Is it mandatory for the increase in charter capital of insurers to be made in Vietnamese Dong?
Is it mandatory for the increase in charter capital of insurers to be made in Vietnamese Dong?
Conditions for insurers to increase charter capital are specified in Clause 1, Article 19 of Decree 46/2023/ND-CP as follows:
Increase in charter capital of insurers, reinsurers, foreign branches in Vietnam
1. If an insurer, reinsurer, or foreign branch in Vietnam seeks to increase their charter capital, they must meet the following requirements:
a) The increase in charter capital or allocated capital shall be made in Vietnamese Dong;
b) Shareholders, capital contributors, and parent companies of insurers, reinsurers, and foreign branches in Vietnam are not permitted to supplement their charter capital or allocated capital through loan capital or investment trust capital from other organizations or individuals.
c) After charter capital is increased, the insurer or reinsurer must still satisfy the requirements pertaining to shareholder structure specified in Article 66 of the Law on Insurance Business for joint-stock companies.
With respect to joint-stock companies established before January 1, 2023, they must satisfy the mentioned requirements pertaining to shareholder structure from January 1, 2026.
d) If the insurer or reinsurer increases its charter capital through capital contributions from new shareholders or capital contributors, these new shareholders and capital contributors must satisfy the conditions prescribed in Clauses 1 and 2, Article 64 and Article 65 of the Law on Insurance Business.
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Accordingly, to increase charter capital, insurance enterprises must meet the conditions specified in Clause 1, Article 19 above.
There is a condition that the increase in charter capital is done in Vietnamese Dong.
Is it mandatory for the increase in charter capital of insurers to be made in Vietnamese Dong?
What is the application for approval of principle to increase charter capital for insurers in Vietnam?
Documents in the application for approval of principle to increase charter capital for insurers are specified in Clause 2, Article 19 of Decree 46/2023/ND-CP as follows:
Increase in charter capital of insurers, reinsurers, foreign branches in Vietnam
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2. Application for Ministry of Finance's approval of principle to increase charter capital (for insurers, reinsurers) or increase allocated capital (for foreign branches in Vietnam) includes the following:
a) An application form for change of charter capital or allocated capital, provided in Appendix III to this Decree;
b) A competent authority's document as prescribed in the company's charter (for insurer or reinsurer) or Regulation on organization and operation (for foreign branch in Vietnam) on the increase of charter capital (or allocated capital). This document must specify the increased amount, method, and time for capital increase;
c) Plan for mobilization and use of charter capital or allocated capital;
d) List of capital contributors of the insurer or reinsurer (for limited liability company) or shareholders (for joint-stock company) expected to own at least 10% of the charter capital of the insurer or reinsurer after increasing capital; documentation proving that the new shareholders and capital contributors satisfy the requirements specified in Articles 64 and 65 of the Law on Insurance Business. This provision does not apply to the case of increasing charter capital by the method of securities public offering, securities offering of listed and public joint-stock companies.
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Accordingly, the application for approval of principle to increase charter capital for insurers includes the documents specified in Clause 2, Article 19 above.
What is the time limit for in-principle approval of a request to increase charter capital of an insurance enterprise?
According to the provisions of Clause 3, Article 19 of Decree 46/2023/ND-CP as follows:
Increase in charter capital of insurers, reinsurers, foreign branches in Vietnam
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3. Within 20 working days of receiving a complete and valid application, the Ministry of Finance shall issue a written approval. If the application is rejected, the Ministry of Finance shall provide an explanation in writing.
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Thus, the time limit for the Ministry of Finance to approve in principle to increase charter capital for insurers is within 20 working days of receiving a complete and valid application.
If the application is rejected, the Ministry of Finance shall provide an explanation in writing.
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