Insurance business for foreign investors in Vietnam is opening up many opportunities as Vietnam has opened its market, creating favorable conditions for foreign investors to participate in this field. And to operate effectively and sustainably, foreign investors need to meet certain insurance business conditions. Follow Long Phan’s following article for a detailed analysis of the conditions and procedures related to this issue.
Regulations on insurance business for foreign investors
Can foreign investors do insurance business in Vietnam?
According to Vietnam’s commitments within the WTO framework. Foreign investors are allowed to do insurance business in Vietnam. Currently, Vietnam also allows foreign investors to own shares and capital contributions up to 100% of the charter capital of insurance enterprises and reinsurance enterprises as prescribed in Article 68 of the Law on Insurance Business. 2022.
Insurance business conditions for foreign investors
General conditions for licensing the establishment and operation of insurance enterprises and reinsurance enterprises
To do insurance business in Vietnam, there are general conditions that investors must meet to be granted an Establishment and Operation License. These conditions are specifically stipulated in Article 64 of the Law on Insurance Business 2022. Specifically as follows:
Firstly, Conditions for shareholders and members contributing capital to establish:
Organizations and individuals have the right to establish and manage businesses in Vietnam according to the provisions of the Enterprise Law;
The organization has legal status and is operating legally; In case of contributing 10% or more of charter capital, the business must be profitable for the last 3 consecutive financial years up to the time of submitting the application for license and meet the financial conditions according to the regulations. Government regulations;
Insurance enterprises and reinsurance enterprises that have been granted a license to establish and operate in Vietnam must contribute capital to establish a new insurance enterprise or reinsurance enterprise that must be profitable for 03 consecutive financial years. as recent as the time of submitting the application for license and meeting the capital adequacy ratio as prescribed by this Law.
Second, Capital conditions:
Charter capital is contributed in Vietnam Dong and is not lower than the minimum level as prescribed by the Government;
Shareholders and founding members are not allowed to use loan capital or investment trust capital from other organizations or individuals to contribute capital.
Third, Human resources conditions:
Have a Chairman of the Board of Directors or Chairman of the Board of Members, Director or General Director, legal representative, Actuarial expert expected to meet the conditions and standards of management capacity and experience and professional expertise specified in Article 81 of the Law on Insurance Business 2022.
Fourth, have an organizational and operational form according to the provisions of this Law and have a draft charter consistent with the provisions of the Law on Enterprises.
Specific conditions for each form of insurance and reinsurance enterprise in foreign-invested insurance companies
For Limited Liability Company
Conditions for organizations established under foreign laws:
For organizations established under foreign laws:
Is a foreign enterprise
Confirmed by a foreign competent authority that the insurance enterprise has not seriously violated the provisions of law on insurance business of the country where the enterprise is headquartered within the most recent 03 consecutive years. up to the time of submitting the application for a license
The field expected to request a license to operate in Vietnam is the field that the insurance enterprise is directly implementing or has a subsidiary implementing for at least the last 07 consecutive years.
Have total assets of not less than 02 billion USD in the year immediately preceding the year of submitting the application for establishment and operation license.
Commitment to support in finance, technology, corporate governance, risk management, operations and operations for insurance businesses expected to be established in Vietnam; Ensure insurance enterprises comply with regulations on financial safety and risk management according to regulations
Insurance enterprises can authorize their subsidiaries to perform the function of investing abroad to establish insurance enterprises and reinsurance enterprises in Vietnam.
Conditions for economic organizations established under Vietnamese law:
Have total assets not less than 2,000 billion VND in the year immediately preceding the year of submitting the license application;
For joint stock companies
There are at least 02 institutional shareholders and each shareholder meets the following conditions:
Must contribute 10% or more of the insurance enterprise’s charter capital
Conditions specified in Article 65 of the Law on Insurance Business 2022;
An individual shareholder may not contribute more than 10% of the charter capital of an insurance enterprise
For foreign branch operations in Vietnam
Pursuant to Article 67 of the Law on Insurance Business 2022, conditions for granting licenses to establish and operate foreign branches in Vietnam are prescribed as follows:
When establishing a branch in Vietnam, foreign non-life insurance enterprises must meet the following conditions:
Headquartered in a country with which Vietnam and that country have signed international treaties, including an agreement on establishing a branch in Vietnam; The state management agency for foreign insurance where the enterprise is headquartered has signed an international agreement with the Ministry of Finance of Vietnam on management and supervision of branch operations;
Be permitted by the foreign state insurance management agency where the enterprise is headquartered to establish a branch in Vietnam to operate within the scope of insurance operations that the enterprise is permitted to do;
Have at least 07 years of experience in the field expected to be licensed in Vietnam;
Have minimum total assets that meet the conditions specified in Point d, Clause 1 and Clause 3, Article 65 of the Law on Insurance Business 2022;
Profitable business activities for the last 3 consecutive financial years up to the time of application submission and meeting financial conditions according to Government regulations;
Commit to ensuring and taking responsibility for all obligations and commitments of the foreign branch in Vietnam.
