Thông tư 124/2012/TT-BTC

CIRCULAR

GUIDING THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF THE GOVERNMENT'S DECREE NO. 45/2007/NĐ-CP DATED MARCH 27, 2007 DETAILING THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF THE LAW ON INSURANCE BUSINESS, AND THE GOVERNMENT'S DECREE NO. 123/2011/NĐ-CP DATED NOVEMBER 28, 2011, DETAILING THE IMPLEMENTATION OF A NUMBER OF ARTICLES OF THE LAW ON AMENDING AND SUPPLEMENTING A NUMBER OF ARTICLES OF THE LAW ON INSURANCE BUSINESS

Pursuant to the Law on Insurance Business No. 24/2000/QH10 dated December 09, 2000;

Pursuant to the Law on amending and supplementing a number of articles of the Law on Insurance Business No. 61/2010/QH12 dated November 24, 2010;;

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

Pursuant to the Government's Decree No. 123/2011/NĐ-CP dated November 28, 2011, detailing the implementation of a number of articles of the Law on amending and supplementing a number of articles of the Law on Insurance Business, amending and supplementing a number of articles of the Government's Decree No. 45/2007/NĐ-CP dated March 27, 2007 detailing the implementation of a number of articles of the Law on Insurance Business;

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

At the proposal of the Director of the Department of Insurance Management and Supervision

The Minister of Finance promulgates the Circular guiding the implementation of a number of articles of the Government's Decree No. 45/2007/NĐ-CP dated March 27, 2007 detailing the implementation of a number of articles of the Law on Insurance Business, and the Government's Decree no. 123/2011/NĐ-CP dated November 28, 2011, detailing the implementation of a number of articles of the law on amending and supplementing a number of articles of the Law on Insurance Business

Chapter 1.

GENERAL PROVISION

Article 1. Scope of regulation

This Circular guides the establishment and business of enterprises providing life insurance, non-life insurance, health insurance, reinsurance, insurance brokerage, branches of foreign non-life insurance enterprises; the provision of life insurance, non-life insurance, health insurance, reinsurance, insurance brokerage, insurant agents; the establishment and operation of representative offices of foreign enterprises providing life insurance, non-life insurance, health insurance, reinsurance, insurance brokerage in Vietnam.

Article 2. Subjects of application

The enterprises providing life insurance, non-life insurance, health insurance, reinsurance, insurance brokerage, branches of foreign non-life insurance enterprises, insurance agents, relevant organizations and individuals must comply with this Circular and relevant law provisions; ensuring healthy competition and cooperation, prevent monopoly in insurance business.

Article 3. Interpretation of terms

The terms in this Circular are construed as follows:

1. Insurance enterprises are life insurance enterprises, non-life insurance enterprises, health insurance enterprises, reinsurance enterprises, and insurance brokerage enterprises.

2. Insurers are life insurance enterprises, non-life insurance enterprises, and health insurance enterprises.

3. Insurance joint-stock companies are joint-stock companies providing life insurance, non-life insurance, health insurance, reinsurance, or insurance brokerage.

4. Insurance limited liability companies are limited liability companies providing life insurance, non-life insurance, health insurance, reinsurance, insurance brokerage.

5. Foreign branches are branches of foreign non-life insurance enterprises.

6. Commercial banks are banks established and operated legally in Vietnam.

Chapter 2.

SPECIFIC PROVISIONS

SECTION 1. THE ISSUANCE OF ESTABLISHMENT AND OPERATION LICENSE

Article 4. General conditions for issuing the Establishment and Operation License

1. Organizations and individuals contributing capital to insurance enterprises must satisfy the conditions prescribed in Article 63 of the Law on Insurance Business, Clause 8 Article 1 of the Law on amending and supplementing a number of articles of the Law on Insurance Business, and Point a, Clause 1 Article 6 of the Decree No. 45/2007/NĐ-CP Foreign non-life insurance enterprises establishing branches in Vietnam must satisfy the conditions in Clause 1 Article 9 of the Decree No. 123/2011/NĐ-CP.

2. Contributed charter capital of insurance enterprises must not be not lower than the legal capital as prescribed in Article 4 of the Decree No. 46/2007/NĐ-CP (applicable to insurers and insurance brokerage enterprises), Clause 4 Article 43 of the Decree No. 123/2011/NĐ-CP (applicable to reinsurance enterprises). Provided capital of foreign branches must not be lower than the legal capital as prescribed in Point a Clause 1 Article 19 of the Decree No. 123/2011/NĐ-CP.

3. The contributing organizations and individuals shall submit the application for the Establishment and Operation License as prescribed in Article 64 of the Law on Insurance Business, Article 7 of the Decree No. 45/2007/NĐ-CP (applicable to life insurance enterprises, non-life insurance enterprises, insurance brokerage enterprises), Article 40 of the Decree No. 123/2011/NĐ-CP (applicable to health insurance enterprises), Clause 2 and Clause 3 Article 43 of the Decree No. 123/2011/NĐ-CP (applicable to reinsurance enterprises). Foreign non-life insurance enterprises establishing branches in Vietnam must submit the application as prescribed in Article 10 of the Decree No. 123/2011/NĐ-CP.

4. The form, the organization and operation charter of insurance enterprises to be established must comply with the Law on Insurance Business and relevant law provisions. The organization and operation charter of foreign branches must comply with the Law on Insurance Business and relevant legal documents.

