Circular No. 124/2012/TT-BTC dated July 30, 2012 of the Ministry of Finance guiding the implementation of a number of articles of the Government’s Decree No. 45/2007/ND-CP of March 27, 2007, detailing a number of articles of the Insurance Business Law, and the Government’s Decree No. 123/2011/ND-CP of December 28, 2011, detailing a number of articles of the Law Amending and Supplementing a Number of Articles of the Insurance Business Law

THE MINISTRY OF FINANCE

Circular No. 124/2012/TT-BTC of July 30, 2012, guiding the implementation of a number of articles of the Government’s Decree No. 45/2007/ND-CP of March 27, 2007, detailing a number of articles of the Insurance Business Law, and the Government’s Decree No. 123/2011/ND-CP of December 28, 2011, detailing a number of articles of the Law Amending and Supplementing a Number of Articles of the Insurance Business Law

Pursuant to December 9, 2000 Law No. 24/2000/QH10 on Insurance Business;

Pursuant to November 24, 2010 Law No. 61/2010/QH12 Amending and Supplementing a Number of Articles of the Law on Insurance Business;

Pursuant to the Government’s Decree No. 45/2007/ND-CP of March 27, 2007, detailing a number of articles of the Law on Insurance Business;

Pursuant to the Government’s Decree No. 123/2011/ND-CP of December 28, 2011, detailing a number of article of the Law Amending and Supplementing a Number of Articles of the Law on Insurance Business, and amending and supplementing a number of articles of the Government’s Decree No. 45/2007/ND-CP of March 27, 2007, detailing a number of articles of the Law on Insurance Business;

Pursuant to the Government’s Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Finance,

At the proposal of the director of the Insurance Management and Supervision Department;

The Minister of Finance issues the Circular guiding the implementation of a number of articles of the Government’s Decree No. 45/2007/ND-CP of March 27, 2007, detailing a number of articles of the Law on Insurance Business, and the Government’s Decree No. 123/2011/ND-CP of December 28, 2011, detailing a number of articles of the Law Amending and Supplementing a Number of Articles of the Law on Insurance Business.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular guides the establishment and operation of life insurance, non-life insurance, health insurance, reinsurance and insurance brokerage businesses and branches of foreign non-life insurance businesses; life insurance, non-life insurance, health insurance and reinsurance business activities, insurance brokerage activities and insurance agency activities; the establishment and operation of Vietnam-based representative offices of foreign life insurance, non-life insurance, health insurance, reinsurance and insurance brokerage businesses.

Article 2. Subjects of application

Life insurance, non-life insurance, health insurance, reinsurance and insurance brokerage businesses, branches of foreign non-life insurance businesses, insurance agents and related organizations and individuals shall comply with this Circular and relevant laws; assuring cooperation, fair competition and anti-monopoly in insurance business activities.

Article 3. Interpretation of terms

In this Circular, the following terms are construed as follows:

1. Insurance business means a life insurance business, non-life insurance business, health insurance business, reinsurance business or insurance brokerage business.

2. Insurer means a life insurance business, non-life insurance business or health insurance business.

3. Joint-stock insurance company means a joint-stock life insurance company, joint-stock non-life insurance company, joint-stock health insurance company, joint-stock reinsurance company or joint-stock insurance brokerage company.

4. Limited liability insurance company means a limited liability life insurance company, limited liability non-life insurance company, limited liability health insurance company, limited liability reinsurance company or limited liability insurance brokerage company.

5. Foreign branch means a branch of a foreign non-life insurance business.

6. Commercial bank means a bank lawfully established and operating in Vietnam.

Chapter II

SPECIFIC PROVISIONS

Section 1

GRANT OF ESTABLISHMENT AND OPERATION LICENSES

Article 4. General conditions for obtaining an establishment and operation license

1. Organizations and individuals contributing capital to establish an insurance business meet the conditions specified in Article 63 of the Insurance Business Law, Clause 8, Article 1 of the Law Amending and Supplementing a Number of Articles of the Insurance Business Law, and Point a, Clause 1, Article 6 of Decree No. 45/2007/ND-CP. Foreign non-life insurers establishing branches in Vietnam meet the conditions specified in Clause 1, Article 9 of Decree No. 123/2011/ND-CP.

2. An insurance business has a contributed charter capital not less than  the legal capital specified in Article 4 of Decree No. 46/2007/ND-CP (for insurers and insurance brokerage businesses) or in Clause 4, Article 43 of Decree No. 123/2011/ND-CP (for reinsurers). A foreign branch has an allocated capital not less than the legal capital specified at Point a, Clause 1, Article 19 of Decree No. 123/2011/ND-CP.

3. Capital contributors produce a dossier of application for an establishment and operation license according to Article 64 of the Insurance Business Law, Article 7 of Decree No. 45/2007/ND-CP (for life insurers, non-life insurers and insurance brokerage businesses), Article 40 of Decree No. 123/2011/ND-CP (for health insurers), or Clauses 2 and 3, Article 43 of Decree No. 123/2011/ND-CP (for reinsurers). Foreign non-life insurers establishing branches in Vietnam produce a dossier according to Article 10 of Decree No. 123/2011/ND-CP.

4. The type and the organization and operation charter of a to be-established insurance business conform to the Insurance Business Law and relevant laws. The organization and operation charter of a foreign branch conforms to the Insurance Business Law and relevant legal documents.

5. Nominated managers and executives of insurance businesses and foreign branches meet the conditions on managerial capacity and professional qualifications specified in Article 13 of Decree No. 45/2007/ND-CP (for insurance businesses) or Clause 2, Article 12 of Decree No. 123/2011/ND-CP (for foreign branches) and the Ministry of Finance’s guidance.

6. Insurance businesses and foreign branches have technical and physical foundations, equipment and information technology systems so that they can operate right after obtaining establishment and operation licenses.

Article 5. Conditions for insurance businesses to obtain an establishment and operation license

In addition to the general conditions specified in Article 4 of this Circular, organizations and individuals contributing capital to establish an insurance business must meet the following conditions:

1. In case of establishing a joint-stock insurance company

1.1. There are at least 2 institutional founding shareholders. For a joint-stock reinsurance company, institutional shareholders operate in the domain of finance, banking or insurance.

1.2. The structure of contributed charter capital complies with the following regulations:

a/ An individual shareholder may hold at most 10% of the charter capital;

b/ An institutional shareholder may hold at most 20% of the charter capital;

c/ A shareholder and affiliated persons may hold at most 20% of the charter capital;

d/ Founding shareholders together hold at least 50% of the joint-stock insurance company’s ordinary shares permitted for public offering for at least three (3) years from the date the company is granted an operation and operation license.

1.3. An institutional capital contributor meets the following conditions:

a/ Using its equity capital and refraining from using loans or investment trust funds of other organizations or individuals to contribute capital; its equity capital, after subtracting long-term investments formed from such equity capital, being larger than the capital amount to be contributed to the insurance business in the year preceding the year of submitting the dossier of application for an establishment and operation license;

b/ Making profits and having no accumulative loss for three (3) consecutive years preceding the year of submitting a dossier of application for an establishment and operation license, for organizations contributing 10% of the charter capital or more;

c/ Having an equity capital at least equal to 50% of the legal capital required for the insurance business; and contributing a money amount not exceeding 25% of its equity capital;

d/ Maintaining and satisfying capital adequacy ratios and other financial conditions under specialized laws, for contributors being insurance businesses, commercial banks or finance companies.

1.4. An individual capital contributor meets the following conditions:

a/ Using his/her own capital and refraining from using loans or investment trust funds of other organizations or individuals to contribute capital.

b/ Having bank certifications of balances of his/her bank accounts (including savings accounts) in Vietnam dong or freely convertible foreign currencies (with a balance at least equal to the to be-contributed amount) as evidence of his/her ability to contribute capital in cash. Such certifications must be made within thirty (30) days before the date of submitting a dossier of application for an establishment and operation license for an insurance business.

2. In case of establishing a limited liability insurance company

2.1. Capital contributors are organizations having the legal person status, which:

a/ For Vietnamese organizations, satisfy the conditions specified in Clause 2, Article 39 of Decree No. 123/2011/ND-CP (for insurers) or Clause 3, Article 43 of Decree No. 123/2011/ND-CP (for reinsurers).

b/ For foreign organizations, satisfy the conditions specified in Clauses 2 and 3, Article 6 of Decree No. 45/2007/ND-CP.

2.2. Capital contributors satisfy the conditions specified at Point 1.3, Clause 1 of this Article.

Article 6. Conditions for foreign branches to obtain an establishment and operation license

Foreign insurance businesses that wish to establish branches in Vietnam must satisfy the conditions specified at Points c and d, Clause 2, Article 9 of Decree No. 123/2011/ND-CP, and Article 4, and Items a and b, Point 1.3, Clause 1, Article 5, of this Circular.

Article 7. Dossier of application for an establishment and operation license

1. An application for an establishment and operation license made according to a set form.

2. The draft organization and operation charter (for insurance businesses) or draft organization and operation regulation (for foreign branches). The draft organization and operation charter of an insurance business must be signed by all authorized representatives of capital contributors according to law. The draft organization and operation regulation of a foreign branch must be approved by the foreign non-life insurers.

3. The business plan for the first five (5) years of the insurance business or foreign branch, containing the following main details:

a/ General evaluation of the business plan of the to be-established insurance business or foreign branch in light of general market circumstances, including prominent challenges and prospects;

b/ Evaluation of the to be-established insurance business’s or foreign branch’s capacity to compete in the market, proving its advantages when participating in the market;

c/ Clear analysis of to be-launched insurance operations, target clients and sale networks;

d/ Conditions to provide insurance operations according to law (for conditional insurance operations);

e/ Strategies on development and expansion of the operation network of the insurance business or foreign branch;

f/ Projected business results, turnover and indemnities of each operation, management expenses and plans on financial investment made with equity capital and insurance reserve funds. Projected targets must be based on grounded foundations and presumptions;

g/ Draft processes for sale, assessment, indemnity, internal control, finance and investment management and reinsurance program management;

h/ Projected methods for setting up insurance reserves according to Decree No. 46/2007/ND-CP and its guiding documents;

i/ Projected solvency margin as specified in Decree No. 46/2007/ND-CP and its guiding documents;

j/ Plan on investment in information technology, clearly stating investment size and time, to be-applied technologies and capacity to apply information technology to the operation of the insurance business or foreign branch;

k/ Organizational and operational chart; descriptions of the functions and structure and number of staff members of each section; and plan on initial training and regular training of the insurance business or foreign branch.

4. List, resumes and notarized copies of diplomas proving capacity and professional qualifications of holders of managerial and executive titles of the insurance business or foreign branch. Particularly for chairperson of the Board of Directors (chairperson of the Members’ Council or company president), or general director (director) of the insurance business or general director (director) of the foreign branch, a judicial record of the title holder is required.

