Financial requirements to enable Establishment And Operation License to be issued to insurance brokers in Vietnam

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Financial requirements to enable Establishment And Operation License to be issued to insurance brokers in Vietnam (Internet image)

1. Financial requirements to enable Establishment And Operation License to be issued to insurance brokers in Vietnam

According to Article 63 Decree 46/2023/ND-CP, a capital contributor of an insurance broker must satisfy the following requirements:

- Organizations contributing from 10% of the charter capital must have profitable business operations in the 3 consecutive years preceding the year of application for the license.

- Organizations participating in capital contribution operating in industries requiring statutory capital or minimum charter capital must ensure that the owner's equity, as reflected in the audited financial statements of the year preceding the application, minus the statutory, minimum charter capital, is greater than or equal to the intended contributed capital.

- If the capital-contributing organization is established and operates under the provisions of the Law on Credit Institutions 2024, the Law on Insurance Business 2022, or the Law on Securities 2019, it must ensure financial safety conditions and obtain approval from the competent authority to participate in capital contribution under legal provisions. If the law does not require approval from competent authorities, the contributing organization must have documentation proving this.

- If an organization established under foreign laws participates in capital contribution and has a subsidiary engaging in insurance brokerage, it must ensure that the foreign-established organization does not have accumulated losses at the time of application and has total assets of not less than 2 million US dollars in the fiscal year preceding the license application.

- Organizations contributing from 10% of the charter capital upwards must have financial statements audited with unqualified opinions for the 3 consecutive years preceding the application; organizations contributing less than 10% require the preceding year's audited financial statements with unqualified opinions.

2. Application for issuance of Establishment and Operation License to insurance brokers in Vietnam

The application for issuance the license, as per Article 64 Decree 46/2023/ND-CP, includes the following:

- Application form for the license for establishment and operation according to the template prescribed in Appendix I issued with Decree 46/2023/ND-CP.

- Draft company charter according to the provisions of the Law on Enterprises 2020.

- A five-year operational plan consistent with the business field for which the license is sought, clearly stating the intended activities and the business efficiency of establishing the insurance brokerage enterprise.

- Copy of the citizen identification card, identity card, or passport; judicial record certificate or equivalent document for foreigners as regulated by foreign laws; résumé, copies of diplomas, certificates, and other documents proving compliance with the standards for proposed appointments as Chairman of the Board of Directors or Members, General Director or Director, and Legal Representative.

- List of shareholders, members contributing 10% or more of the charter capital who are organizations, accompanied by:

+ Copy of the decision on establishment or business registration certificate or other equivalent documents;

+ Copy of the company charter;

+ Document from the competent level of the contributing organization deciding on the participation in capital contribution for establishing the insurance brokerage enterprise;

+ Power of attorney, copy of the citizen identification card, identity card, or passport of the authorized representative of the capital-contributing organization;

+ Copy of audited financial statements for the 3 fiscal years preceding the license application as required by Clause 5, Article 63 Decree 46/2023/ND-CP;

+ Documents proving that the organization participating in capital contribution complies with the provisions at point a, clause 5, Article 133 the Law on Insurance Business 2022.

- Records for corporate shareholders, members contributing less than 10% of the charter capital:

+ Documents as specified in points a, b, c, d of clause 5, Article 64 Decree 46/2023/ND-CP;

+ Copy of audited financial statements for the fiscal year preceding the license application complying with Clause 5, Article 63 Decree 46/2023/ND-CP.

- If an organization established under foreign law has a subsidiary conducting insurance brokerage operations, it must submit a copy of the establishment decision or business registration certificate or other equivalent documents of the subsidiary, as well as a copy of the audited financial statements of the subsidiary for the fiscal year preceding the license application, satisfying Clause 5, Article 63 Decree 46/2023/ND-CP.

- Documents for shareholders, members contributing capital who are individuals:

+ Copy of the citizen identification card, identity card, or passport; judicial record certificate or equivalent document for foreigners as regulated by foreign laws;

+ Bank statement verifying the balance in Vietnamese dong or freely convertible foreign currency held at the bank.

- Verification from an authorized bank in Vietnam regarding the charter capital in a frozen account at the bank, not less than the minimum charter capital as stipulated in Article 81 Decree 46/2023/ND-CP, specifying the contribution amount of each shareholder, amount frozen, purpose and conditions for unfreezing.

- Meeting minutes of capital-contributing organizations or individuals regarding:

+ Consensus on capital contribution to establish a limited liability or joint-stock insurance brokerage company with a list of shareholders, members, and founding shareholders, members;

+ Approval of the draft Company Charter.

- Authorization document for a person or entity representing shareholders, contributing members, to carry out procedures for the license application.

- If an organization established under foreign law is currently undertaking insurance brokerage, it must provide documentation from the competent authority in the home country confirming:

+ The organization is allowed to establish an insurance brokerage enterprise in Vietnam. If the home country's law does not require approval, evidence from the competent authority must be provided;

+ The organization is operating in the insurance brokerage field;

+ There have been no major legal violations in insurance brokerage in the home country within the 3 consecutive years prior to the application.

- For an organization established under foreign law with a subsidiary conducting insurance brokerage, a document from the home country’s competent authority is required confirming:

+ Permission to establish an insurance brokerage enterprise in Vietnam. If not required by the home country's laws, confirmation from competent authorities must be provided;

+ The foreign-established organization is financially sound and meets the management requirements in its home country;

+ No severe breaches of insurance brokerage law in the home country for the 3 consecutive years prior to the application.

- Commitment letter from the contributing organization or individual regarding compliance with the conditions for obtaining the license as per Article 63 Decree 46/2023/ND-CP and Article 133 the Law on Insurance Business 2022.

- Document from the competent state authority regarding the Vietnamese organization’s participation in capital contribution meeting safety financial conditions and permit for establishing an insurance brokerage under the legal provisions. If the law does not require an approval document, capital-contributing organizations must furnish evidence.

- Evidence that the capital-contributing organization, operating in a business requiring statutory or minimum charter capital, meets the criteria specified in Clause 2, Article 63 Decree 46/2023/ND-CP.

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