5. The anticipated managers, directors of insurance enterprises and foreign branches must satisfy the conditions for managerial capability and credentials as prescribed in Article 13 of the Decree No. 45/2007/NĐ-CP (applicable to insurance enterprises), Clause 2 Article 12 of the Decree No. 123/2011/NĐ-CP (applicable to foreign branches), and the guidance from the Ministry of Finance.

6. The technical facilities, equipment, and information technology system of insurance enterprises and foreign branches must be ready to work right after the Establishment and Operation License is issued.

Article 5. Conditions for issuing the Establishment and Operation License of an insurance enterprise

Apart from the general conditions prescribed in Article 4 of this Circular, organizations and individuals contributing capital to the establishment of insurance enterprises must also satisfy the following conditions:

1. For the establishment of insurance joint-stock companies

1.1. Having at least 02 founding shareholders are organizations. For reinsurance joint-stock companies, the shareholders being organizations must operate in finance, banking, or insurance.

1.2. The structure of contributed charter capital must comply with the following provisions:

a) A shareholder being an individual may possess up to 10% of charter capital;

a) A shareholder being an organization may possess up to 20% of charter capital;

a) Shareholders and relevant persons may possess up to 20% of charter capital;

d) The founding shareholders must possess at least 50% of the liquidatable common share of a joint-stock insurance company for at least three (03) years as from being issued with the Establishment and Operation License.

1.3. Contributing organizations must satisfy the following conditions:

a) The capital must be contributed from the equity capital, not the loaned capital, investment trust capital of other organizations and individuals; the remainder after deducting the long-term investment that is derived from the equity capital from the equity capital, must be higher than the capital planned to be contributed to the insurance enterprise in the year preceding the year when the application for the Establishment and Operation License is submitted.

b) An organization that contributes 10% capital or more must have a profitable business without accumulative loss for three (03) years preceding the year when the application for the Establishment and Operation License is submitted;

c) The minimum equity capital must be 50% of the legal capital of the insurance enterprises; the contributed capital must not exceed 25% of the equity capital of such organization;

d) The contributing organizations being insurance enterprises, commercial banks, or financial companies must maintain and satisfy the capital safety conditions and other financial conditions as prescribed by professional laws.

1.4. Contributing individuals must satisfy the following conditions:

a) Making the contribution using their own capital, not loaned capital or investment trust capital from other organizations and individuals.

b) The monetary contribution capacity must be proved: certification from the bank about the balance in VND (including saving deposits) or freely convertible foreign currency in the bank account (the minimum balance must equal the money being contributed). The date of certification of the bank must not exceed thirty (30) days as from the day of submitting the application for the Establishment and Operation License.

2. For the establishment of insurance limited liability companies (insurance LLC)

2.1. The contributors must be organizations with legal status, including:

a) Vietnamese contributing organizations that satisfy the conditions in Clause 2 Article 39 of the Decree No. 123/2011/NĐ-CP (applicable to insurers), Clause 3 Article 43 of the Decree No. 123/2011/NĐ-CP (applicable to reinsurance enterprises).

b) Foreign contributing organizations must satisfy the conditions in Clause 2 and Clause 3 Article 6 of the Decree No. 45/2007/NĐ-CP.

2.2. Contributing organizations that satisfy conditions in Point 1.3 Clause 1 this Article.

Article 6. Conditions for issuing Establishment and Operation Licenses to foreign branches

Foreign insurance enterprises wishing to establish branches in Vietnam must satisfy the conditions in Point c and Point d Clause 2 Article 9 of the Decree No. 123/2011/NĐ-CP; and Article 4, Point 1.3.a and Point 1.3.b Clause 1 Article 5 of this Circular.

Article 7. The application for the Establishment and Operation License

1. The application for the Establishment and Operation License is made under the form in Annex 1 promulgated together with this Circular.

2. The draft Charter of organization and operation (of insurance enterprises) or the draft Regulation on organization and operation (of foreign branches), the draft Charter of organization and operation of insurance enterprises must be signed by competent representatives of the contributing parties as prescribed by law. The draft Regulation on organization and operation of foreign branches must be approved by the foreign non-life insurance enterprise.

3. The first 5-year business plans of insurance enterprises and foreign branches include the following primary contents:

a) The general assessment about the business plan of the insurance enterprise or the foreign branch in the market situation, including the challenges and potentials;

b) The assessment about the competition on the market of the insurance enterprise or the foreign branch being established that proves the advantages of the enterprise or the branch when participating in the market;

c) Analyzing the insurance services, the customers and the sale network going to be run;

d) The condition for launching the insurance services as prescribed by law (for conditional insurance techniques);

dd) The strategy of the insurance enterprise or the foreign branch for developing and expanding their network;

e) The estimate of business results, revenue, and indemnity of each service, the managerial cost, the plan for financial investment from the equity capital and the insurance reserves funds. The norms must be based on grounds and reasonable assumption;

g) The draft of the procedures for the sales, appraisal, indemnity, internal control, financial management, investment, and reinsurance program management;

h) The plan for leaving insurance reserves under the Decree No. 46/2007/NĐ-CP and its guiding documents;

i) The estimate of the solvency margin as prescribed in the Decree No. 46/2007/NĐ-CP and its guiding documents;

k) The information technology investment plan, specifying: the investment scale, the investment period, the type of technology being applied, the application of information technology to the activities of the insurance enterprise or the foreign branch;

l) The diagram of organization; the description of the functions of each division; the structure and quantity of employees in each division; the initial and regular training plan of the insurance enterprise or the foreign branch.