5. Documents relating to founding shareholders (members) or shareholders (members) contributing 10% of the charter capital or more:

5.1. For institutional capital-contributing shareholders (members):

a/ Copies of the capital contributor’s establishment decision, establishment and operation license and business registration certificate which are certified within three (3) months counting to the date of submitting a license application dossier;

b/ The capital contributor’s organization and operation regulation;

c/ A competent authority’s decision on the contribution of capital to establish the insurance business or foreign branch in Vietnam;

d/ A document authorizing the capital contributor’s representative, clearly stating the duration and scope of authorization (if any). The representative must have lawful personal identification papers (notarized copies) according to law;

e/ Audited financial statements of three (3) consecutive years preceding the year of submitting a license application dossier and documents proving the capacity to contribute capital under Point 1.3, Clause 1, Article 5 of this Circular.

5.2. For individual capital-contributing shareholders (members):

a/ Lawful personal identification papers (notarized copies) and judicial records as specified by law;

b/ Documents proving the capacity to contribute capital under Point 1.4, Clause 1, Article 5 of this Circular.

5.3. A commercial bank’s certification of the charter capital deposited at a frozen account opened at such bank, clearly stating the charter capital amount already paid by each founding shareholder (member) or shareholder (member) contributing 10% of the charter capital or more.

5.4. Written commitments of capital-contributing shareholders (members) that the capital contributed to establish the insurance business or foreign branch comes from lawful sources and is neither loans nor investment trust funds in any forms.

6. The insurance rules, terms and premium rates of to be-sold insurance products. This provision does not apply to dossiers of application for a license for establishment and operation of an insurance brokerage business.

7. Evidence of the building and establishment of technical and physical foundations for insurance business activities, including:

a/ The right to use the locations of the head office and branches (if any) of the to be-established business;

b/ Establishment of ready-to-run information technology infrastructure systems, equipment and software capable to support professional operations and supervise the compliance with law and internal processes in business activities of the insurance business or foreign branch.

Article 8. Dossiers of application for licenses to establish and operate joint-stock insurance companies

A dossier of application for a license to establish a joint-stock insurance company comprises the following documents:

a/ The documents specified in Article 7 of this Circular.

b/ A minutes of the investors’ meeting:

- Agreeing to contribute capital to establish a joint-stock insurance company, enclosed with a list of founding shareholders or shareholders contributing 10%  of the charter capital or more;

- Approving the draft organization and operation charter of the joint-stock insurance company.

c/ A document authorizing a representative of investors to carry out procedures for applying for a license to establish the joint-stock insurance company.

d/ Investors’ written commitments on their satisfaction of the requirement on structure of charter capital under Item c, Point 1.2, Clause 1, Article 5 of this Circular.

2. The minutes specified at Points b and c, Clause 1 of this Article must be signed by all investors that are founding shareholders.

Article 9. Dossiers of application for licenses to establish and operate limited liability insurance companies

A dossier of application for a license to establish a limited liability insurance company comprises:

1. The documents specified in Article 7 of this Circular.

2. A minutes of the investors’ meeting (for a dossier of application for a license to establish a limited liability company with two or more members):

- Agreeing to contribute capital to establish a limited liability insurance company, enclosed with a list of founding members or members contributing 10% of the charter capital or more;

- Approving the draft organization and operation charter of the limited liability insurance company.

3. The joint-venture contract (for cases in which domestic and foreign organizations jointly contribute capital to establish a limited liability insurance company with 2 or more members).

4. Written certification by a competent agency of the country in which the investor is headquartered (for foreign investors) that:

a/ The investor is permitted to establish an insurance business in Vietnam;

b/ The investor has committed no serious violations of insurance business regulations and other laws of the country in which it is headquartered for three (3) consecutive years preceding the year of submitting a license application dossier;

c/ Written certification by a competent agency of the country in which the investor is headquartered that the investor is in a healthy financial status by the end of the fiscal year preceding the year of submitting a dossier application dossier.

If such certification is not required by the law of the country in which the investor is headquartered, evidence of this fact is required.

5. A written authorization to the nominated general director (director) in Vietnam (for a dossier of application for a license to establish a single-member limited liability company) and his/her lawful personal identification papers (notarized copies).

Article 10. Dossiers of application for licenses to establish and operate foreign branches

A dossier of application for an establishment and operation license for a foreign branch comprises the documents specified in Clauses 6, 7 and 8, Article 10 of Decree No. 123/2011/ND-CP, and in Article 7 of this Circular.

Article 11. Procedures for granting establishment and operation licenses

1. A dossier of application for an establishment and operation license for an insurance business or foreign branch shall be submitted to the Ministry of Finance in three (3) sets at least one of which must be the original. For a license application dossier of a foreign insurance business or foreign partner, each set comprises one dossier in Vietnamese and one in English. Documents in the license application dossier which contain foreign parties’ signatures, titles and seals must be consularly legalized. Copies in Vietnamese and Vietnamese translations must be certified in accordance with law. The investor shall take responsibility for the accuracy of the license application dossier.

2. Within thirty (30) days after receiving an investor’s license application dossier, if the dossier is incomplete or invalid, the Ministry of Finance shall notify in writing the investor thereof for dossier supplementation. The time limit for the investor to supplement or modify the dossier is six (6) months after the issuance of the notice. In case the investor fails to supplement or modify the dossier within the prescribed time limit, the Ministry of Finance shall issue a document refusing to consider the license application dossier. The time limit for considering and granting a license shall be counted only from the time of receiving a complete and valid application dossier.

3. Within sixty (60) days after receiving a complete and valid dossier of an investor, based on the results of its field assessment of the investor’s physical and technical foundations, the Ministry of Finance shall grant an establishment and operation license to the insurance business or foreign branch according to a set form.

Article 12. Formalities to be performed by insurance businesses or foreign branches before their official operation

1. Within thirty (30) days after obtaining an establishment and operation license, an insurance business or a foreign branch shall:

a/ Complete formalities for appointing the chairperson of the Board of Directors (chairperson of the Members’ Council or company president) and general director (director), for insurance businesses, or general director (director), for foreign branches;

b/ Announce its operation in accordance with Clause 1, Article 9 of Decree No. 45/2007/ND-CP (for insurance businesses) or Clause 1, Article 15 of Decree No. 123/2011/ND-CP (for foreign branches).

2. Within twelve (12) months after obtaining an establishment and operation license, an insurance business or a foreign branch shall complete the following formalities in order to officially commence its insurance business activities:

a/ Paying the licensing fee into the state budget according to law;

b/ Transferring the capital amount deposited at the frozen account into its charter capital (or allocated capital) after obtaining the establishment and operation license from the Ministry of Finance;

c/ Remitting into a commercial bank the full deposited fund as required in Article 6 of Decree No. 46/2007/ND-CP (for insurance businesses) or Clause 2, Article 19 of Decree No. 123/2011/ND-CP;

d/ Carving its seal, making tax identification number registration and opening an account at a bank in accordance with law;

e/ Requesting the Ministry of Finance:

- To approve the method of making operation reserves according to law. This provision does not apply to insurance brokerage businesses;

- To approve insurance products to be sold, appointed actuaries, methods of separating funds and sharing surplus between the owner’s fund and the policyholder’s fund (for life insurers);

- To approve health insurance products (for insurers and foreign branches providing health insurance).

f/ Promulgating processes for sale, assessment, indemnity, internal control, finance and investment management and reinsurance program management.

3. If an insurance business or a foreign branch fails to commerce its operation within twelve (12) months after obtaining an establishment and operation license, the Ministry of Finance shall revoke its license.

Section 2

MODIFICATION OF ESTABLISHMENT AND OPERATION LICENSES

Article 13. Renaming of insurance businesses or foreign branches

1. An insurance business or a foreign branch that wishes to rename itself shall send to the Ministry of Finance a dossier comprising the following documents:

a/ A written request for renaming the insurance business or foreign branch made according to a set form;

b/ A written approval of the renaming of the insurance business or foreign branch by a competent authority as specified in the organization and operation charter (for insurance businesses) or organization and operation regulation (for foreign branches).

2. Within twenty-one (21) days after receiving a complete dossier as specified in Clause 1 of this Article, the Ministry of Finance shall grant a modified license according to a set form. In case of refusal, it shall clearly state the reason in writing.

Article 14. Increase or decrease of charter capital (allocated capital)

1. An insurance businesses wishing to adjust its charter capital level or a foreign branch wishing to adjust its allocated capital level shall send to the Ministry of Finance a dossier comprising the following documents:

a/ A written request for adjustment of the charter capital (allocated capital) level made according to a set form;

b/ A written approval of the adjustment of charter capital (allocated capital) level  by a competent authority;

c/ Plan on increase of charter capital (allocated capital) clearly identifying:

- The need for capital increase and use of capital;

- Business effectiveness on the new charter capital (allocated capital);

- Governance, management and supervision capacity of the insurance business or foreign branch with regard to the increased capital level and correspondingly expanded operation scope;

- Feasibility of the capital increase plan: total increased capital and fund raising methods and duration.

d/ List of shareholders (members) expected to own 10% of the insurance business’s charter capital or more after the capital increase; documents evidencing these shareholders’ (members’) satisfaction of the conditions specified in Clause 1, Article 4, and Article 5 of this Circular (this provision does not apply to shareholders (members) having held 10% of the insurance business’s charter capital or more before the capital increase);

e/ Plan on decrease of charter capital (allocated capital) which must prove that the insurance business or foreign branch is capable of fully paying its debts and fulfilling other asset obligations after the capital decrease. Capital decrease is not allowed for single-member limited liability companies.

2. Within fourteen (14) days after receiving a complete and valid dossier as specified in Clause 1 of this Article, the Ministry of Finance shall issue its written approval or disapproval of the request for adjustment of charter capital (or allocated capital). In case of disapproval, the Ministry of Finance shall clearly state the reason.

For cases of increase of charter capital by issuing stocks to the public, after obtaining the Ministry of Finance’s in-principle approval, insurance businesses shall issue stocks in accordance with the Securities Law.

3. Within six (6) months after obtaining the Ministry of Finance’s approval of its request for change of charter capital (allocated capital), an insurance business or a foreign branch shall complete its capital adjustment and submit to the Ministry of Finance one (1) dossier comprising:

a/ A brief report on the results of the adjustment of charter capital (allocated capital) compared to the capital adjustment plan already approved by the Ministry of Finance;

b/ Evidence of shareholders’ (members’) full payment of the increased capital amount to the insurance business or foreign branch (for capital increase) or the insurance business’s or foreign branch’s full payment of the decreased capital amount to shareholders (members) (for capital decrease).

In case of failure to adjust capital as approved, the insurance business or foreign branch shall report its handling plan to the Ministry of Finance.

4. Within seven (7) working days after receiving a complete and valid dossier as specified in Clause 3 of this Article, the Ministry of Finance shall grant a modified license according to a set form.