Branches of foreign non-life insurance enterprises expected to be established and operating in Vietnam must meet the following conditions:
Have capital allocated in Vietnam Dong and not lower than the minimum level as prescribed by the Government;
The capital source for establishing a branch is a legal source, do not use loan capital or investment trust capital in any form;
There is a Branch Manager and Actuary expected to meet the conditions and standards of management capacity, experience and professional expertise specified in Article 81 of the Law on Insurance Business 2022.
Conditions for foreign investors to do insurance business in Vietnam
Procedures for establishing insurance businesses for foreign investors in Vietnam
Prepared documents
Pursuant to Article 69 of the Law on Insurance Business 2022, detailed instructions for each case are provided in Articles 12, 13, 14, 15 of Decree 46/2023 ND-CP. Application dossiers for a license to establish and operate insurance business for foreign investors in Vietnam include the following main dossiers and documents:
Written request for establishment and operation license according to the form specified in Appendix I issued with Decree 46/2023/ND-CP;
Draft charter; draft organization and operation regulations for foreign branches in Vietnam;
Operational plan for the first 05 years, clearly stating the insurance operations expected to be deployed, risk management model, method of setting up professional reserves, reinsurance program, capital investment, and capacity. pay
Curriculum vitae, criminal record cards, copies of diplomas and certificates proving the capacity, professional qualifications and skills of the person expected to be appointed as Chairman of the Board of Directors or Chairman of the Council member, Director or General Director, legal representative, Actuarial expert;
Level of capital contribution and method of capital contribution, list of founding organizations and individuals or members and shareholders expected to contribute 10% or more of charter capital and documents proving satisfaction of corresponding conditions with each type of foreign insurance enterprise in Vietnam;
List of beneficial owners of insurance enterprises The Government regulates criteria for determining beneficial owners of insurance enterprises
Execution order
The insurance business licensing process for foreign investors is guided in Article 16 of Decree 46/2023/ND-CP. Specifically, includes the following steps:
Step 1: Submit application
Organizations and individuals applying for an establishment and operation license must prepare documents according to the provisions of this Decree.
Applications can be submitted directly to the Ministry of Finance, sent by post, or submitted via the online public service system (if eligible).
Step 2: Consider licensing
Within 30 days from the date of receipt of the dossier, if the dossier is not complete and valid, the Ministry of Finance will notify in writing a request for supplementation or amendment. The maximum time limit for supplementing and amending the investor’s documents is 06 months from the date of notification.
If the investor does not supplement or amend the dossier on time, the Ministry of Finance will refuse to consider granting the License.
The total time for organizations and individuals to supplement and amend records is maximum 12 months from the date of the first notification by the Ministry of Finance. After this deadline, the Ministry of Finance has the right to refuse to consider granting a License.
Step 3: Grant establishment and operation license
Within 60 days from the date of receipt of complete and valid documents, the Ministry of Finance will issue an establishment and operation license to insurance enterprises, reinsurance enterprises, and foreign branches in Vietnam.
In case of refusal to issue a License, the Ministry of Finance must issue a written explanation clearly explaining the reason.
The Ministry of Finance can only refuse to grant a License when the organization or individual contributing capital or the insurance enterprise, reinsurance enterprise, or foreign branch in Vietnam expected to be established does not meet the conditions or There is fraud or falsification in the records.
Steps to license to establish an insurance business in Vietnam
Consulting services and support for insurance business issues for foreign investors in Vietnam
Consulting services and support for insurance business issues for foreign investors in Vietnam help investors save effort when carrying out insurance business licensing procedures. With his experience, Long Phan can effectively support you in insurance business issues of foreign investors in Vietnam. Long Phan’s services include:
Consulting on issues related to insurance business activities for foreign investors;
Consulting on conditions for establishing and doing insurance business for foreign investors in Vietnam;
Support in completing procedures for establishing an insurance company, branch or representative office in Vietnam;
Representing customers in working with state agencies;
Consulting and supporting the implementation of tasks after being granted a license to establish and operate insurance business;
Consulting on other issues related to insurance business for foreign investors in Vietnam;
Insurance business for foreign investors in Vietnam needs to comply with many legal regulations. Customers need to clearly understand the conditions and procedures to ensure a smooth investment process. If you still have related questions, please contact Long Phan via hotline: 0906735386for detailed advice on the process of establishing and operating an insurance business in Vietnam.
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Dương Thị Kim Ngân
Jurist Ngan Duong Thi Kim - Partner of Long Phan, Ms. Ngan possesses profound knowledge in business consulting, labor, and contracts. With dedication and creativity, Ms. Ngân has achieved significant success in advising and supporting businesses in critical areas such as legal matters, finance, management, and contracts. She is committed to providing optimal solutions and helping clients succeed in the business environment.