Changes relying on approval or notification to the insurer in Vietnam

Changes relying on approval or notification to the insurer in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Changes relying on approval or notification to the insurer in Vietnam

Changes relying on approval or notification to the insurer in Vietnam under Article 74 of the Law on Insurance Business 2022 are as follows:

- Insurance companies, reinsurance companies or foreign branches in Vietnam need to seek the written approval of any change in the following information from the Ministry of Finance:

+ Their name or their head office’s address;

+ Amount of charter capital; allocated capital;

+ Scope and period of business;

+ Assignment of shares or ownership interests that help shareholders or members contributing capital to own at least 10% of their charter capital, or cause shareholders or members contributing capital to own less than 10% of their charter capital;

+ Chairperson of the Managing Board or Chairperson of the Board of Members, Director or General Director or the Actuary;

+ Split-up, split-off, merger, amalgamation, dissolution of or transformation into other business type or type of business ownership;

+ Outward investment, including the establishment of new branches, representative offices, and other types of commercial establishment in foreign countries.

- Within 10 days of receipt of the written consent to any change prescribed in clause 1 of this Article from the Ministry of Finance, the Ministry of Finance shall be responsible for posting updated information on the Web Portal of the Ministry of Finance.

- Insurance companies, reinsurance companies or foreign branches in Vietnam need to notify the Ministry of Finance in writing within 15 days after making the following changes:

+ Changes in the charter of the insurance company or reinsurance company; rules and regulations for operations of the foreign branch in Vietnam;

+ Opening, closing or change of location of the branch or representative office of the insurance company or the reinsurance company;

+ Opening, closing or change of the business location;

+ Replacement by new beneficial owners of the insurance company or reinsurance company.

- The Government shall impose detailed regulations regarding conditions, application procedures, documentation requirements and processes for approval of changes referred to in point b of clause 3 of Article 74 of the Law on Insurance Business 2022.

2. Preconditions of official business of Insurance companies in Vietnam

Preconditions of official business in Vietnam under Article 73 of the of the Law on Insurance Business 2022 are as follows:

-  Insurance companies, reinsurance companies and foreign branches in Vietnam must officially commence their business within 12 months of issuance of business licenses or permits, except in case of force majeure events or circumstantial obstacles.

In case of force majeure events or circumstantial obstacles, insurance companies, reinsurance companies and foreign branches in Vietnam must report on such unexpected events in writing and receive the written consent to extension of the time limit for commencement of their official business from the Ministry of Finance;

The extension of the time limit for commencement of official business shall not be longer than 12 months.

- An insurance company, reinsurance company or foreign branch in Vietnam must meet the following regulations to officially commence their business:

+ Transform funds kept in their escrow account into charter capital or allocation;

+ Develop their organization structure and machinery for corporate management, internal control, audit and risk management system matched with their business type prescribed in this Law and other regulatory provisions of relevant law; elect or appoint the legal representative; elect or appoint officeholders approved in principle by the Ministry of Finance according to clause 2 of Article 70 of the of the Law on Insurance Business 2022;

+ Issue internal rules and regulations regarding operations management and governance; internal rules and regulations on risk management and other basic operational procedures in accordance with law;

+ Provide security deposit in full prescribed in this Law at commercial banks that are active in Vietnam;

+ Have their office, facilities, technical utilities and technological systems tailor-made for operations processes in the insurance industry;

+ Publicly communicate and disseminate information about their business license or permit as provided in clause 2 of Article 72 of the of the Law on Insurance Business 2022.

- Insurance companies, reinsurance companies or foreign branches in Vietnam must notify the Ministry of Finance of their compliance with the regulations laid down in clause 2 of Article 73 of the of the Law on Insurance Business 2022 at least 15 days before their business is officially commenced.

The Ministry of Finance shall be accorded authority to cease the official business commencement of insurance companies, reinsurance companies or foreign branches in Vietnam when regulations laid down in clause 2 of Article 73 of the of the Law on Insurance Business 2022 are not satisfied yet.

- Insurance companies, reinsurance companies and foreign branches in Vietnam shall not be allowed to perform any insurance transactions before the official commencement date.

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