Article 15. Opening or termination of operation of branches or representative offices

1. Opening of branches or representative offices of insurance businesses

a/ An insurance business wishing to open a branch or representative office must satisfy the conditions specified in Clause 1, Article 11 of Decree No. 45/2007/ND-CP, and the following specific guidance:

- Its equity capital and contributed charter capital meeting law-prescribed conditions;

- Not having been fined VND 200 million or more  for administrative violations in the insurance business sector within twelve (12) months counting to the time of submitting a dossier of application for opening a branch or representative office;

- Having a suitable information technology system to support its professional operations.

b/ A dossier of application for opening a branch or representative office complies with Clause 2, Article 11 of Decree No. 45/2007/ND-CP, and the following specific guidance:

- An application for opening a branch or representative office made according to a set form;

- Written approval of the opening of a branch or representative office by a competent authority specified in the insurance business’s organization and operation charter;

- Judicial record and diplomas and certificates (certified copies) proving the nominated head of the branch or representative office;

- Documents proving working experience of the head of the branch or representative office;

- Documents proving that the head of the branch or representative office has terminated his/her labor contract with his/her old employer;

- Draft organization and operation regulation of the branch or representative office, which must not be contrary to law and the insurance business’s organization and operation charter;

- Documentary evidence of the right to use the place in which the branch or representative office will be based;

- Documentary evidence on the branch’s or representative office’s establishment of an information technology system meeting the requirements provided at Point a, Clause 1 of this Article.

c/ Within twenty-one (21) days after receiving a complete and valid dossier as specified at Point b, Clause 1 of this Article, based on the its field assessment, the Ministry of Finance shall issue a written approval or disapproval of the application. In case of disapproval, it shall clearly state the reason. In the case of approval, it shall grant a modified license according to a set form.

d/ The insurance business’s branch or representative office must commerce its operation within six (6) months after being licensed by the Ministry of Finance. Past this time limit, if it fails to commerce operation, the modified license shall be withdrawn.

2. Termination of operation of insurance businesses’ branches and representative offices

a/ When terminating the operation of its branch or representative office, an insurance business shall submit to the Ministry of Finance one (1) dossier of application for operation termination comprising the following documents:

- A written request for termination of operation of a branch or representative office made according to a set form;

- A written approval of termination of operation of the branch or representative office by a competent authority specified in the insurance business’s organization and operation charter (the original);

- A report on the operation of the branch or representative office in the last three (3) years, or an operation report if the branch or representative office has been operating for less than three (3) years;

- Responsibilities, arising matters and their settlement plans when terminating the operation of the branch or representative office;

b/ Within twenty-one (21) days after receiving a complete and valid dossier as specified at Point a of this Clause, the Ministry of Finance shall issue a written approval or disapproval of the application. In case of disapproval, it shall clearly state the reason. In case of approval, it shall grant a modified license according to a set form.

3. The procedures for opening or terminating the operation of overseas branches and representative offices of insurance businesses comply with the laws on insurance business and offshore investment and must be approved by the Ministry of Finance. Approval application procedures comply with current laws.

Article 16. Change of locations of head offices, branches or representative offices and business places

1. An insurance business wishing to change the location of its head office or a branch or representative office or a foreign branch wishing to change the location of its head office shall send to the Ministry of Finance one (1) dossier comprising:

a/ A written request for change of location of the head office, branch or representative office made according to a set form;

b/ A written approval of such change of location by a competent authority as specified in the organization and operation charter (for insurance businesses) or organization and operation regulation (for foreign branches);

c/ Documentary evidence of the right to use the place of the head office, branch or representative office.

2. Within twenty-one (21) days after receiving a complete and valid dossier as specified in Clause 1 of this Article, the Ministry of Finance shall issue a written approval or disapproval. In case of disapproval, it shall clearly state the reason.

3. Within fifteen (15) days after changing its business place (including the opening and operation termination), an insurance business or a foreign branch shall notify such change to the Ministry of Finance and its clients.

Article 17. Change of contents, scope and term of operation

1. An insurance business and a foreign branch wishing to expand the contents, scope or term of operation must meet the conditions specified in Clause 1, Article 12 of Decree No. 45/2007/ND-CP, and the following specific guidance:

a/ Its equity capital and contributed charter capital (allocated capital) satisfy law-prescribed conditions;

b/ It has not been fined VND 200 million or more for administrative violations in the insurance business sector for twelve (12) months counting to the time of submitting a dossier of application for expansion of the contents, scope or term of operation;

c/ For cases of expansion of the contents or scope of operation, the head of the section in charge of expanded operation contents or scope must meet the criteria specified in Article 28 of this Circular.

2. An insurance business or a foreign branch wishing to change the contents, scope or term of operation shall submit to the Ministry of Finance one (1) application dossier.

3. A dossier of application for change of the contents, scope or term of operation of an insurance business comprises the following documents:

a/ A written request for expansion (or narrowing) of the contents, scope or term of operation made according to a set form;

b/ A written approval of such expansion (or narrowing) by a competent authority as specified in the insurance business’s organization and operation charter (the original);

c/ The rules, terms and premium rates of the new insurance products to be sold (if any), for cases of applying for expansion of the contents or scope of operation;

d/ Notarized copies of diplomas, certificates and evidence proving the capacity, professional qualifications and working experience of the nominated head of the section in charge of newly expanded contents or scope (for cases of expansion of the contents or scope of operation);

e/ Plan on settlement of valid insurance policies and fulfillment of obligations toward involved parties, for cases of narrowing of the contents or scope of operation.

4. Dossiers of application for change of operation contents, scope and duration of foreign branches comply with Points a, b and e, Clause 2, Article 16 of Decree No. 123/2011/ND-CP.

5. Within twenty-one (21) days after receiving a complete and valid dossier as specified in Clause 3 of this Article (for insurance businesses) or Clause 4 of this Article (for foreign branches), the Ministry of Finance shall issue a written approval or disapproval of the insurance business’s or foreign branch’s application. In case of disapproval, it shall clearly state the reason. In case of approval, it shall grant a modified license according to a set form.

Article 18. Division, split, consolidation, merger and transformation of insurance businesses

1. The division, split, consolidation, merger and transformation of insurance businesses comply with the Enterprise Law, Article 16 of Decree No. 45/2007/ND-CP (for division, split, consolidation and merger), Article 42 of Decree No. 123/2011/ND-CP (for transformation), other relevant laws and specific guidance in this Circular.

2. Organizations and individuals contributing capital to insurance businesses after division, split, consolidation, merger or transformation must meet the conditions specified in Clause 1, Article 4, and Article 5, of this Circular.

3. Insurance businesses formed from the division, split, consolidation, merger or transformation must meet the conditions specified in Clause 2, 4, 5 or 6, Article 4 of this Circular (corresponding to the type of newly formed insurance businesses).

4. The division, split, consolidation, merger or transformation of insurance businesses must not affect the rights and lawful interests of the insurance buyers, employees and the State; and must assure stable operation of insurance businesses.

5. The division, split, consolidation, merger and transformation of insurance businesses must be approved by the Ministry of Finance.

6. Procedures for applying for division, split, consolidation, merger or transformation of insurance businesses:

Before effecting its division, split, consolidation, merger or transformation, an insurance business shall submit to the Ministry of Finance one (1) application dossier comprising:

a/ An application for division, split, consolidation, merger or transformation of the insurance business, made according to a set form;

b/ Written approval of the division, split, consolidation, merger or transformation by a competent authority as specified in the insurance business’s organization and operation charter;

c/ A plan on division and handling of valid insurance policies signed with clients, debt obligations, obligations toward the State and commitments with employees upon division, split, consolidation, merger or transformation of the insurance business;

d/ A list of capital-contributing shareholders (members) and structure of the insurance business’s charter capital after its division, split, consolidation, merger or transformation;

e/ The in-principle consolidation or merger contract (for consolidation or merger) (notarized copy);

f/ Opinions of an asset-valuating agency lawfully established and operating, clearly determining the share conversion rate or the valuation of the contributed capital portion (for consolidation or merger); and valuation of assets divided to parties (for division or split);

g/ Audited financial statements of three (3) consecutive years preceding the year of applying for merger or consolidation of the organization to be merged or consolidated with the insurance business (notarized copy). In case the period from the ending date of the latest fiscal year to the time of submitting the merger or consolidation application dossier exceeds ninety (90) days, such organization shall submit supplementary quarterly financial statements up to the latest quarter;

h/ Resumes and lawful personal identification papers of new individual capital-contributing shareholders (or members); business registration certificates of new institutional capital-contributing shareholders (or members) holding 10% of the insurance business’s charter capital or more (notarized copies);

i/ Diplomas and certificates proving the capacity of nominated managers and executives of the insurance business after the division, split, consolidation, merger or transformation (notarized copies);

j/ Evidence proving satisfaction of the conditions specified in Clause 2 of this Article by organizations and individuals contributing capital to the insurance business after the division, split, consolidation, merger or transformation;

k/ Evidence proving satisfaction of the conditions specified in Clause 3 of this Article by the insurance business formed after the division, split, consolidation, merger or transformation.

7. Within fourteen (14) days after receiving a complete and valid dossier as specified in Clause 6 of this Article, the Ministry of Finance shall issue a written approval or disapproval of the plan proposed by the insurance business. In case of disapproval, it shall clearly state the reason.

Within seven (7) working days after completing the division, split, consolidation, merger or transformation under the approved plan, the insurance business shall report the results to the Ministry of Finance. If failing to implement the approved plan, the insurance business shall report the handling plan to the Ministry of Finance.

Within seven (7) working days after receiving the insurance business’s report on the implementation of the division, split, consolidation, merger or transformation plan, the Ministry of Finance shall grant an establishment and operation license according to a set form.

Article 19. Transfer of shares and contributed capital portions equaling 10% of the charter capital or more

The transfer of shares or contributed capital portions equaling 10% of an insurance business’s charter capital or more complies with Point f, Clause 1, and Clause 2, Article 69 of the Insurance Business Law, Article 16 of Decree No. 45/2007/ND-CP, and the following guidance:

1. The transfer of shares or contributed capital portions equaling 10% of an insurance business’s charter capital or more of falls into one of the following cases:

a/ After the transfer, an individual holds 10% of the insurance business’s charter capital or more or an organization holds 10% of the insurance business’s charter capital or more;

b/ After the transfer, an individual no longer holds 10% of the insurance business’s charter capital or more or an organization no longer holds 10% of the insurance business’s charter capital or more.

2. Transfer conditions:

2.1. The transfer must not affect the rights and lawful interests of insurance buyers, employees and the State and must assure stable operation of the insurance business.

2.2. The transfer must be approved by the Ministry of Finance before it is effected.

2.3. In case the transferee owns between 10% and below 100% of charter capital of the insurance business: the transferee must meet the conditions specified in Clause 1, Article 4, and Article 5, of this Circular (corresponding to the type of the transferee’s insurance business).

2.4. For cases of transferring 100% of charter capital of the insurance business:

a/ The transferee must meet the conditions specified at Point 2.3, Clause 2 of this Article;

b/ The insurance business formed after the transfer must meet the conditions specified in Clause 2, 4, 5 or 6, Article 4 of this Circular (corresponding to the type of the insurance business).

3. Transfer application procedures

Before carrying out the transfer, the insurance business shall send to the Ministry of Finance one (1) application dossier. Documents containing the foreign party’s signatures, titles and seals in the dossier (if any) must be consularly legalized. Copies in Vietnamese and Vietnamese translations must be certified in accordance with law. The transferor and transferee shall take responsibility for the accuracy of the application dossier.