4. The list, résumé, the notarized copies of the qualifications proving the capability and credentials of the persons holding the managerial positions in the insurance enterprise or the foreign branch. The President of the Board of Directors (President of the Member assembly, Company President), General Director (Director) of the insurance enterprise, and the General Director (Director) of the foreign branch must have judicial résumés.

5. The documents related to the founding shareholders (or members) or the contributors that contribute at least 10% of charter capital:

5.1. For contributing shareholders (or members) being organizations:

a) An authenticated copy of the Establishment Decision, Establishment and Operation License, Certificate of business registration or the contributing organization within three (03) months as from submitting the application for the License.

b) The Charter of organization and operation of the contributing organization;

c) The written decision made by competent authorities on the participation in the contribution to the establishment of the insurance enterprise or the foreign branch in Vietnam;

d) The written authorization for the representative of the contributing organization, specifying the authorization period and contents (if any). The representative must have the ID papers (notarized copies) as prescribed by law;

dd) The audited Financial statements in the three (03) years preceding the yearn when the application is submitted, and the documents proving the contribution capacity as prescribed in Point 1.3 Clause 1 Article 5 of this Circular.

5.2. For contributing shareholders (or members) being individuals:

a) The ID papers (notarized copies) and the judicial résumé as prescribed by law;

b) The documents proving the contribution capacity as prescribed in Point 1.4 Clause 1 Article 5 of this Circular.

5.3. The certification from a commercial bank about the balance in the escrow account, including the contributed charter capital of each founding shareholder (or member) or contributor that contributes at least 10% of charter capital.

5.4. The written commitments made by the contributing shareholders (or members) that the capital being contributed to the establishment of the insurance enterprise or the foreign branch is legal, and is not loaned money or investment trust in any form.

6. The principles, terms, and insurance premiums of the insurance services planned to be launched. These provisions are not applicable to the application for the Establishment and Operation License of insurance brokerage enterprises.

7. The proof about the establishment of technical facilities for insurance business, including:

a) The right to use the anticipated location of the head office and braches (if any) of the enterprise being established;

b) The readiness of the infrastructure, equipment, software in order to support the professional activities and supervise the business on the basis of complying with laws and internal procedures of insurance enterprises or foreign branches.

Article 8. The application for the Establishment and Operation License of joint-stock insurance companies

1. The application for the Establishment and Operation License of a joint-stock insurance company includes the following documents:

a) The documents specified in Article 7 of this Circular;

b) The Minutes of the meeting of the investors about:

- The consent to the capital contribution to the establishment of the joint-stock insurance company, enclosed with the list of founding shareholders or contributors of at least 10% charter capital;

- The approval for the draft Charter of organization and operation of the joint-stock insurance company.

c) The written authorization for a representative of the investors to bear responsibility for implementing the application procedures for the establishment license of the joint-stock insurance company.

d) The written commitments of the contributing investors on the fulfillment of the requirements for the charter capital structure prescribed in Point 1.2.c Clause 1 Article 5 of this Circular.

2. The documents specified in Point b, and Point c Clause 1 this Article must contain the signatures of every investors being the contributing founding shareholders.

Article 9. The application for the Establishment and Operation License of an insurance LLC

The application for the Establishment and Operation License of an insurance LLC includes the following documents:

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

2. b) The Minutes of the meeting of the investors (for applications for the establishment of 2-member LLC or more) about:

- The consent to the capital contribution to the establishment of the insurance LLC, enclosed with the list of founding shareholders or contributors of at least 10% charter capital;

- The approval for the draft Charter of organization and operation of the insurance LLC.

3. The joint venture contract (in case domestic organizations and foreign organizations contribute capital to the establishment of a 2-member LLC or more).

4. The written certification from the competent agency of the country where the head office of the foreign investor is situated that:

a) The investor is allowed to establish insurance enterprises in Vietnam;

b) The investor does not seriously violate the provisions on insurance business and other laws of the country where the investor’s head office is situated in three (03) years preceding the year when the application is submitted;

c) The written certification from the competent agency of the country where the investor’s head office is situated that the investor is in a healthy financial state until the end of the fiscal year preceding the year when the application is submitted.

In case the law of the country where the investor’s head office is situated does not require a certification from its competent agencies, it is required to have an evidence for this.

5. The written authorization for a person anticipated to be designated as the General Director (Director) in Vietnam (for the application for the establishment license of the 1-member LLC) and ID papers of the authorized person (notarized copies) as prescribed by law.

Article 10. The application for the Establishment and Operation License of a foreign branch

The application for the Establishment and Operation License of a foreign branch includes the documents prescribed in Clause 6, Clause 7, Clause 8 Article 10 of the Decree No. 123/2011/NĐ-CP and the documents specified in Article 7 of this Circular.

Article 11. Procedures for issuing the Establishment and Operation License

1. 03 sets of the application the Establishment and Operation License shall be sent to the Ministry of Finance, at least 01 set among which is original. The application made by foreign insurance enterprises or foreign partners includes 01 Vietnamese copy and 01 English translation. The documents that contain foreign stamps, signatures, and positions in the application must be consularly legalized. The Vietnamese copy and the Vietnamese translation must be authenticated as prescribed by law. The investor must be responsible for the accuracy of the application for the Establishment and Operation License.

