Circular No. 26/1998/TT-BTC guides the procedures for issuing certificates of qualification and conditions for operating insurance businesses.

CIRCULAR
Guidelines for the issuance of Certificates of Eligibility for Insurance Business Operations

Pursuant to Decree No. 100/CP dated December 18, 1993 of the Government on insurance business;

Pursuant to Decree No. 74/CP dated June 14, 1997 of the Government amending and supplementing certain provisions of Decree No. 100/CP dated December 18, 1993 of the Government on insurance business;

The Ministry of Finance guides the procedures for issuing Certificates of Eligibility for Insurance Business Operations as follows:

I. GENERAL PROVISIONS:

1. According to Article 1 of Decree No. 100/CP dated December 18, 1993 of the Government on insurance business, the scope of application of this Decree is insurance activities with a commercial nature. Health insurance issued pursuant to Decree No. 299/HĐBT dated August 15, 1992 of the Council of Ministers (now the Government) and Decree No. 47/CP dated June 6, 1994 of the Government amending certain provisions of the Health Insurance Regulations promulgated together with Decree No. 299/HĐBT, and social insurance issued pursuant to Decree No. 12/CP dated January 26, 1995 of the Government are not within the scope of application of Decree No. 100/CP and Decree No. 74/CP.

2. The objects regulated by Decree No. 100/CP and Decree No. 74/CP are insurance companies, insurance brokerage organizations, and insurance agents conducting insurance business on the territory of Vietnam.

3. The Ministry of Finance is the agency responsible for managing state functions regarding insurance business operations. Insurance companies and insurance brokerage organizations wishing to conduct insurance business must be granted a Certificate of Eligibility for Insurance Business Operations (hereinafter referred to as the Certificate) by the Minister of Finance.

After being granted the Certificate, insurance companies and insurance brokerage organizations must complete the procedures for establishing a business and registering for business operations, and apply for an Investment License (if they are foreign organizations) in accordance with current laws.

Economic organizations both within and outside the country that have not been granted the Certificate and have not been registered for business operations or granted an Investment License (if they are foreign organizations) shall not be permitted to conduct insurance business operations.

II. CONDITIONS AND PROCEDURES FOR ISSUING THE CERTIFICATE:

1. The Certificate:

The Certificate issued by the Ministry of Finance to insurance companies and insurance brokerage organizations is a legal document confirming their lawful right to conduct insurance business operations.

The Certificate is a prerequisite for competent authorities to permit establishment of a business or issue an Investment License and register for business operations in cases involving insurance business operations.

2. Principles for Issuing the Certificate:

The Certificate is issued to insurance companies and insurance brokerage organizations based on the following principles:

Consistent with the orientation and strategy for developing the Vietnamese insurance market;

Consistent with the needs of the national economy for types of insurance that the enterprise plans to operate;

Consistent with the need to increase the number of types of insurance companies in each locality;

Ensuring stability in the insurance market without disrupting it;

3. Conditions for Being Considered for Issuance of the Certificate:

The conditions for the Ministry of Finance to consider issuing a Certificate to insurance enterprises and insurance brokerage organizations are specified as follows:

3.1. General Conditions:

Having clear business objectives and fields of insurance activities: specifying the scope of operations, duration of operation, and types of insurance business to be conducted;

Having a minimum authorized capital (excluding borrowed capital) equal to the statutory capital level corresponding to each type of enterprise as stipulated in Article 22 of Decree No. 100/CP;

Having a form of business organization in accordance with the provisions of Article 2 of Decree No. 100/CP;

Having a suitable office location for business activities: a clear address, ensuring the legality of the office;

The management personnel having management capabilities, specialized expertise in insurance, graduating from a regular university economics program, and having at least three years of practical experience in business management or state administration;

Complying with the principles for issuing Certificates.

3.2. For State-owned insurance enterprises, in addition to meeting the general conditions stipulated in point 3.1, they must also obtain permission from the competent authority to use capital for the purpose of conducting insurance business.