A transfer application dossier comprises the following documents:

3.1. An application for the transfer, made according to a set form.

3.2. A written approval of the transfer by a competent authority specified in the insurance business’s organization and operation charter.

3.3. In case both the transferor and transferee are organizations: written approval of the transfer by a competent agency specified in the organization and operation charter of the transferee (for the cases specified at Point a, Clause 1 of this Article) or the transferor (for the cases specified at Point b, Clause 1 of this Article).

3.4. The in-principle transfer contract (if any).

3.5. For the cases specified at Point 2.3, Clause 2 of this Article, the following documents are additionally required:

a/ Documents proving the transferee’s satisfaction of the conditions specified at Point 2.3, Clause 2 of this Article;

b/ A list of capital-contributing shareholders (members) and structure of charter capital after the transfer.

3.6. For the cases specified at Point 2.4, Clause 2 of this Article, the following documents are additionally required:

a/ The documents specified at Item a, Point 3.5, Clause 3 of this Article;

b/ Documents proving the satisfaction of the conditions specified at Item b, Point 2.4, Clause 2 of this Article by the insurance business formed after the transfer.

Within twenty-one (21) days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval or disapproval of the insurance business’s application. In case of disapproval, it shall clearly state the reason. In case of approval, it shall grant a modified license or a new establishment and operation license according to a set form.

Article 20. Dissolution of insurance businesses and foreign branches

1. Insurance businesses dissolve under the cases specified in Article 82 of the Insurance Business Law.

2. Before its dissolution, an insurance business shall submit to the Ministry of Finance one (1) dissolution application dossier for approval.

3. A dossier of application for dissolution of an insurance business comprises the following documents:

a/ An application for dissolution and operation termination;

b/ A decision of a competent authority specified in the insurance business’s organization and operation charter, in case the insurance business applying for its dissolution can pay its debts (the original);

c/ Evidence of the payment of debts and fulfillment of asset obligations by the insurance business, including:

- Report on the performance of obligations toward employees according to law;

- Report on the performance of debt obligations toward insurance policy holders, including payment of due obligations under insurance policies and transfer of insurance policies according to regulations (for insurers);

- Report on the performance of obligations toward the State and other creditors;

- Tax agencies’ certification of the fulfillment of tax obligations (notarized copies).

d/ The insurance business’s establishment and operation license (the original).

4. Within seven (7) working days after receiving a complete and valid dossier as specified in Clause 3 of this Article, the Ministry of Finance shall issue a decision to dissolve an insurance business.

5. The dissolution and operation termination of foreign branches comply with Article 22 of Decree No. 123/2011/ND-CP.

Article 21. Change of chairperson of the Board of Director (chairperson of the Members’ Council), general director (director) of insurance businesses; general director (director) of foreign branches

1. Before appointing or changing its chairperson or general director (director), an insurance business or a foreign branch shall send to the Ministry of Finance one (1) dossier of notification for approval.

2. A dossier of request for approval of change of the chairperson or general director (director) comprises the following documents:

- A written request for approval of change of chairperson or general director (director) made according to a set form;

- A written approval of such change by a competent authority specified in the organization and operation charter (for insurance businesses) or organization and operation regulation (for foreign branches);

- Judicial records, lawful personal identification papers (notarized copies); diplomas and certificates proving the capacity and professional qualifications of the nominated chairperson or general director (director) (notarized copies);

- Written commitment to work for the insurance business or foreign branch after being approved by the Ministry of Finance, made by the nominated chairperson or general director (director).

3. Within twenty-one (21) days after receiving a valid and complete dossier specified in Clause 2 of this Article, the Ministry of Finance shall issue a written approval or disapproval. In case of disapproval, it shall clearly state the reason. Past this time limit, if the Ministry of Finance issues no reply, the change of the chairperson or general director (director) of the insurance business or general director (director) of the foreign branch is automatically approved.

Section 3

ORGANIZATION AND GOVERNANCE OF INSURANCE BUSINESSES AND FOREIGN BRANCHES

Article 22. Managers and executives of insurance businesses and foreign branches

1. Managers and executives of insurance businesses and foreign branches provided in this Circular include chairperson of the Board of Directors (chairperson of the Members’ Council, company president); general director (director); deputy general director (deputy director); members of the Board of Directors (Members’ Council); head of the Control Board; controller (for businesses without a Control Board); head of the internal inspection and control section; chief accountant; branch director, representative office chief (for insurance businesses); heads of professional sections; appointed actuary (for life insurers); appointed actuary for estimation of contingency and solvency margin (for non-life insurers, health insurers and foreign branches).

2. Holders of managerial and executive titles of insurance businesses and foreign branches shall be appointed as follows:

a/ Insurance businesses or foreign branches may appoint holders of the titles of chairperson of the Board of Directors (chairperson of the Members’ Council, company president); general director (director); appointed actuary (for life insurers); and appointed actuary for estimation of contingency and solvency margin (for non-life insurers, health insurers and foreign branches) after obtaining the Ministry of Finance’s approval in accordance with law.

b/ Insurance businesses or foreign branches may appoint holders of titles other than those provided at Point a, Clause 2 of this Article. Within thirty (30) days after the official appointment, insurance businesses or foreign branches shall send written reports thereon to the Ministry of Finance together with documents proving appointed persons’ capacity and experience meeting law-prescribed conditions and criteria.

Article 23. General criteria for managers and executives

1. Not being banned from business management under Clause 2, Article 13 of the Enterprise Law.

2. Being other than those who were or are being examined for penal liability, were sentenced to imprisonment without being remitted from such convictions, are serving imprisonment sentence or have their professional practice right deprived by the court in accordance with law.

3. Having never been representatives at law of bankrupt insurance businesses (except bankruptcy in force majeure circumstances) or insolvent foreign branches, or managers or executives of insurance businesses or foreign branches that have their operation licenses revoked due to violations in insurance business.

4. Having full civil act capacity.

5. Within three (3) consecutive years before being appointed:

a/ Not being administratively sanctioned in the insurance business domain in the form of forced dismissal from a managerial or executive post approved by the Ministry of Finance or forced resignation from a post appointed by insurance businesses or foreign branches;

b/ Not being disciplined in the form of dismissal due to their violations of internal processes on sale, assessment, indemnification, internal control, finance and investment management, and reinsurance program management at insurers, reinsurers or foreign branches, or professional insurance brokerage process, internal control process or professional code of conduct at insurance brokerage businesses;

c/ At the time of being appointed, not being directly involved in a criminal case instituted by a competent authority in accordance with law.

Article 24. Criteria for chairperson of the Board of Directors (chairperson of the Members’ Council, company president)

The chairperson of the Board of Directors (chairperson of the Members’ Council, company president) must satisfy the conditions provided in Clause 1, Article 13 of Decree No. 45/2007/ND-CP and the following requirements:

1. Meeting the general criteria provided in Article 23 of this Circular.

2. Possessing a bachelor or postgraduate diploma.

3. Having directly worked in the domain of insurance, finance or banking for at least five (5) years or having at least three (3) years’ managerial or executive experience at a business operating in the domain of insurance, finance or banking.

Article 25. Criteria for member of the Board of Directors or Members’ Council, head of the Control Board and controller (for businesses not required to establish the Control Board)

1. Meeting the general criteria provided in Article 23 of this Circular.

2. Possessing a bachelor or postgraduate diploma.

3. Having directly worked in the domain of insurance, finance or banking for at least three (3) years or having at least two (2) years’ experience of managing a section (or equivalent) or a higher-level department at the headquarters of a business operating in the domain of insurance, finance or banking.

4. The Board of Directors and Control Board (for joint-stock insurance companies) must have a number of resident members in Vietnam as required by the Enterprise Law and the organization and operation charter of the company.

Article 26. Criteria for general director (director) or representative at law

A general director (director) or representative at law must satisfy the conditions provided in Clause 1, Article 13 of Decree No. 45/2007/ND-CP and the following requirements:

1. Meeting the general criteria provided in Article 23 of this Circular.

2. Possessing a bachelor or postgraduate diploma.

3. Possessing an insurance diploma or training certificate granted by a domestic or foreign insurance training institution which is established and operates lawfully.

4. Having worked in the domain of insurance, finance or banking for at least five (5) years, including at least three (3) years working as the general director (director) of a foreign branch or as the head of a professional section or department at the headquarters of an insurance business or as the director of an insurance business’s branch or a higher position.

5. Residing in Vietnam during his/her term of office.

Article 27. Criteria for deputy general director (deputy director), chief accountant, branch director, or representative office chief

1. Meeting the general criteria provided in Article 23 of this Circular.

2. Possessing a bachelor or postgraduate diploma.

3. Possessing an insurance diploma or training certificate granted by a domestic or foreign insurance training institution which is established and operates lawfully.

4. Having worked for at least three (3) years in the domain of insurance, finance or banking or the specialized domain he/she will be in charge of.

5. For a chief accountant, in addition to meeting the criteria provided in Clauses 1, 2 and 3 of this Article, meeting the conditions and criteria for a chief accountant provided in legal documents on accounting and having at least three (3) years working in accounting or audit in the insurance domain.

6. Residing in Vietnam during his/her term of office.

Article 28. Criteria for heads of professional sections

The head of the research and development, insurance sale, assessment, indemnity, reinsurance, investment or internal inspection and control section must satisfy the following conditions:

1. Meeting the general criteria provided in Article 23 of this Circular.

2. Possessing a bachelor or postgraduate diploma.

3. Possessing an insurance diploma or training certificate granted by a domestic or foreign insurance training institution which is established and operates lawfully. For the head of the reinsurance or investment section, possessing a reinsurance or investment diploma or training certificate.

4. Having at least three (3) years’ experience of working in the domain he/she will be in charge of.

5. Residing in Vietnam during his/her term of office.

Article 29. Principles of appointment

1. A member of the Board of Directors or Members’ Council of an insurance business may not concurrently be a member of the Board of Directors or Members’ Council of another business operating the same domain (non-life insurance, life insurance, reinsurance or insurance brokerage).

2. The general director (director) or deputy general director (deputy director) of an insurance business or a foreign branch may not concurrently work for another insurance business or foreign branch operating in the same domain in Vietnam; the general director (director) of an insurance business or a foreign branch may not be a member of the Board of Directors or Members’ Council of another insurance business operating in the same domain in Vietnam.

3. The general director (director) or deputy general director (deputy director) of an insurance business may concurrently act as the head of only one (1) branch or representative office or professional section of that insurance business. The general director (director) or deputy general director (deputy director) of a foreign branch may concurrently act as the head of only one (1) professional section of that branch.

