From January 1, 2023, are insurance companies in Vietnam not allowed to conduct real estate investment and business activities?
What is insurance companies in Vietnam?
According to Clause 17, Article 1 of the Law on Insurance Business in 2022, it stipulates:
Insurance companies in Vietnam means an enterprise established, organized and operating in accordance with this Law and other relevant laws for insurance business, reinsurance business, and reinsurance transfer. Insurance enterprises include life insurance enterprises, non-life insurance enterprises, and health insurance enterprises.
From January 1, 2023, are insurance companies in Vietnam not allowed to conduct real estate investment and business activities? (Pictures from the internet)
How are the new regulations on investment sources of insurance companies in Vietnamregulated?
According to Article 99 of the Law on Insurance Business in 2022, the general regulations on investment of insurance companies in Vietnam are as follows:
- Investment sources of insurance enterprises, reinsurance enterprises and foreign branches in Vietnam include:
+ Equity;
+ The part of idle capital from the professional reserve according to the Government's regulations;
+ Other lawful sources as prescribed by law.
- The investment of insurance enterprises, reinsurance enterprises and foreign branches in Vietnam must comply with the following principles:
+ Ensuring safety, liquidity and efficiency; comply with the law, take self-responsibility for investment activities;
+ Technical reserves may only be invested in Vietnam, except for the case specified at Point b, Clause 2, Article 100 of this Law;
+ Do not borrow to invest, invest in securities, trade in real estate or contribute capital to other enterprises;
+ Not to invest more than 30% of investment capital in companies in the same group of companies with mutual ownership relationship. This provision does not apply to the deposit of money into credit institutions and the source of investment capital abroad in the form of establishing an enterprise or establishing a branch in a foreign country;
+ Not to re-invest in any form for shareholders, capital contributors or people related to shareholders, capital contributors in accordance with the Law on Enterprises, except for deposits at shareholders, members member is a credit institution;
+ Not to buy bonds issued by enterprises with the purpose of restructuring debts of the issuing enterprises;
+ In the case of investment entrustment, the entrusting organization must be licensed to conduct investment entrustment activities in accordance with the contents of the investment entrustment.
- Insurance enterprises, reinsurance enterprises and foreign branches in Vietnam are not allowed to conduct the following investment activities:
+ Trading in real estate, except for the following cases: buying shares of a real estate enterprise listed on the stock market, fund certificates of a public fund; buy, invest in, own real estate to use as a business office, a working place or a warehouse in direct service of professional activities; lease the unused business premises under the ownership or use rights; holding real estate due to the handling of bonds secured by real estate, due to the deduction of receivables with real estate within 03 years from the date of holding;
+ Investment in precious metals and gems;
+ Investing in intangible fixed assets, except for insurance business activities of enterprises or branches;
+ Investing in derivative securities or derivative contracts, except for listed derivatives for the purpose of hedging against risks arising from insurance and reinsurance contracts and from the portfolio of corporate securities. insurance companies, reinsurance enterprises, foreign branches in Vietnam are holding.
- Insurance enterprises, reinsurance enterprises and foreign branches in Vietnam shall determine the value of investment assets according to regulations of the Minister of Finance.
- The Government shall detail investment limits of insurance enterprises, reinsurance enterprises and foreign branches in Vietnam.
What are the current regulations on capital investment of insurance enterprises?
According to Article 98 of the Law on Economic Insurance 2000 (amended and supplemented in 2010, 2019), the capital investment of insurance enterprises is as follows:
"Article 98. Capital investment
1. The capital investment of the insurance enterprise must ensure safety and efficiency and satisfy the requirement of regular payment for commitments under the insurance contract.
2. Insurance enterprises may only use their idle capital to invest in Vietnam in the following fields:
a) Buy Government bonds;
b) Buying stocks and corporate bonds;
c) Real estate business;
d) Contributing capital to other enterprises;
dd) Make loans according to the provisions of the Law on Credit Institutions;
e) Deposit money at credit institutions.
3. The Government shall specify the investment portfolio in the fields specified in Clause 2 of this Article and the percentage of idle capital allowed to invest in each investment portfolio in order to ensure that the insurance enterprises always maintain be able to pay."
Thus, from January 1, 2023, insurance enterprises are not allowed to conduct real estate investment and business activities, except for the cases prescribed by law.
The Law on Insurance Business 2022 takes effect from January 1, 2023.
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