2. If the application is not complete and valid, the Ministry of Finance shall notify the investor in writing for supplementation within 30 days as from receiving the application from the investor. The maximum supplementation period is six (06) months as from the date of notification. If the investor fails to supplement the application punctually, the Ministry of Finance shall refuse to issue the license in writing. The consideration and issuance period begins when the application is complete and valid.

3. Within 60 days as from receiving the complete and valid application from the investor, depending on the appraisal results of the Ministry of Finance about the technical facilities, the Ministry of Finance shall issue the Establishment and Operation License to the insurance enterprise or the foreign branch under the form in Annex 2 promulgated together with this Circular.

Article 12. The tasks need to be done before insurance enterprises and foreign branches come into operation

1. Within 30 days as from being issued with the Establishment and Operation License, the insurance enterprise or the foreign branch must complete the tasks below:

a) Completing the procedures for designating the President of the Board of Directors (President of the Member assembly, Company President), General Director (Director) of the insurance enterprise, or the General Director (Director) of the foreign branch;

b) Announcing the operation as prescribed in Clause 1 Article 9 of the Decree No. 45/2007/NĐ-CP (applicable to insurance enterprises), Clause 1 Article 15 of the Decree No. 123/2011/NĐ-CP (applicable to foreign branches).

2. Within 12 months as from being issued with the Establishment and Operation License, the insurance enterprise or the foreign branch must complete the procedures below in order the officially commence the insurance business:

a) Paying the licensing fee to the State budget as prescribed by law;

b) Converting the capital in the escrow account into charter capital (or provided capital) after being issued with the Establishment and Operation License by the Ministry of Finance;

c) Paying the deposit as prescribed in Article 6 of the Decree No. 46/2007/NĐ-CP (applicable to insurance enterprises) and Clause 2 Article 19 of the Decree No. 123/2011/NĐ-CP (applicable to foreign branches) at a commercial bank;

d) Making the stamp, registering the tax code, opening a transaction account at a bank as prescribed by law;

dd) Implement the procedures for requesting the Ministry of Finance to:

- Approve the method of leaving reserves as prescribed by law. This provision is not applicable to insurance brokerage enterprises;

- Approve the insurance services planned to provide, approve the Actuary title, approve the method of splitting funds and surplus distribution between the owners’ fund and the insurance policy holders’ fund participating in profit distribution (for life insurance enterprises);

- Approving the health insurance products (for insurers and foreign branches providing health insurance services);

e) Promulgate the procedures for sales, appraisal, indemnity, internal control, financial management, investment, and reinsurance program management;

3. If the insurance enterprise or the foreign branch does not commence their operation within 12 months as from being issued with the Establishment and Operation License, the Ministry of Finance shall revoke the License issued.

SECTION 2. AMENDING THE ESTABLISHMENT AND OPERATION LICENSE

Article 13. Changing the name of insurance enterprises and foreign branches

1. An insurance enterprise or a foreign branch wishing to change its name must send the Ministry of Finance 01 dossier including:

a) The written request for changing the name of the enterprise or the branch under the form in Annex 3 promulgated together with this Circular;

b) The written approval from competent persons prescribed in the Charter of organization and operation (of insurance enterprises) or the Regulation on organization and operation (of foreign branches) for the changing of the enterprise name or the branch name.

2. Within 21 days as from receiving the complete dossier as prescribed in Clause 1 this Article, the Ministry of Finance shall issue the Amendment license under the form in Annex 7 promulgated together with this Circular. The refusal (if any) must be explained in writing by the Ministry of Finance.

Article 14. Increasing or decreasing the charter capital (or provided capital)

1. An insurance enterprise wishing to change its charter capital, or a foreign branch wishing to change its provided capital must send the Ministry of Finance 01 dossier, including:

a) The written request for the change of the charter capital (or provided capital) under the form in Annex 3 promulgated together with this Circular;

b) The approval from competent persons for the increase or decrease of the charter capital (or provided capital);

c) The plan for increasing charter capital (or provided capital). The plan for increasing charter capital (or provided capital) must specify:

- The demand of capital increase and the capital use;

- The business efficiency on the basis of the new charter capital (or provided capital);

- The management and supervision capability of the insurance enterprise or the foreign branch over the increase of capital scale and operation scale;

- The feasibility of the capital increase plan: total increased capital, capital mobilization method and period.

d) The list of shareholders (or members) anticipated to posses at least 10% of charter capital of the insurance enterprise after increasing capital; the documents proving that such shareholders (or members) satisfy the conditions prescribed in Clause 1 Article 4 and Article 5 of this Circular (this provision is not applicable to the shareholders (or members) that already possess at least 10% of charter capital of the insurance enterprise before increasing capital).

dd) The plan for decreasing charter capital (or provided capital) must prove that the insurance enterprise or the foreign branch is able to pay all the debts and fulfill other obligations related to property after decreasing capital. 1-member LLC must not decrease charter capital.

2. Within 14 days as from receiving the complete and valid dossier prescribed in Clause 1 this Article, the Ministry of Finance shall notify in writing the approval or refusal of the request for changing charter capital (or provided capital). The refusal must be explained by the Ministry of Finance.

In case the charter capital is increased by issuing shares to the public, insurance enterprises may issue in accordance with the Law on Securities after being approved by the Ministry of Finance on principle.

3. Within 06 months after the Ministry of Finance approves the change of charter capital (or provided capital), the insurance enterprise or the foreign branch must complete the capital change and submit 01 dossier to the Ministry of Finance, including:

a) A summary report on the change of charter capital (or provided capital) compared to the plan for capital change approved by the Ministry of Finance;

b) The proof that the shareholders (or members) have completely provided the increased capital for the enterprise or the branch (when increasing capital); the proof that the enterprise or the branch has completed paying the decreased capital to its shareholders (or members) when decreasing capital.