Article 30. Tasks of appointed actuaries of life insurers

1. A life insurer must employ appointed actuaries to perform the following tasks:

a/ To formulate rules and terms and calculate insurance premiums of life insurance products, to annually compare differences between assumed premiums and actual price of each product.

b/ To make insurance reserves in accordance with law.

c/ To separate policy holder funds and distribute annual surpluses of these funds in a fair, rational and lawful manner. At the end of a fiscal year, to make written reports on insurance business results, including a separate report on separation of funds for profit sharing and proposed profits shared to each policy holder, for decision by the business’s competent authority.

d/ To assess the life insurer’s solvency for reporting to the Ministry of Finance on the 15th every month.

e/ Quarterly and annually, to report in writing to the Board of Directors (Members’ Council, company president) on the life insurer’s financial status and its expected financial status in the future.

f/ To promptly report in writing to the general director (director), the Board of Directors (Members’ Council, company president) on irregular issues that may adversely affect the life insurer’s financial status and propose remedies. In serious cases in which the life insurer’s solvency may be affected, to directly report to the Ministry of Finance.

g/ To assess reinsurance programs and reinsurance contracts before submitting them to the Executive Board, the Board of Directors (Members’ Council, company president) for approval.

h/ To perform other tasks to ensure the life insurer’s financial safety.

2. Annually, within ninety (90) days after the end of a fiscal year, appointed actuaries shall submit to the Ministry of Finance a report (made according to a set form) on issues related to their tasks provided in Clause 1 of this Article.

Article 31. Criteria for an appointed actuary of a life insurer

1. Having been trained and worked as an actuary for at least ten (10) years in the life insurance domain and having worked in this domain for at least one (1) year after becoming a fellow of one of internationally accredited associations of actuaries such as the United Kingdom Institute and Faculty of Actuaries, the Scotland Faculty of Actuaries, the US Society of Actuaries, the Institute of Actuaries of Australia, the Canadian Institute of Actuaries, or actuarial associations that are official members of the International Actuarial Association; or having worked as an actuary in the life insurance domain for at least five (5) years after becoming a fellow of one of the above-mentioned institutions.

2. Having committed no violation of the professional code of conduct of actuaries; having never been examined for penal liability for crimes related to his/her professional operations.

3. Being an employee of a life insurer.

4. Residing in Vietnam during his/her term of office.

Article 32. Procedures for appointing, changing and terminating status of appointed actuaries of life insurers

1. Appointment of actuaries

a/ The Board of Directors (Members’ Council, company president) of a life insurer or the general director (director) (in case the business has no Board of Directors, Members’ Council, company president), shall appoint actuaries to perform the tasks provided in Article 30 of this Circular. Before appointing an actuary, the life insurer shall submit one (1) notification dossier to, and obtain written approval of, the Ministry of Finance.

b/ A dossier of notification of appointment of an actuary comprises:

- A notice of appointment of an actuary, signed by the chairman of the Board of Directors (Members’ Council, company president) or the general director (director) (in case the business has no Board of Directors, Members’ Council, company president);

- Notarized copies of diplomas and certificates proving the professional capacity, qualifications and experience in life insurance of the nominated actuary;

- A notarized copy of the certificate of fellowship of an accredited association of actuaries provided in Clause 1, Article 31 of this Circular;

- A certified copy of the in-principle agreement signed between the nominated actuary and the insurance business on the insurance business’s recruitment of this actuary after obtaining the Ministry of Finance’s approval;

- Original written certification by the international association of actuaries to which the nominated actuary is a fellow provided in Clause 1, Article 31 of this Circular that this actuary has not breached the professional code of conduct at the time of his/her expected appointment;

- The original judicial record of the nominated actuary.

2. Change of an appointed actuary:

a/ In case of change of an appointed actuary, a life insurer shall submit to the Ministry of Finance one (1) dossier of notification of such change and obtain the Ministry of Finance’s approval.

b/ A dossier of notification of change of an actuary comprises:

- A notice of relief from duty of an appointed actuary already approved by the Ministry of Finance, which must be signed by the president or the general director (director) (in case the business has no Board of Directors, Members’ Council, company president);

- The documents provided at Point b, Clause 1 of this Article.

3. Termination of the legal status of appointed actuaries

a/ An appointed actuary will automatically have his/her legal status terminated in the following cases:

- His/her fellowship to an accredited association of actuaries has terminated;

- The life insurer requests termination of his/her legal status.

b/ The life insurer shall notify the Ministry of Finance in writing of the termination of an appointed actuary.

4. Within eleven (11) days after receiving a complete and valid dossier provided at Point b, Clause 1, or Point b, Clause 2, of this Article, the Ministry of Finance shall issue a written approval or disapproval of appointment or change of an actuary of a life insurer. In case of disapproval, it shall clearly state the reason. Past this time limit, if the Ministry of Finance gives no written reply, the life insurer’s appointment or change of an actuary is automatically approved.

Article 33. Tasks of appointed actuaries for estimation of insurance reserves and solvency of non-life insurers, health insurers and foreign branches

1. Non-life insurers, health insurers and foreign branches must employ appointed actuaries for estimation of insurance reserves and solvency to perform the following tasks:

a/ To formulate rules and terms and set insurance premium tariffs of insurance products, to annually compare differences between assumed premiums and the actual price of each product;

b/ To make insurance reserves in accordance with law;

c/ To assess the payment of indemnities by non-life insurers, health insurers or foreign branches;

d/ To quarterly assess the solvency of non-life insurers, health insurers or foreign branches and certify solvency reports for submission to the Ministry of Finance in accordance with law;

e/ To assess reinsurance programs and reinsurance contracts before submission to the Executive Committee, the Board of Directors (Members’ Council, company president) for approval;

f/ At the end of a fiscal year, to make reports on investment results of non-life insurers, health insurers or foreign branches, specifying arising risks and proposing invested assets and investment period of each type of asset, ensuring commensuration between invested assets and liabilities committed under insurance policies.

2. Within two (2) years after the effective date of this Circular, non-life insurers, health insurers and foreign branches shall employ appointed actuaries for estimation of insurance reserves and solvency to perform the tasks provided in Clause 1 of this Article.

Article 34. Criteria for appointed actuaries for estimation of insurance reserves and solvency of non-life insurers, health insurers and foreign branches

1. Possessing a bachelor or postgraduate diploma.

2. Having worked in the insurance domain for at least five (5) years.

3. Possessing a diploma in insurance granted by an accredited domestic or international training institution.

4. Not being administratively sanctioned in the insurance business domain for three (3) consecutive years before the expected time of being appointed.

5. To reside in Vietnam during their term of office.

Article 35. Registration of appointed actuaries for estimation of insurance reserves and solvency of non-life insurers, health insurers and foreign branches

1. A non-life insurer, health insurer or foreign branch shall submit to the Ministry of Finance one (1) dossier of registration of its appointed actuary for estimation of insurance reserves and solvency, which comprises:

a/ An application for registration of an appointed actuary signed by the president or general director (director) of the non-life insurer, health insurer or foreign branch;

b/ Notarized copies of diplomas and certificates of the nominated actuary and his/her resume.

2. The Ministry of Finance shall appraise a dossier of registration of an appointed actuary of a non-life insurer, health insurer or foreign branch. When necessary, it may request the nominated actuary to justify that his/her professional capacity meets the requirements of the tasks provided in Clause 1, Article 33 of this Circular.

3. Within eleven (11) days after receiving a complete and valid dossier provided in Clause 1 of this Article, the Ministry of Finance shall issue a written approval or disapproval. In case of disapproval, it shall clearly state the reason. Past this time limit, if the Ministry of Finance gives no written reply, the non-life insurer’s, health insurer’s or foreign branch’s registration of an appointed actuary is automatically approved.

Article 36. Internal inspection and control

Insurance businesses and foreign branches shall conduct internal inspection and control in accordance with Article 15 of Decree No. 45/2007/ND-CP and the following guidance:

1. Insurance businesses and foreign branches shall develop and issue their operational processes under Clause 1, Article 15 of Decree No. 45/2007/ND-CP and organize internal inspection and control.

2. The operational process of an insurance business or a foreign branch is a document defining the operation, functions, tasks and powers of each staff member in every section and the mechanism for coordination among staff members and sections of the business or branch. The operational process must meet the following requirements for internal inspection and control:

a/ Clear and transparent decentralization and authorization of tasks and powers to all individuals and sections of the insurance business or foreign branch;

b/ Determination of responsibilities of each individual and section in every transaction.

3. Internal inspection and control activities must be independent from governance and business activities and ensure prompt assessment and detection of all risks that may adversely affect the insurance business’s or foreign branch’s operation efficiency and objectives, and prompt reporting to competent authorities of the insurance business or foreign branch for taking appropriate remedies.

4. Persons performing internal inspection and control work must possess a bachelor or postgraduate diploma and have worked in the domain of finance, banking or insurance for at least three (3) years.

5. Requirements on the internal inspection and control process:

The internal inspection and control process must be prescribed by a competent authority in the written organization and operation charter (for insurance businesses) or the organization and operation regulation (for foreign branches) and meet the following requirements:

a/ It allows cross-check between individuals and sections participating in the same operational process;

b/ It is notified by the insurance business or foreign branch to all of its staff members so that they are aware of the importance of, and actively participate in, internal inspection and control activities;

c/ Its effect and effectiveness are regularly reviewed and assessed by managers of involved sections, professional units and individuals; all errors of this system are promptly reported to the immediate supervisory authority; major errors that may cause damage or risks are reported immediately to the general director (director), the chairperson of the Board of Directors (Members’ Council chairperson, company president) and the Control Board;

d/ Heads of sections of the insurance business or foreign branch report and assess internal inspection and control results at their sections or within their assigned tasks; propose measures to address problems (if any) to the immediate supervisory authority regularly or at the latter’s request.

Section 4

INSURANCE SALE

Article 37. General principles of insurance business and sale

1. An insurer or a foreign branch shall conduct insurance business and sale according to the following principles:

a/ Honesty, publicity and transparency, preventing customers’ misunderstanding of its products and services;

b/ Its employees possess adequate professional qualifications and moral qualities. Employees directly introducing, selling and arranging conclusion of insurance policies possess at least an insurance agent certificate or a certificate of training in insurance operations carried out under regulations. Employees directly arranging reinsurance, assessment for indemnity and approval of indemnities possess a certificate of training in this operation granted by a lawfully established and operating insurance training institution;

c/ Before concluding an insurance policy, it shall gather necessary information on the customer, take into account its own financial capacity and professional capability, ensure its financial resources, solvency and risk control systems; and ensure no discrimination in terms of insurance conditions and premiums between the insured at the same risk level;

d/ Documents introducing its products and services are clear and easy-to-understand, contain no misleading information and are not contrary to the insurance rules and terms of its licensed products and services;

e/ Sale illustration documents of insurance products (for life insurance and health insurance products) supplied directly to customers or through insurance agents or insurance brokerage businesses licensed to operate in Vietnam must adhere to the following principles:

- Assumptions used in calculations in sale illustration documents are approved by appointed actuaries (for life insurers), actuaries for estimation of insurance reserves and solvency margin (for non-life insurers, health insurers and foreign branches) before these documents are provided to customers. These documents must be clear, complete and accurate to help customers make appropriate selection.