3.3. For joint-stock companies, in addition to meeting the general conditions stipulated in point 3.1, the founders establishing the company must also have confirmation of the legality of their contributed capital from the competent authority.

3.4. For joint ventures, in addition to meeting the general conditions stipulated in point 3.1, the following additional conditions must be met:

The parties intending to participate in the joint venture must be organizations legally operating for at least three years as of the date of submitting the application according to the current laws of the country where these organizations have their main offices, and must be confirmed by a legitimate financial agency or auditor in the home country to have sound financial status and currently operating normally;

The parties intending to participate in the joint venture cannot be partners with conflicting interests;

NH PHÓAt least one of the parties intending to participate in the joint venture must be an organization engaged in insurance business;

The foreign party must be an organization permitted to establish a representative office in Vietnam for at least three years, not violating Vietnamese laws, and making positive contributions to the development of the Vietnamese insurance market;

The proposed joint venture field must be consistent with the capabilities and experience of the parties intending to participate in the joint venture;

The contributed capital of the domestic partner must be confirmed by the competent authority as legal;

Having a training plan and prioritizing the employment of Vietnamese labor, including managerial positions in the joint venture company;

3.5. For branches of foreign insurance organizations and wholly foreign-owned insurance companies, in addition to meeting the general conditions, the following conditions must also be met:

Being an organization legally operating for at least five years as of the date of submitting the application according to the current laws of the country where these organizations have their main offices, and must be confirmed by a legitimate financial agency or auditor in the home country to have sound financial status and currently operating normally;

Being an organization permitted to establish a representative office in Vietnam for at least three years, not violating Vietnamese laws, and making positive contributions to the development of the Vietnamese insurance market;

Having a training plan and prioritizing the employment of Vietnamese labor, including managerial positions in the company;

4. Application Documents for Issuing a Certificate:

4.1. For State-owned Enterprises:

The enterprise applying for a Certificate must submit to the Ministry of Finance a complete set of original documents in Vietnamese. In addition to the documents prescribed in Clause 1 of Article 18 of Decree No. 100/CP, the application documents for issuing a Certificate must also include:

A document from the authority deciding on establishment approving the enterprise's participation in insurance business activities;

An explanation of the source of capital for establishing the insurance enterprise, confirmed by the competent authority;

Documentation related to leasing, purchasing, or using office space;

4.2. For Joint-Stock Companies:

The application documents for issuing a Certificate must be submitted to the Ministry of Finance in a complete set of original documents in Vietnamese. In addition to the documents prescribed in Clause 1 of Article 18 of Decree No. 100/CP, the application documents for issuing a Certificate must also include:

Minutes of the meeting recording the opinions of the founding shareholders regarding the establishment of the joint-stock company;

Confirmation from the competent authority regarding the legality of the capital for establishing the company;

Documentation related to leasing, purchasing, or using office space;

4.3. For Joint Ventures:

The application documents for issuing a Certificate must be submitted to the Ministry of Finance in a complete set of original documents in Vietnamese and a complete set of original documents in English. In addition to the documents prescribed in Clause 2 of Article 18 of Decree No. 100/CP, the application documents for issuing a Certificate must also include:

A document from the competent authority permitting the Vietnamese party to participate in the joint venture company;

An explanation of the capital contribution of the Vietnamese party, confirmed by the competent authority;

Documentation related to leasing, purchasing, or using office space for the joint venture company;

Copies of documents must be certified as legal by a notary public in the place where the participating joint venture party has its main office.

Translated documents must be certified as legal by a notary public in Vietnam or a translation organization legally operating in Vietnam.

4.4. For Branches of Foreign Insurance Organizations and Wholly Foreign-Owned Insurance Companies:

The application documents for issuing a Certificate must be submitted to the Ministry of Finance in a complete set of original documents in Vietnamese and a complete set of original documents in English. In addition to the documents prescribed in Clause 3 of Article 18 of Decree No. 100/CP, the application documents for issuing a Certificate must also include:

Documentation related to leasing, purchasing, or using office space for the company in Vietnam;

Translated or copied documents must be certified as legal by a notary public in the home country.