If the approved plan for changing capital is not implemented, the insurance enterprise or the foreign branch must send reports on the settlement plan to the Ministry of Finance.

4. Within 07 working days as from receiving the complete dossier as prescribed in Clause 3 this Article, the Ministry of Finance shall issue the Amendment license under the form in Annex 7 promulgated together with this Circular.

Article 15. Opening or shutting down branches and representative offices

1. Opening branches, representative offices of insurance enterprises

a) A insurance enterprise wishing to open branches or representative offices must satisfy the conditions in Clause 1 Article 11 of the Decree No. 45/2007/NĐ-CP and the following guidance:

- The equity capital and charter capital contributed must satisfy the conditions as prescribed by law;

- Not getting total fines of 200 million VND or more for violations of insurance business in the previous12 months as from applying for the opening of branches or representative offices;

- Having appropriate information technology systems to support professional activities of the insurance enterprise;

b) The application dossier for opening branches or representative offices must comply with Clause 2 Article 11 of the Decree No. 45/2007/NĐ-CP and the following guidance:

- The written application for opening branches or representative offices under the form in Annex 3 promulgated together with this Circular;

- The written approval from competent persons prescribed in the Charter of organization and operation of the insurance enterprise applicable to the opening of branches and representative offices;

- The judicial résumé and qualifications (authenticated copy) proving the education and skills of the person anticipated to be designated as the head of the branch or representative office;

- The proof of work experience of the head of the branch or representative office;

- The proof that the labor contract between head of the branch or representative office and the old unit has expired;

- The draft Regulation on organization and operation of the branch or representative office must not contradict the laws and the Charter of organization and operation of the insurance enterprise;

- The proof of the right to use the location to situate the branch or representative office;

- The proof that the branch or representative office has established the software system that satisfies the requirements in Point a Clause 1 this Article.

c) Within 21 days as from receiving the complete and valid dossier prescribed in Point b Clause 1 this Article, depending on the appraisal results, the Ministry of Finance make the written approval or refusal of the licensing. The refusal must be explained in writing by the Ministry of Finance. If approved, the Ministry of Finance shall issue the Amendment license under the form in Annex 7 promulgated together with this Circular.

d) The branch and representative office of the insurance enterprise must commence their operation within 06 months as from being licensed. If the branch or representative office of the insurance enterprise fails to commence their operation after such period expires, the Amendment license shall be revoked.

2. Shutting down branches, representative offices of insurance enterprises

a) When an insurance enterprise shut down its branch or representative office, it must submit 01 dossier on shutting down the operation to the Ministry of Finance, including:

- a) The written request for the change of the charter capital (or provided capital) under the form in Annex 3 promulgated together with this Circular;

- The written approval from competent persons prescribed in the Charter of organization and operation of the insurance enterprise applicable to the shutting down of branches and representative offices (original);

- The report on the operation of the branch or representative office in the previous 03 years. The report on the operation from the beginning of the branch or representative office has operated less than 03 years;

- The responsibility, arising issues and settlement plans before shutting down the branch or representative office.

b) Within 21 days as from receiving the complete and valid dossier prescribed in Point a of this Clause, the Ministry of Finance shall make the written approval or refusal. The refusal must be explained in writing by the Ministry of Finance. If approved, the Ministry of Finance shall issue the Amendment license under the form in Annex 7 promulgated together with this Circular.

3. The procedures for opening or shutting down branches and representative offices of insurance enterprises overseas must comply with the law provisions on insurance business and overseas investment approved, and must be approved by the Ministry of Finance. The procedures for requesting the approval must comply with current law provisions.

Article 16. Changing the location of the head office, branches, representative offices and the business location;

1. An insurance enterprise wishing to change the location of the head office, branch or representative office; a foreign branch wishing to change the location of the head office must send 01 dossier to the Ministry of Finance, including:

a) The written request for the change of the location of the head office, branch or representative office under the form in Annex 3 promulgated together with this Circular;

b) The written approval from competent persons prescribed in the Charter of organization and operation (of insurance enterprises) or the Regulation on organization and operation (of foreign branches) for changing the location of the of the head office, branch or representative office;

c) The proof of the right to use the location of the head office, branch or representative office;

2. Within 21 days as from receiving the complete and valid dossier prescribed in Clause 1 this Article, the Ministry of Finance shall make the written approval or refusal. The refusal must be explained.

3. Within 15 days as from changing the business location (including the opening and the shutting down), the insurance enterprise or foreign branches must notify the Ministry of Finance and their customers.

Article 17. Amending the contents, scale, and period of operation

1. a) An insurance enterprise or foreign branches wishing to expand their operation contents and scope must satisfy the conditions in Clause 1 Article 12 of the Decree No. 45/2007/NĐ-CP and the following guidance:

a) The contributed equity capital and charter capital (or provided capital) must satisfy the conditions as prescribed by law;

b) Not getting total fines of 200 million VND or more for violations of insurance business in the previous 12 months as from applying for the expansion of operation contents and scope;

c) The person in charge of the new contents or scope being expanded must satisfy the standards prescribed in Article 28 of this Circular;

2. Insurance enterprises and foreign branches wishing to change their operation contents, scope, and period must send the Ministry of Finance 01 dossier.