- For products with surrender value, life insurers shall present in sale illustration documents conditions for claiming the surrender value and benefits together with specific sums of money which customers will receive upon receipt of the surrender value, clearly stating whether these benefits are secured or not;

- Insurers and foreign branches shall take responsibility for the accuracy and update of documents introducing their products and services, sale illustration documents and other sale documents throughout their use duration;

- Sale illustration documents must use a language suitable to customers.

f/ Unless clearly provided in an insurance policy, when issuing such policy, an insurer or a foreign branch shall notify in writing the following information to a customer:

- Deadline or periods for insurance premium payment (if any);

- Names of contact persons or units of the insurer or foreign branch and addresses for settlement of the customer’s complaints, inquiries or disputes related to the conclusion, performance and termination of insurance policies;

- The customer’s responsibility to notify the insurer or foreign branch of the change of address of the insurance buyer;

- Annually, a life insurer shall notify its insurance buyers of the status of their policies (for life insurance products);

g/ An insurer or a foreign branch shall analyze customers’ needs to advise them to buy appropriate insurance products with appropriate premiums. Such analysis and advice shall be made in writing (for life insurance products);

h/ An insurer or a foreign branch shall give clear explanations and specific information requests to insurance buyers. Insurance buyers shall fully provide information relating to the insured to the insurer or foreign branch;

i/ Upon entry into an insurance policy, an insurer or a foreign branch shall fully provide information on such policy and explain insurance conditions and terms to the insurance buyer. Such information constitutes an integral part of the insurance policy;

j/ A life insurer shall notify customers that:

- The entry into a supplementary insurance policy to a principal insurance policy does not constitute a compulsory condition for maintaining the validity of the principal policy;

- A life insurance policy has a surrender value when it has become valid and insurance premiums have been paid for full twenty-four (24) months or more, or for a shorter time as agreed under the insurance policy (for regular premium insurance policies). The surrender value takes immediate effect for single premium insurance policies;

- An insurer may deduct unpaid debts before paying the surrender value to an insurance buyer.

Article 38. Prohibited acts in insurance sale

1. Illegally intervening into the right of insurance buyers to select insurers, insurance brokerage businesses and foreign branches.

2. Using influence of any organizations or persons in any forms to ask, obstruct or compel their subordinate units or related persons to buy insurance of a certain insurer or foreign branch;

3. Insurers or foreign branches taking advantage of prestige and influence of, or direction by, any organizations or persons in any forms, to provide insurance services, harming the rights and legitimate interests of insurance buyers.

Article 39. Approval of life insurance products and health insurance products

1. Before marketing life insurance products or health insurance products, life insurer, or an insurer or a foreign branch shall submit to the Ministry of Finance one (1) dossier of request for approval of these products, and shall observe the insurance rules, terms and premium tariffs approved by the Ministry of Finance.

2. A life insurer that sells life insurance, or an insurer or a foreign branch that sells health insurance, directly to an insurance buyer and does not have to pay insurance commissions to an insurance agent or broker may reduce the insurance premium for the buyer at a level not exceeding the commission level provided in this Circular. Insurers and foreign branches shall work out their premium reduction process to ensure fairness for customers. The Members’ Council (the Board of Directors, company president) of an insurer or the general director (director) of a foreign branch shall approve the premium reduction process and level applicable to insurance buyers and notify them in writing to the Ministry of Finance before their application.

3. A dossier of request for approval of life insurance products or health insurance products comprises:

a/ A written request for the Ministry of Finance’s approval of products, containing the insurer’s or foreign branch’s commitment to take responsibility for the contents and legality of the insurance rules and terms;

b/ Insurance rules, terms and premium tariffs of expected insurance products in accordance with Clause 4, Article 20 of Decree No. 45/2007/ND-CP. Insurers and foreign branches are encouraged to use model insurance rules and terms developed by the Association of Vietnamese Insurers;

c/ Formulas, methods and explanations about technical bases for calculation of premiums and reserves of insurance products to be provided.

For life insurance products with shared profits, life insurers shall clearly state the principles, modes and rates for sharing profits to customers in the bases for calculation of premiums of insurance products to be provided.

d/ Related documents, including the insurance request form, documents introducing products and services of the insurer or foreign branch, sale illustration documents, forms of application to be completed and signed by customers upon buying insurance. These documents constitute a part of an insurance policy;

A dossier of request for approval of life insurance products or health insurance products must be signed by the representative at law of an insurer or a foreign branch and certified by an actuary (for life insurers) or an actuary for estimation of insurance reserves and solvency (for non-life insurers, health insurers and foreign branches).

4. Contents of appraisal of life insurance products and health insurance products

a/ Checking the validity of dossiers of request for approval of insurance products and compliance of insurance rules and terms with current law. For insurance products developed under the model insurance rules and terms, the Ministry of Finance shall only check the validity of dossiers of request for approval of insurance products;

b/ Assessing the economic and technical feasibility of insurance products on the basis of the certifications of actuaries (for life insurers), actuaries for estimation of insurance reserves and solvency (for non-life insurers, health insurers and foreign branches);

c/ Non-life insurers and foreign branches that sell package insurance products, including health insurance, shall comply with this Article regarding approval of health insurance products.

5. Time limit for approval of life insurance products and health insurance products

Within thirty (30) days after receiving a complete and valid dossier provided in Clause 3 of this Article, the Ministry of Finance shall issue a written approval or disapproval. In case of disapproval, it shall clearly state the reason.

6. Non-life insurers are not required to carry out procedures for approval of health insurance products sold before the effective date of this Circular. When changing or supplementing these insurance products, non-life insurers shall carry out procedures for approval of products provided in Clauses 3 and 4 of this Article.

Article 40. Provision of non-life insurance products

Non-life insurers and foreign branches shall provide non-life insurance products under Clauses 3 and 4, Article 20 of Decree No. 45/2007/ND-CP, Clause 4, Article 26 of Decree No. 123/2011/ND-CP, and the following guidance:

1. Insurance premiums under an original insurance policy must not be lower than premiums for reinsurance of that policy.

2. When the rules, terms and premium tariffs of an insurance product fail to assure financial safety under regimes applicable to non-life insurers and foreign branches and affect the interests of insurance buyers, the Ministry of Finance shall request the non-life insurer or foreign branch to suspend that product for appropriate adjustment.

3. Based on the Ministry of Finance’s request provided in Clause 2 of this Article, a non-life insurer or foreign branch shall adjust the rules, terms and premium tariffs of an insurance product and report it to the Ministry of Finance for approval before providing that product. A reporting dossier comprises:

a/ A report on adjustment as requested by the Ministry of Finance, which is signed by the representative at law of the non-life insurer or foreign branch;

b/ Adjusted rules, terms and premium tariffs of the insurance product;

c/ A written explanation about the technical bases for calculation of premiums for the insurance product after adjustment, which is signed by an actuary for estimation of insurance reserves and solvency of the non-life insurer or foreign branch;

Within fifteen (15) days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval or disapproval of the adjustment. In case of approval, the non-life insurer or foreign branch shall provide the insurance product in accordance with the rules, terms and tariffs approved by the Ministry of Finance. In case of disapproval, the Ministry of Finance shall clearly state the reason.

4. On the 15th every month at the latest, non-life insurers and foreign branches shall report to the Ministry of Finance on their new products provided in the preceding month (if any) according to a set form.

Article 41. Insurance agent commissions

1. Insurance agent commission is an amount paid by an insurer or a foreign branch directly to an insurance agent after the latter provides services for the former.

2. An insurer or a foreign branch may take the initiative in paying insurance agent commissions to insurance agents for the following jobs:

a/ Introducing and offering insurance;

b/ Arranging the conclusion of insurance policies;

c/ Collecting insurance premiums;

d/ Arranging the settlement of compensation and payment of indemnities upon occurrence of insured events;

e/ Carrying out other activities relating to the performance of insurance policies.

3. The maximum rates of insurance commissions which insurance businesses and foreign branches are permitted to pay to insurance agents for each insurance policy comply with the following provisions (except the cases provided at Point 3.5 of this Clause):

3.1. Maximum commission rates for non-life insurance policies:

3.2. Maximum commissions for life insurance policies:

a/ For individual life insurance operations:

- For each separate insurance operation: Life insurance commissions apply to principal insurance products according to the following tariff:

- In case of combining different insurance operations: Insurance commissions shall be calculated on the basis of the aggregate commissions of separate insurance operations.

b/ For group life insurance operations: The maximum insurance commission rate equals 50% of the rate applicable to individual life insurance operation of the same type.

3.3. The maximum commission rate for health insurance policies is 20%.

3.4. Insurance agent commissions for a package insurance policy equal the aggregate commissions for each insured risk under that package insurance policy.

3.5. For insurance products provided under pilot programs decided by the Prime Minister and insurance products other than those provided at Points 3.1, 3.2 and 3.3, Clause 3 of this Article, insurers and foreign branches shall comply with the Ministry of Finance’s separate guidance.

4. Insurers and foreign branches that provide insurance services through bidding provided in Article 24 of Decree No. 123/2011/ND-CP may not pay insurance agent commissions.

5. Insurers and foreign branches shall, based on current regulations on insurance agent commissions and their specific conditions and characteristics, elaborate the regulation on payment of insurance agent commissions for uniform and public application at their businesses and branches.

Article 42. Loss prevention and mitigation

1. Insurers and foreign branches may spend up to 2% of their insurance premiums collected in a fiscal year on loss prevention and mitigation measures.

2. Expenses for loss prevention and mitigation comply with Clause 2, Article 25 of Decree No. 45/2007/ND-CP.

Section 5

REINSURANCE

Article 43. Management of reinsurance programs

1. Approval of reinsurance programs:

a/ In order to ensure safety and efficiency of reinsurance business activities, the Board of Directors (Members’ Council, company president), general director (director) of an insurer or a reinsurer, or the general director (director) of a foreign branch shall approve reinsurance programs suitable to its financial capacity and business scope and compliant with current law; and review, assess and adjust reinsurance programs annually or upon market change.

b/ A reinsurance program covers the following principal contents:

- Identifying the risk acceptance ability of an insurer or a reinsurer or foreign branch;

- Identifying the retention level suitable to the accepted insurance risk; limits on the retention level per unit of risk and the maximum level of protection from the reinsurer;

- Identifying types and modes of reinsurance most appropriate to the management of accepted risks;

- Mode, criteria for and process of selecting reinsurers, including the mode of assessing the risk level and financial safety of reinsurers;

- A list of expected reinsurers, with attention paid to the diversity and ranking of these businesses;

- Modes of using deposits of reinsurers, if any;

- Managing cumulated risks with respect to specific domains, geographical areas and products;

- Methods of controlling reinsurance programs, including the reporting and internal control systems.

2. Organization of implementation of reinsurance programs:

On the basis of the approved reinsurance program, the general director (director) of an insurer or a reinsurer or foreign branch shall issue the internal process and guidelines on reinsurance business activities, specifically:

a/ The insurance sale process, specifying types of insurance products to be provided; insurance rules and terms and aggregate liability for each type of insurance product;

b/ Identifying the limit of liability to be automatically insured under fixed reinsurance contracts for each type of insurance;

c/ Formulating standards for temporary reinsurance contracts;

d/ Comparing the rules and terms of original insurance policies with the terms of reinsurance contracts to ensure that every risk is insured (for insurers and foreign branches).

3. Insurers, reinsurers and foreign branches shall regularly update the list of reinsurers enclosed with information on the level of risk, possibility and readiness to pay indemnities corresponding to the reinsured liability; and request deposits corresponding to the level of risk and credit rating of each reinsurer.

