What are regulations on dissolution of insurance companies, reinsurance companies in Vietnam?

What are regulations on dissolution of insurance companies, reinsurance companies in Vietnam?

Pursuant to Article 115 of the Law on Insurance Business in 2022 (takes effect from 01/01/2023) stipulating dissolution of insurance companies, reinsurance companies in Vietnam as follows:

1. An insurance company, reinsurance company or foreign branch in Vietnam can be terminated in the following cases:

a) They are dissolved or terminated of their own accord;

b) The business life specified in their business license or permit is expired;

c) Their business license or permit is revoked or withdrawn as per point a, b, d and e of clause 1 of Article 75 herein;

d) The foreign branch in Vietnam fails to correct their capital adequacy ratio after being subject to the control measure;

dd) They fall into other cases specified in law.

2. Dissolution of insurance companies, reinsurance companies or termination of foreign branches in Vietnam shall be subject to the written consent from the Ministry of Finance.

3. The Government shall impose detailed regulations on conditions, documentation requirements, application procedures and processes for dissolution of insurance companies, reinsurance companies or termination of foreign branches in Vietnam.

What are regulations on bankruptcy of insurance companies and reinsurance companies in Vietnam?

Pursuant to Article 116 of the Law on Insurance Business in 2022 (takes effect from 01/01/2023) stipulating bankruptcy of insurance companies and reinsurance companies in Vietnam as follows:

1. After the Ministry of Finance issues the written instruction on application of the control measure prescribed in point c of clause 11 of Article 113 herein, the insurance company or reinsurance company suffering such control measure shall be obliged to file a petition to the Court to initiate the bankruptcy proceedings as per the Law on Bankruptcy; if the insurance company or reinsurance company suffering the control measure does not file a petition to initiate the bankruptcy proceedings, the Ministry of Finance shall do so.

2. Upon receipt of the petition to initiate the bankruptcy proceedings against the insurance company or reinsurance company as provided in clause 1 of this Article, the Court shall start the procedures for handling of the request for declaring bankruptcy and declare that the insurance company or reinsurance company is bankrupt without resort to any meeting of creditors to be held and business recovery actions to be taken.

3. Property and assets of an insurance company or reinsurance company in case of bankruptcy shall be distributed in the following order of priority to pay:

a) Bankruptcy-related costs;

b) Outstanding wages, salaries, severance allowance, social insurance or health insurance contributions for employees;

c) Insurance indemnities or coverage in insurance claims under which the insurance company or reinsurance company has accepted payment of surrender value, account balance of insurance contracts or insurance premium refunds;

d) Financial obligations to the Government; unsecured debts that need to be repaid to creditors on the list of creditors; secured debts that are not repaid yet due to the imbalance between the value of collateral and the amount of debts payable;

dd) Owners, capital-contributing members and shareholders of the insurance company or reinsurance company.

4. If the value of property or asset is not enough to pay as prescribed in clause 3 of this Article, the payees in the same group of priority may receive payments in percent in proportion to the amount of debts owed.

5. Issues related to bankruptcy of insurance companies and reinsurance companies that are not mentioned in this Article shall be subject to regulatory provisions of the Law on Bankruptcy.

Best regards!