3. The dossier on the change of operation contents, scope, and period of an insurance enterprise includes:

a) The written request for the expansion (or contraction) of the operation contents, scope, and period under the form in Annex 3 promulgated together with this Circular;

b) The written approval from competent persons prescribed in the Charter of organization and operation of the insurance enterprise applicable to the expansion (or contraction) of the operation contents, scope, and period (original);

c) The principles, terms, price list of new insurance services to be launched (if any) when expanding the operation contents and scope;

d) The notarized copies of the qualifications and certificates proving the education, credentials, and work experience of the person anticipated to be in charge of the new contents or scope being expanded when expanding the operation contents and scope;

dd) The settlement plan for the unexpired insurance contracts, the plan for obligation fulfillment of relevant parties when contracting the operation contents and scope.

4. The dossier on the change of operation contents, scope, and period of a foreign branch is made as prescribed in Point a, Point b, and Point dd Clause 2 Article 16 of the Decree No. 123/2011/NĐ-CP.

5. Within 21 days as from receiving the complete and valid dossier from the insurance enterprise as prescribed in Clause 3 this Article, or from the foreign branch as prescribed in Clause 4 this Article, the Ministry of Finance shall make the written approval or refusal. The refusal must be explained. If approved, the Ministry of Finance shall issue the Amendment license under the form in Annex 7 promulgated together with this Circular.

Article 18. Dividing, splitting, consolidating, merging, and converting insurance enterprises

1. The division, splitting, consolidation, merger and conversion of insurance enterprises are carried out as prescribed by the Law on Enterprise, Article 16 of the Decree No. 45/2007/NĐ-CP (when dividing, splitting, consolidating, merging), Article 42 of the Decree No. 123/2011/NĐ-CP (when converting), other relevant laws, and the guidance in this Circular.

2. Organizations and individuals contributing capital to insurance enterprises after the division, splitting, consolidation, merger or conversion must satisfy the conditions specified in Clause 1 Article 4 and Article 5 of this Circular.

3. Organizations and individuals contributing capital to new insurance enterprises after the division, splitting, consolidation, merger or conversion must satisfy the conditions specified in Clause 1 Article 4 and Article 5 of this Circular (corresponding to the form of the new enterprises after the division, splitting, consolidation, merger or conversion).

4. The division, splitting, consolidation, merger or conversion of insurance enterprises must not affect the lawful rights and interests of the insurance buyers, the employees, and the State; ensure the stable operation of the insurance enterprises.

5. The division, splitting, consolidation, merger or conversion of insurance enterprises must be approved by the Ministry of Finance before carrying out.

6. Application procedures for the division, splitting, consolidation, merger or conversion of insurance enterprises:

Before dividing, splitting, consolidating, merging, or converting, the insurance enterprise must submit 01 dossier to the Ministry of Finance, including:

a) The written request for the division, splitting, consolidation, merger or conversion of the insurance enterprise under the form in Annex 4 promulgated together with of this Circular;

b) The written approval from competent persons prescribed in the Charter of organization and operation of the insurance enterprise applicable to the division, splitting, consolidation, merger or conversion;

c) The report on the plan for dividing and settling unexpired contracts with customers, debt obligations, obligation to the State, commitments with employees when dividing, splitting, consolidating, merging, or converting the insurance enterprise;

d) The list of contributing shareholders (or members), the charter capital and charter capital structure of the new insurance enterprise being established from the division, splitting, consolidation, merger or conversion;

dd) The principle contract (notarized copy) for the consolidation or merger when consolidating or merging;

e) The opinion from a legitimate asset valuation agency, specifying the determination of share conversion ratio or the value of the contributed capital (when consolidating or merging); or the determination of the asset being distributed to the parties (when dividing or splitting insurance enterprises);

g) The audited Financial statements (notarized copies) of the transferor enterprises in the previous 03 years preceding the year applying for the consolidation or the merger. In case the period from the end of the nearest fiscal year until the time of submitting the application for the consolidation or merger exceeds 90 days, such organization must submit the quarter Financial statements of the nearest quarters;

h) The résumés and ID papers of new contributing shareholders (or members) being individuals; the Certificates of business registration (notarized copies) of new contributing shareholders (or members) being organizations that own at least 10% of charter capital of the insurance enterprise;

i) The qualifications and certificates (notarized copies) proving the credentials of the anticipated executive of the insurance enterprise after dividing, splitting, consolidating, merging, or converting;

k) The proof that the organizations and individuals contributing capital to the insurance enterprise after the division, splitting, consolidation, merger or conversion must satisfy the conditions specified in Clause 2 this Article;

k) The proof that the new insurance enterprises established after the division, splitting, consolidation, merger or conversion satisfy the conditions specified in Clause 3 this Article.

7. Within 14 days as from receiving the complete and valid dossier prescribed in Clause 6 this Article, the Ministry of Finance shall make the written approval or refusal. The refusal must be explained.

Within 07 working days after the division, splitting, consolidation, merger, or conversion is done under the approved plan, the insurance enterprise must report results to the Ministry of Finance. If the approved plan for changing capital is not implemented, the insurance enterprise must report the settlement plan to the Ministry of Finance.

Within 07 working days as from receiving the report on the results of the division, splitting, consolidation, merger or conversion from the insurance enterprise, the Ministry of Finance shall issue the Establishment and Operation License under the form in Annex 2 promulgated together with this Circular.

