the position of manager, executive, or controller at an enterprise operating in the field of insurance, finance, banking.

3. Conditions and standards for Director or General Director, legal representative:

• Meet the general conditions and standards in section 1;
• Have a university degree or higher in insurance. In case 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 have an insurance certificate issued by an insurance training facility legally established and operating domestically or abroad;
• Have at least 05 years of working experience in the fields of insurance, finance, banking, including at least 03 years as a manager or controller of an insurance enterprise, reinsurance enterprise, or foreign branch;
• Reside in Vietnam during his term of office.

4. Conditions and standards for other managers who do not fall into the above two cases:

• Meet the general conditions and standards in section 1;
• Have a university degree or higher in insurance. In case 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 have an insurance certificate appropriate to the type of insurance that the enterprise is allowed to deploy, issued by insurance training establishments legally established and operating domestically or abroad;
• Have at least 03 years of working experience in the field of insurance, finance, banking or expected professional field. Particularly for heads of operational departments, have at least 03 years of experience working in the insurance field or the professional field expected to be in charge;
• Reside in Vietnam during his term of office.

Services for establishing a comprehensive insurance business

With comprehensive, professional and fast services, we help customers complete all procedures legally and optimally. Below is the scope of services we provide:

• Consulting and choosing a suitable business model;
• Draft and complete company establishment documents;
• Apply for an insurance business license and related sub-licenses;
• Register seal, tax code, bank account;
• Support for tax declaration and initial financial reports;
• Consulting and support services after establishment.

Establishing an insurance business joint stock company brings many benefits, including the ability to flexibly mobilize capital, expand market share and build reputation in the market. Full compliance with legal conditions helps businesses operate sustainably, creating trust with customers and partners. If you need detailed advice, please contact Long Phan via the hotline 0906735386 for professional and dedicated support.