Article 44. Retention level

1. Insurers, reinsurers and foreign branches shall compute the retention level for each type of insurance and each kind of risk; and the retention level per risk and insured event.

2. When computing the retention level, an insurer or a reinsurer or foreign branch shall take into account the following factors:

a/ Legal provisions on solvency;

b/ Insurance selling capacity;

c/ Financial capability;

d/ Its readiness to accept risks;

e/ Arrangement for protection against major and catastrophic risks;

f/ Balancing of business results;

g/ Constituents of the list of insurance contracts;

h/ Developments of the domestic and international reinsurance markets.

3. An insurer or a foreign branch may only retain the maximum level of liability per single risk or loss not exceeding 5% of its equity. A reinsurer may only retain the maximum level of liability per single risk or loss not exceeding 10% of its equity.

4. An insurer or a reinsurer or foreign branch may not receive reinsurance for the reinsured risks.

Article 45. Cession of insurance

1. An insurer or a reinsurer or foreign branch may cede part of the liability it has insured to one or more than one insurer, reinsurer and foreign branch, but may not cede the entire liability it has insured under an insurance contract to another insurer, reinsurer or foreign branch.

2. For finite insurance, before entering into a reinsurance contract, an insurer or a reinsurer or foreign branch shall send to the Ministry of Finance a notice, signed by its representative at law, of the principal contents of the reinsurance contract, purposes of the contract signing, commitment to observe legal provisions on insurance business, and the applied accounting regime.

3. Cession of insurance must be conducted without discrimination between insurers, reinsurers and foreign branches in Vietnam and foreign insurance businesses.

Article 46. Conditions on foreign reinsurers

1. Foreign reinsurers are lawfully operating and meet all solvency requirements under the laws of the countries where they are headquartered.

2. Leading reinsurers and reinsurers receiving 10% or more of the aggregate liability of each reinsurance contract are rated at least “BBB+” by Standard & Poor’s or Fitch, “B++” by A.M.Best, “Baa1” by Moody’s or get equivalent ratings of another experienced and accredited rating institution in the fiscal year right before the time of entry into the reinsurance contract.

3. In case of reinsurance to an overseas parent company or companies within the same group without credit rating according to the above provisions, an insurer or a reinsurer or foreign branch shall submit to the Ministry of Finance a written certification of the overseas reinsurer’s solvency in the fiscal year preceding the year of reinsurance receipt by the insurance management authority of the country in which the reinsurer is headquartered.

Section 6

INSURANCE AGENTS

Article 47. Operations of insurance agents

1. Organizations and individuals acting as insurance agents must satisfy the conditions provided in Article 86 of the Law on Insurance Business, and Clause 10, Article 1 of the Law Amending and Supplementing a Number of Articles of the Law on Insurance Business, and observe the principles of operation of insurance agents provided in Article 28 of Decree No. 45/2007/ND-CP.

2. Insurers and foreign branches shall perform the rights and obligations in the operation of insurance agents under Article 29 of Decree No. 45/2007/ND-CP.

3. Insurance agents shall perform the rights and obligations provided in Article 30 of Decree No. 45/2007/ND-CP.

4. Insurance agents are prohibited from:

a/ Providing untrue information and advertisements on the contents and scope of operation of insurers and foreign branches, and insurance conditions and terms, that harm the rights and legitimate interests of insurance buyers.

b/ Preventing insurance buyers from providing information relating to insurance policies or inciting insurance buyers or the insured not to declare details related to insurance policies.

c/ Fighting for customers by obstructing, inciting, buying off or intimidating employees or customers of other insurers, foreign branches, insurance agents or insurance brokerage businesses.

d/ Offering customers sales promotion in such illegal forms as promising reduction of insurance premiums, refund of insurance premiums or other benefits which insurers or foreign branches do not provide to customers.

e/ Inciting insurance buyers to cancel valid insurance policies in order to buy new ones.

Article 48. Training of insurance agents

1. Training programs for insurance agents:

1.1. Basic training programs:

a/ A basic training program covers:

- General knowledge about insurance (insurance principles, types of insurance operations);

- Responsibilities of insurance agents, professional code of conduct of insurance agents;

- Law on insurance business;

- Rights and obligations of insurers, foreign branches and insurance agents in insurance agency activities.

b/ The duration of a basic training program, which is conducted in a concentrated manner, is at least 24 hours.

1.2. Insurance product training programs:

a/ A program on training in insurance products covers:

- Insurance selling skills;

- Insurance agency practice;

- Insurance products to be sold by agents.

b/ The duration of a first-time insurance product training program, which is conducted in a concentrated manner, is at least 24 hours.

1.3. Insurers and foreign branches shall update the contents specified at Item a, Point 1.1, and Item a, Point 1.2, Clause 1 of this Article for insurance agents under the Ministry of Finance’s guidance.

2. Insurance agent training institutions

2.1. Insurance agent training institutions include:

a/ The Association of Vietnamese Insurers, which may provide basic training programs, or shall coordinate with insurers or foreign branches in providing training programs on their insurance products;

b/ Insurers and foreign branches, which may provide training programs on their own insurance products and shall coordinate with the Association of Vietnamese Insurers in providing basic training programs;

c/ Other lawfully established training institutions in Vietnam, which may provide basic training programs on insurance.

2.2. Conditions on insurance agent training institutions:

To train insurance agents, the Association of Vietnamese Insurers, insurers, foreign branches and training institutions must satisfy the following conditions:

a/ Having training programs meeting the requirements provided at Item a, Point 1.1, or Item a, Point 1.2, Clause 1 of this Article (corresponding to training contents to be provided).

b/ Having trainers who:

- Possess a collegial or higher diploma;

- Have at least two (2) years working or training in insurance.

c/ Having physical and technical foundations meeting training requirements.

d/ Obtaining the Ministry of Finance’s written approval before providing training.

2.3. Procedures for requesting approval of training:

Before training insurance agents, a training institution shall submit to the Ministry of Finance one (1) dossier which comprises:

a/ An application for registration of an insurance agent training institution, made according to a set form;

b/ A notarized copy of the license or establishment decision of the registered insurance agent training institution;

c/ The insurance agent training program as provided at Item a, Point 1.1, or Item a, Point 1.2, Clause 1 of this Article (depending on the training contents to be provided);

d/ A list of trainers, enclosed with their resumes, diplomas and certificates;

e/ Training process and training quality assessment process;

f/ Proof that physical and technical foundations satisfy training requirements.

Within thirty (30) days after receiving a complete dossier, the Ministry of Finance shall issue a written approval or disapproval of an insurance agent training institution’s request. In case of disapproval, it shall clearly state the reason.

2.4. In case of change of contents of insurance agent training programs or trainers, within thirty (30) days before organizing a new training course, a training institution shall submit to the Ministry of Finance a written request for approval of such change enclosed with a written explanation about that change. Within eleven (11) days after receiving a complete dossier, the Ministry of Finance shall issue a written approval or disapproval. In case of disapproval, it shall clearly state the reason.

Article 49. Exams and grant of insurance agent certificates

1. Training institutions shall coordinate with the Ministry of Finance in organizing exams and granting insurance agent certificates.

2. Insurance agent certificates are made according to a set form.

3. For pilot insurance programs decided by the Prime Minister and particular insurance products, exams and grant of insurance agent certificates comply with the Ministry of Finance’s guidance.

4. For insurance agent certificates granted lawfully before the effective date of this Circular, insurance agents may use these certificates to sell insurance products they have been trained in. Agents that sell new insurance products must be trained in those products (including cases in which agents sign contracts with new insurance businesses).

Article 50. Reporting regime

1. Annually, on January 30 of the subsequent year at the latest, insurance agent training institutions shall submit to the Ministry of Finance a report, made according to a set form, on the number of training courses held, the number of trainees, and the number of trainees obtaining a certificate in the year.

2. Insurers and foreign branches shall make quarterly reports as follows:

a/ Quarterly, on the 15th of the first month of the subsequent quarter at the latest, to send to the Ministry of Finance (electronic and written) lists of operating insurance agents, made according to a set form.

b/ Quarterly, on the 15th of the first month of the subsequent quarter at the latest, to report to the Ministry of Finance and the Association of Vietnamese Insurers on the list of insurance agents with agency contracts already terminated by insurers or foreign branches for their violations of regulations on practice of insurance agency or illegal acts, made according to a set form, for the Association of Vietnamese Insurers’ notification to other insurers and foreign branches.

Section 7

INSURANCE BROKERAGE

Article 51. Insurance brokerage

1. An insurance brokerage business shall reach written agreement with an insurance buyer when providing the original insurance brokerage service for the latter. Such agreement must clearly state insurance brokerage activities as provided in Article 90 of the Law on Insurance Business, and the obligations and liabilities of each party.

Reinsurance brokerage complies with international practices and current law.

2. An insurance brokerage business may be authorized by an insurer or a foreign branch to collect insurance premiums, pay insurance indemnities or insurance money. Such authorization must adhere to the following principles:

a/ Authorization is made in writing, specifying the time limit and scope of authorized activities, the rights and responsibilities of each party.

b/ For an insurance brokerage business authorized by an insurer or a foreign branch to collect insurance premiums:

- An insurance buyer’s responsibility to pay insurance premiums is fulfilled when that buyer has paid to the insurance brokerage business the insurance premiums as agreed under the insurance policy.

- When an insurance buyer has paid insurance premiums as agreed under the insurance policy, the insurance brokerage business shall pay the collected insurance premiums to the insurer or foreign branch within the time limit agreed between them, which must not exceed five (5) working days after receiving the insurance premiums.

c/ For an insurance brokerage business authorized by an insurer or a foreign branch to pay insurance money or indemnities:

- The insurer or foreign branch shall be still held liable before the insured or beneficiary of the insurance money it is obliged to pay to the latter.

- The insurance brokerage business shall pay insurance money to the insured or beneficiary within five (5) working days after receiving that money from the insurer or foreign branch.

d/ Insurance brokerage businesses may carry out authorized activities provided in Clause 2 of this Article only when authorized activities related to insurance policies are arranged by themselves. Insurance brokerage businesses may not receive any incomes for carrying out activities authorized by insurers or foreign branches.

3. Employees of insurance brokerage businesses directly engaged in insurance brokerage activities provided in Article 90 of the Law on Insurance Business must possess an insurance or insurance brokerage training certificate granted by a lawfully established and operating insurance training institution.

Article 52. Cooperation in insurance brokerage

1. Insurance brokerage businesses may cooperate with other insurance brokerage businesses which are established and operate lawfully in Vietnam to carry out insurance brokerage activities.

2. The cooperation provided in Clause 1 of this Article must be agreed in writing, clearly defining the responsibilities, benefits and insurance brokerage commission sharing rate for each party.

Article 53. Prohibited acts in insurance brokerage

1. Obstructing insurance buyers or the insured in providing information relating to insurance policies or inciting insurance buyers or the insured not to declare details related to insurance policies.