Translated documents must be certified as legal by a notary public in Vietnam or a translation organization legally operating in Vietnam.

5. After receiving all the documents, the Ministry of Finance will consider issuing the Certificate within the time limit specified in Article 21 of Decree No. 100/CP.

If within twelve months from the date of issuance of the Certificate, the insurance company or insurance intermediary has not completed the procedures for establishing the business and registering for operation or obtaining the Investment License, they must notify the Ministry of Finance of the reasons, the expected completion time, and request an extension of the Certificate. The extension of the Certificate can only be granted once, with a maximum duration of six months. Beyond this period, the insurance company or insurance intermediary must reapply for the issuance of a new Certificate.

The insurance company or insurance intermediary must pay the fee for issuing the Certificate in Vietnamese dong or equivalent foreign currency as stipulated in Article 21 of Decree No. 100/CP. This fee does not include the statutory capital of the insurance company or insurance intermediary as specified in Article 22 of Decree No. 100/CP.

The collection, management, and use of the fee for issuing the Certificate shall be carried out strictly in accordance with the provisions of Circular No. 96 TC/CĐTC dated November 18, 1994, issued by the Ministry of Finance, guiding the collection, management, and use of the fee for issuing the Certificate meeting the standards and conditions for operating insurance.

III. ACTIVITIES AND CHANGES IN THE CONTENT OF ACTIVITIES

OF INSURANCE COMPANIES AND INSURANCE INTERMEDIARIES:

1. Insurance companies and insurance intermediaries must operate in accordance with the contents and scope prescribed in the issued Certificate.

In case they wish to change the content of the issued Certificate, the insurance company or insurance intermediary must submit a formal written request for supplementation, amendment, or issuance of a new Certificate to the Ministry of Finance, clearly stating the reasons, the contents requested for supplementation, amendment, or issuance of a new Certificate. Each time the Certificate is amended or reissued, the insurance company or insurance intermediary must pay a fee of ten million Vietnamese dong (or equivalent foreign currency). Within thirty days from the date of receipt of all documents, the Ministry of Finance is responsible for deciding on granting permission for amendment, supplementation, or refusal.

During the period before the Ministry of Finance approves the request for amendment, supplementation, or issuance of a new Certificate, the insurance company or insurance intermediary may not conduct activities exceeding the content and scope permitted by the old Certificate.

2. An insurance company may only conduct life insurance or non-life insurance, and an insurance intermediary may not establish more than one branch in the same city.

When applying for permission to establish a branch (or other forms of organization allowed to operate), the insurance company or insurance intermediary must submit an application to the Ministry of Finance along with the following documents:

A report evaluating the business situation and revenue growth level of the company during the previous period;

A survey of insurance needs at the location where the branch is being applied for establishment;

A three-year business plan for the branch, specifying the areas and scope of business expected for the branch, and the projected revenue of the branch;

A proposed location for the branch headquarters;

A proposed human resources plan, including both managerial and operational staff of the branch;

Curriculum vitae, diplomas, and certificates of the branch manager.

3. Application for implementation of new insurance operations:

During its operation, an insurance company may request the Ministry of Finance to permit the implementation of new insurance operations outside those already specified in the Certificate.

When applying for permission to implement new insurance operations, the insurance company must submit a dossier to the Ministry of Finance including the following documents:

An application for implementation of new insurance operations;

Investigate customer demand for the type of insurance business to be implemented;

Explain the technical infrastructure, staff team, financial conditions serving the implementation of the new business;

Rules, terms, premium rates, insurance commissions of the insurance business to be implemented;

Explain the basis for fee calculation, reserve extraction methods... of the insurance business to be implemented;

Business plans for the next three years for the type of business to be implemented.