Article 19. Transferring shares, contributed capital making up at least 10% of charter capital

The transfer of shares, contributed capital making up at least 10% of charter capital must comply with Point e Clause 1, Clause 2 Article 60 of the Law on Insurance Business, Article 16 of the Decree No. 45/2007/NĐ-CP and the following guidance:

1. Transferring shares, contributed capital making up at least 10% of charter capital of the insurance enterprise in the following cases:

a) An individual or an organization holds at least 10% of charter capital of the insurance enterprise after the transfer;

a) An individual or an organization no longer holds at least 10% of charter capital of the insurance enterprise after the transfer.

2. Conditions for transfer:

2.1. The transfer must not affect the lawful rights and interests of the insurance buyers, the employee, and the State; maintain the smooth operation of the insurance enterprise.

2.2. The transfer must be approved by the Ministry of Finance before carrying out.

2.3. For transferee of 10% - under 100% of charter capital transfer form the insurance enterprise: organizations and individuals that receive the transfer must satisfy the conditions specified in Clause 1 Article 4 and Article 5 of this Circular (corresponding to the type of the insurance enterprise of the receiver).

2.4. Transferring 100% charter capital of an insurance enterprise:

a) Organizations and individuals that receive the transfer must satisfy the conditions specified in Point 2.3 Clause 2 this Article;

k) The new insurance enterprise established after transfer must satisfy the conditions prescribed in Clause 2, Clause 4, Clause 5 and Clause 6 Article 4 of this Circular (corresponding to the type of insurance enterprise).

3. Transfer application procedures

Before transferring, the insurance enterprise must send 01 application dossier to the Ministry of Finance. The documents that contain the foreign stamps signatures, and titles in the dossier must be consularly legalized. The Vietnamese copies and Vietnamese translations must be authenticated as prescribed by law. The transferors and transferees must be responsible for the accuracy of the application for transfer.

The application for transfer includes:

3.1. The written application for the transfer made under the form in Annex 5 promulgated together with this Circular.

3.2. The written approval from competent persons prescribed in the Charter of organization and operation of the insurance enterprise applicable to the transfer.

3.3. In case the transferees and transferors are organizations: the written approval for the transfer from a competent agency as prescribed in the Charter of organization and operation of the transferee (for the transfer prescribed in Point a Clause 1 this Article), or of the transferor (for the transfer prescribed in Point b Clause 1 this Article);

3.4. The contract on transfer principle (if any);

3.5. The transfers specified in Point 2.3 Clause 2 this Article must have the following additional documents:

a) The documents proving that the transferee satisfies the conditions specified in Point 2.3 Clause 2 this Article;

b) The list of contributing shareholders (or members), and the charter capital structure after the transfer.

3.6. The transfers specified in Point 2.4 Clause 2 this Article must have the following additional documents:

a) The documents specified in Point 3.5.a Clause 3 this Article;

k) The documents proving that the new insurance enterprise established after the transfer satisfy the conditions specified in Point 2.4.b. Clause 2 this Article.

Within 21 days as from receiving the complete and valid dossier, the Ministry of Finance shall make the written approval or refusal. The refusal must be explained. If approved, the Ministry of Finance shall issue the Amendment license under the form in Annex 7 promulgated together with this Circular, or issue the Establishment and Operation License under the form in Annex 2 promulgated together with this Circular.

Article 20. Dissolving insurance enterprises and foreign branches

1. Insurance enterprises are dissolved as prescribed in Article 82 of the Law on Insurance Business.

2. Before dissolving, insurance enterprises must submit 01 dissolution dossier to the Ministry of Finance and must obtain the approval from the Ministry of Finance.

3. The insurance enterprise dissolution dossier includes:

a) The written request for dissolution and shutting down;

b) The decision made by competent authorities prescribed in the Charter of organization and operation of the insurance enterprise when voluntarily dissolving and being able to pay the debts (original);

c) The proof that all the debts are paid and all property obligations of the insurance enterprise are fulfilled, including:

- The report on the fulfillment of obligations to employees as prescribed by law;

- The report on the fulfillment of debt obligations to insurance policy holders, including the fulfillment of due obligations under the insurance contracts and insurance contract transfer as prescribed (for insurers);

- The report on the fulfillment of obligations to the State and other creditors;

- The written certification from the tax authorities on the fulfillment of tax liability (notarized copy).

d) The Establishment and Operation License of the insurance enterprise (original).

4. Within 07 working days as from receiving the complete and valid dossier prescribed in Clause 3 this Article, the Ministry of Finance shall make the decision on dissolving the insurance enterprises.

5. The dissolution and shutting down of foreign branches must comply with Article 22 of the Decree No. 123/2011/NĐ-CP.

Article 21. Replacing the President of the Board of Directors (President of the Member assembly, Company President), General Director (Director) of an insurance enterprise, or the General Director (Director) of a foreign branch;

1. Before replacing the President, General Director (Director), the insurance enterprise or foreign branches must send 01 notification dossier to the Ministry of Finance and obtain the approval from the Ministry of Finance.

2. The dossier on the replacement of the President, General Director (Director) includes:

- The written request for replacing the President, General Director (Director) under the form in Annex 3 promulgated together with this Circular;

- The written approval from competent persons prescribed in the Charter of organization and operation (of insurance enterprises) or the Regulation on organization and operation (of foreign branches) for the replacement of the President, General Director (Director).