2. Offering customers sale promotion by promising illegal benefits to induce them to conclude insurance policies.

3. Inciting insurance buyers to cancel valid insurance policies in order to buy new ones.

4. Advising customers to buy insurance at an insurer or a foreign branch offering conditions and terms less competitive than those offered by other insurers or foreign branches in order to earn higher brokerage commissions.

5. Cooperating with individuals or organizations (other than insurance brokerage businesses provided in Clause 1, Article 52 of this Circular) to carry out one or more than one step of the insurance brokerage process.

Article 54. Insurance brokerage commissions

1. The original insurance brokerage commission rate shall be determined based on the agreement between an insurer or a foreign branch and an insurance brokerage business in accordance with Vietnamese law. In all cases, the maximum insurance brokerage commission rate of each insurance service provided through an insurance brokerage business must not exceed 15% of the insurance premiums actually collected by an insurer or a foreign branch.

2. The reinsurance brokerage commission rate is agreed by the parties in accordance with international practices.

Section 8

REPRESENTATIVE OFFICES OF FOREIGN INSURANCE BUSINESSES IN VIETNAM

Article 55. Licensing of representative offices

1. A foreign insurance business wishing to establish a representative office in Vietnam shall submit to the Ministry of Finance one (1) dossier of application for a representative office license in accordance with Article 110 of the Law on Insurance Business. Documents containing foreign signatures, titles and seals in a license application dossier must be consularly legalized. Their copies in Vietnamese and Vietnamese translations must be certified in accordance with law. The investor shall take responsibility for the accuracy of the license application dossier.

2. An application for a license to establish a representative office in Vietnam, which is made according to a set form, must be signed by the chairman of the Board of Directors or a competent person under the organization and operation charter of the foreign insurance business.

3. Within sixty (60) days after receiving a complete and valid dossier of application for a representative office license, the Ministry of Finance shall grant a license for a foreign insurance business’s representative office in Vietnam, made according to a set form. In case of refusal, it shall give the reason in writing.

Article 56. Reporting on operation of representative offices

A foreign insurance business’s representative office in Vietnam shall submit to the Ministry of Finance regular operation reports under Article 38 of Decree No. 45/2007/ND-CP and the following specific guidance:

1. A foreign insurance business’s representative office in Vietnam shall submit to the Ministry of Finance biannual and annual reports on their operation. Biannual reports must be sent before July 30 every year and annual reports, before March 1 of the subsequent year.

2. A report provided in Clause 1 of this Article covers:

a/ The organizational structure of the representative office, its personnel, number of Vietnamese staff and foreign staff working at the office;

b/ The representative office’s principal activities carried out in the reporting period, including:

- Market access;

- Relations between the representative office and insurance businesses, foreign branches and Vietnamese economic organizations;

- Counseling and training work;

- Other activities in accordance with law.

c/ Orientations for future operation.

3. In addition to the above mentioned regular reports, when necessary, the Ministry of Finance may request representative offices to report, provide documents and explain matters on their operation.

Article 57. Modification of representative office licenses

1. In case of change in the following contents of its representative office license, a foreign insurance business shall submit one (1) dossier of request for license modification to the Ministry of Finance:

a/ The name, nationality or address of the foreign insurance business;

b/ The name of the representative office;

c/ Contents of operation of the representative office;

2. A dossier of request for license modification comprises:

a/ A written request for modification of a representative office license, made according to a set form;

b/ A written approval of a change provided in Clause 1 of this Article issued by a competent authority under the foreign insurance business’s organization and operation charter.

3. Within eleven (11) days after receiving a complete and valid dossier provided in Clause 2 of this Article, the Ministry of Finance shall modify a license according to a set form. In case of refusal, it shall give the reason in writing.

Article 58. Changes to be notified to the Ministry of Finance

1. A foreign insurance business shall notify to the Ministry of Finance when changing its representative office chief in Vietnam.

2. A representative office shall notify to the Ministry of Finance when relocating its office or changing its staff members.

3. Notification of a change provided in Clause 1 or 2 of this Article must be made in writing according to a set form within thirty (30) days after such change, enclosed with documents proving the change, including the resume and lawfully notarized copies of personal identification papers (for change of representative office chief), evidence of the right to use the office (for relocation of office).

Article 59. Extension of operation of representative offices

1. A foreign insurance business wishing to extend operation of its representative office must satisfy the following requirements:

a/ Its representative office in Vietnam is not administratively fined VND 200 million or more for violations in insurance business within twelve (12) months before submitting the dossier of request for operation extension;

b/ It is operating lawfully and stably at the time of requesting extension of its representative office’s operation.

2. The time limit for extension of a representative office is five (5) years.

3. At least thirty (30) days before the expiration of its representative office license, a foreign insurance business wishing to extend the operation duration of its representative office shall submit to the Ministry of Finance one (1) request dossier, which comprises:

a/ A written request for extension of operation of a representative office, made according to a set form;

b/ Notarized copy of the foreign insurance business’s establishment and operation license;

c/ Notarized copies of the foreign insurance business’s audited financial statements of three (3) consecutive years before the year of submission of the request dossier;

d/ The resume and notarized copies of lawful personal identification papers of the nominated representative office chief (for change of representative office chief);

4. Within twenty-one (21) days after receiving a complete and valid dossier of request for operation extension, the Ministry of Finance shall issue a written approval or disapproval. In case of disapproval, it shall give the reason in writing.

Article 60. Termination of operation of representative offices

1. A representative office shall terminate operation in the following cases:

a/ Such operation is requested by the foreign insurance business;

b/ The foreign insurance business terminates operation;

c/ The representative office license is revoked in accordance with Clause 3, Article 37 of Decree No. 45/2007/ND-CP.

2. Procedures for termination of operation of representative offices

To terminate operation of its representative office, a foreign insurance business shall submit to the Ministry of Finance one (1) dossier in Vietnamese, which comprises:

a/ A written request for termination of operation of a representative office, made according to a set form;

b/ Evidence of the fulfillment of all obligations toward employees and other organizations and individuals in Vietnam;

c/ The original representative office license;

d/ Related licenses and decisions throughout the operation of the representative office.

Within eleven (11) days after receiving a complete and valid dossier, the Ministry of Finance shall issue a written approval of termination of operation of a representative office and notify such to related agencies.

Section 9

PROCEDURES AND DOSSIERS OF APPLICATION FOR TRANSFER OF INSURANCE CONTRACTS

Article 61. Transfer of insurance contracts

1. In the course of operation, an insurer or a foreign branch may transfer insurance contracts of one or several insurance operations (below referred to as transfer) to other insurers or foreign branches licensed to operate in Vietnam in accordance with Section 3, Chapter III of the Law on Insurance Business.

2. The transfer must adhere to the principle of takeover of rights and obligations and must not harm the interests of insurance buyers after the transfer.

Article 62. Transfer procedures

1. The transferring insurer or foreign branch (below referred to as transferor) shall submit to the Ministry of Finance one (1) transfer application dossier, which comprises:

1.1. A written request for transfer, stating the reason for such transfer:

1.2. A transfer plan, which states:

a/ The name and address of the transferred insurer or foreign branch (below referred to as transferee);

b/ The type of insurance operation and number of transferred insurance contracts;

c/ The mode of transfer of funds, operational reserves and insurance complaints related to the transferred contracts;

d/ Expected time of the transfer;

e/ The transferee’s detailed explanations about its financial capacity after the transfer;

f/ The transfer contract between the transferor and the transferee, covering the following principal contents:

- Subject of the transfer;

- Expected time of the transfer;

- Rights and obligations of the parties to the transfer;

- Modes of settlement of disputes.

1.3. The transferee’s commitment to ensure insurance buyers’ interests under the transferred insurance contracts after the transfer takes effect.

2. Within fifteen (15) days after the written request for transfer of insurance contracts is approved by the Ministry of Finance, the transferor shall:

a/ Publish an announcement on the transfer on two central newspapers in five (5) consecutive issues with the following main contents:

- Names and addresses of the transferor and the transferee;

- Type of insurance operation and number of transferred insurance contracts;

- Expected time of the transfer;

- Address for settlement of insurance buyers’ complaints and petitions related to the transfer.

b/ Send a notice enclosed with a brief transfer plan to each insurance buyer right after the Ministry of Finance approves the written request for transfer. Such notice must state the time limit during which the insurance buyer may cancel the insurance contract if disagreeing with the transfer plan and the date the transfer officially takes effect.

3. An insurance buyer may cancel the insurance contract within fifteen (15) days after the date of receiving the transfer notice as indicated in the postmark. If the insurance buyer cancels the insurance contract, the transferor shall refund to him/her/it the insurance premium amount it has received corresponding to the remaining duration of the insurance contract after subtracting related reasonable costs, for non-life insurance; or the insurance premium amount the insurance buyer has paid after subtracting related reasonable costs, for life insurance.

4. After the Ministry of Finance approves a transfer request, the transferor may not sign new insurance contracts related to the transferred insurance operations.

5. Within sixty (60) days after the Ministry of Finance approves a transfer plan, the transferor shall transfer to the transferee:

a/ All valid insurance contracts under the transfer plan already approved by the Finance Ministry;

b/ Unsettled complaints related to the transferred insurance operations;

c/ All assets, funds and operational reserves related to the transferred insurance contracts and unsettled complaints related to the transferred insurance operations.

Article 63. Approval of dossiers of request for transfer of insurance contracts

1. Within thirty (30) days after receiving a complete dossier of request for transfer, the Ministry of Finance shall issue a written approval or disapproval or request for modification of the dossier. In case the Ministry of Finance requests dossier modification, within sixty (60) days after receiving the request, the transferor shall complete the dossier and send it to the Ministry of Finance. Past this time limit, the Ministry of Finance may refuse to approve the transfer request dossier. In case of disapproval of the dossier, the Ministry of Finance shall give the reason in writing.

2. After approving a transfer request dossier, the Ministry of Finance shall grant to the transferor a modified license, made according to a set form, which accords with the transferor’s licensed insurance operations.

Article 64. Responsibilities of transferees

1. A transferee shall coordinate with a transferor in working out a transfer plan, determining the value of assets related to the funds and operational reserves of the transferred insurance contracts and reaching agreement on the effective date of the transfer plan.

2. From the date of a transfer, the transferee shall perform the obligations under transferred insurance contracts in accordance with the terms concluded between the transferor and insurance buyers, including settlement of complaints which have been filed but not yet reported. The transferee may receive assets related to the funds and operational reserves of the transferred insurance contracts and use those assets to fulfill its obligations under the transferred insurance contracts.

Chapter III

ORGANIZATION OF IMPLEMENTATION

Article 65. Effect

1. This Circular takes effect on October 1, 2012.

2. This Circular replaces the Finance Ministry’s Circular No. 155/2007/TT-BTC of December 20, 2007, guiding the Government’s Decree No. 45/2007/ND-CP of March 27, 2007, detailing a number of articles of the Law on Insurance Business, and Article 1 of the Finance Ministry’s Circular No. 86/2009/TT-BTC of April 28, 2009.

3. Any problems arising in the course of implementation should be promptly reported to the Ministry of Finance for consideration and settlement.-

For the Minister of Finance
Deputy Minister
TRAN XUAN HA