IV. MANAGEMENT AND SUPERVISION OF INSURANCE BUSINESS OPERATIONS:

1. Inspection:

In addition to being subject to inspection by state agencies according to current laws, insurance enterprises and insurance brokerage organizations must also be subject to inspection and supervision by the Ministry of Finance regarding management methods, payment capacity, asset management status, compliance with registered insurance terms, premium rates, and commissions, and adherence to current laws by insurance enterprises and insurance brokerage organizations. The inspection activities of the Ministry of Finance shall not affect the normal operations of insurance enterprises and insurance brokerage organizations. In cases of violation of management regulations, depending on the severity of the violation, they will be handled according to Clause 10, Article 1 of Decree No. 74/CP dated June 14, 1997 amending and supplementing certain provisions of Decree No. 100/CP dated December 18, 1993 of the Government on insurance business.

2. Limitation, suspension, and revocation of Certificates:

2.1. Insurance enterprises and insurance brokerage organizations may be limited in their Certificate by the Ministry of Finance in the following cases:

Failure to comply with insurance terms and premium rates approved by the Ministry of Finance

2.2. Insurance enterprises and insurance brokerage organizations may have their Certificate suspended by the Ministry of Finance in the following cases:

2.2.1. Serious violations of Vietnamese laws, Decree No. 100/CP dated December 18, 1993, and Decree No. 74/CP dated June 14, 1997 in business operations.

2.2.2. Insufficient financial capability to fulfill commitments to insured parties.

2.2.3. Voluntarily suspending operations during the validity period of the Certificate.

2.3. Insurance enterprises and insurance brokerage organizations may have their Certificate revoked by the Ministry of Finance in the following cases:

2.3.1 After twelve months from the date of issuance of the Certificate or the extended period allowed by the Ministry of Finance, if they fail to fully meet the conditions for commencing operations or cease operations.

2.3.2. Unable to continue meeting the conditions at the time of issuance of the Certificate.

2.3.3. Dissolution, bankruptcy.

2.3.4. Merger.

2.3.5. Splitting, being absorbed leading to the loss of legal entity status or inability to continue meeting the conditions at the time of issuance of the Certificate.

2.3.6. In addition to the above cases, the Certificate of foreign insurance and insurance brokerage organizations' branches may also be revoked when the foreign insurance and insurance brokerage organizations lose their licenses and cease operations in their home countries.

The Certificate may be limited, suspended, or revoked for one or more types of insurance business or all types of insurance business depending on the degree of violation.

When the Certificate is limited, suspended, or revoked for a specific type of insurance business, the insurance enterprise shall not enter into new insurance contracts for that type of business but remains responsible for existing contracts signed prior to such limitation, suspension, or revocation.

The document limiting, suspending, or revoking the Certificate issued by the Ministry of Finance shall be sent to relevant agencies to handle subsequent steps concerning the insurance enterprise and insurance brokerage organization.

3. Dissolution, bankruptcy, splitting, merger:

Upon dissolution, cessation of operations, liquidation, splitting, absorption, or merger, insurance enterprises and insurance brokerage organizations must immediately establish a liquidation committee. From the date of establishment, the liquidation committee represents the insurance enterprise and insurance brokerage organization before competent Vietnamese authorities regarding the determination of responsibilities and handling of assets of related parties according to current laws.

The resolution of bankruptcy of insurance enterprises and insurance brokerage organizations operating in Vietnam shall be carried out in accordance with the Enterprise Bankruptcy Law adopted by the National Assembly of the Socialist Republic of Vietnam at its fourth session of the ninth term on December 30, 1993, and related implementing documents.

V. IMPLEMENTATION:

This Circular takes effect fifteen days after the date of signature, replacing Circular No. 46 TC/CĐTC dated May 30, 1994 of the Ministry of Finance guiding the implementation of Decree No. 100/CP dated December 18, 1993 of the Government on insurance business.

Any previous regulations contrary to this Circular are hereby abolished.

During implementation, if there are any difficulties, please promptly report to the Ministry of Finance for consideration, supplementation, and amendment./.