- The judicial résumé and ID papers (notarized copies) as prescribed by law; the qualifications and certificates (notarized copies) proving the education and credentials of the anticipated President, General Director (Director);

- The written commitment made by the anticipated President, General Director (Director) on working for the insurance enterprise or foreign branches when being approved by the Ministry of Finance.

3. Within 21 days as from receiving the complete and valid dossier prescribed in Clause 2 this Article, the Ministry of Finance shall issue the written approval or refusal. The refusal must be explained by the Ministry of Finance. If the Ministry of Finance does not respond after such period, the request for the replacement of the President, General Director (Director) of the insurance enterprise, or the replacement of the General Director (Director) of the foreign branch is implicitly accepted.

SECTION 3. THE ORGANIZATION AND OPERATION OF INSURANCE ENTERPRISES AND FOREIGN BRANCHES

Article 22. Managerial persons of insurance enterprises and foreign branches

1. The managerial persons of an insurance enterprise or a foreign branch in this Circular include: President of the Board of Directors (President of the Member assembly, Company President); General Director (Director); Deputy General Director (Deputy Director); members of the Board of Directors (Member assembly); Chief of the Control Board; Controllers (in case the enterprise does not establish the Control Board); Chief of the Internal Supervision Department; Chief accountant; branch managers; representative office managers (for insurance enterprises); managers of professional departments; Actuary (in life insurance enterprises, non-life insurance enterprises, health insurance enterprises, and foreign branches).

2. The designation of the managerial titles of an insurance enterprise or a foreign branch is carried out as follows:

The designation of the titles of President of the Board of Directors (President of the Member assembly, Company President); General Director (Director); Actuary (in life insurance enterprises, non-life insurance enterprises, health insurance enterprises, and foreign branches) must obtain the approval from the Ministry of Finance as prescribed by law.

b) Insurance enterprises and foreign branches may actively designate other titles apart from the titles specified in Point a Clause 2 this Article. Within 30 days as from the official designation, the enterprise or the branch must send written reports to the Ministry of Finance, enclosed with the documents proving the credentials and experience of the title holders, which satisfy the conditions and standards as prescribed by law.

Article 23. General standards of managerial persons

1. Not being the subjects banned from enterprise management prescribed in Clause 2 Article 13 of the Law on Enterprise.

2. Not having the criminal record expunged after being liable to criminal prosecution, or in jail, or being liable to criminal prosecution, in jail, or having the practitioner’s right abolish be the Court as prescribed by law.

3. Having never been a legal representative of a bankrupt insurance enterprise (except for bankruptcy due to force majeure events), or an insolvent foreign branch, nor been a managerial person of an insurance enterprise or a foreign branch of which the operation license has been revoked due to violations of insurance business.

4. Capable of civil acts.

5. Being a managerial person for 03 consecutive years preceding the time of designation;

a) Not being administrative sanctions in form of discharging from the managerial title approved by the Ministry of Finance, nor having the title designated by the insurance enterprise or the foreign branch suspended;

g) Not being fired due to violations of the procedures for sales, appraisal, indemnity, internal control, financial management, investment, and reinsurance program management in an insurer, reinsurance enterprise, foreign branch, or violations of the procedures for insurance brokerage, internal control, professional ethics in an insurance brokerage enterprise;

c) Not being related to a lawsuit lodged by a competent agency as prescribed by law when being designated as a managerial person of the insurance enterprise or the foreign branch.

Article 24. Standards of the President of the Board of Directors (President of the Member assembly, Company President)

The President of Board of Directors (President of the Member assembly, Company President) must satisfy the conditions specified in Clause 1 Article 13 of the Decree No. 45/2007/NĐ-CP and the following guidance:

1. Satisfying the general standards prescribed in Article 23 of this Circular.

2. Having a higher education degree.

3. Directly working in insurance, finance, banking for at least 05 years, of having experience in managerial job for at least 03 years at an enterprise operating in insurance, finance, and banking.

Article 25. Standards of members of the Board of Directors, Member assembly, Chief of the Control Board, Controllers (in case the enterprise does not establish the Control Board)

1. Satisfying the general standards prescribed in Article 23 of this Circular.

2. Having a higher education degree.

3. Directly working in insurance, finance, banking for at least 03 years, or having worked as a department manager or higher for at least 02 years at an enterprise operating in insurance, finance, and banking.

4. The Board of Directors and the Control Board (of joint-stock insurance companies) must ensure the quantity of members being Vietnamese residents as prescribed in the Law on Enterprise and the Charter of organization and operation of the company.

Article 26. Standards of the General Director (Director) or legal representatives

The General Director (Director) must satisfy the conditions specified in Clause 1 Article 13 of the Decree No. 45/2007/NĐ-CP and the following guidance:

1. Satisfying the general standards prescribed in Article 23 of this Circular.

2. Having a higher education degree.

3. Having certificates qualifications in insurance issued by legitimate institutions that provide insurance training.

4. Having at least 05 years of experience in insurance, finance, banking, of having worked as a General Director (Director) of the foreign branch for at least 03 years of which, or as a department manager at the financial office, or as a branch manager of an insurance enterprise or higher.

5. Residing in Vietnam when holding the position

Article 27. Standards of the Deputy General Director (Deputy Director), Chief accountant, branch manager, and representative office manager

1. Satisfying the general standards prescribed in Article 23 of this Circular.

2. Having a higher education degree.

3. Having certificates qualifications in insurance issued by legitimate institutions that provide insurance training.

4. Having at least 03 years of experience in insurance, finance, banking, or a professional area anticipated to work in.

5. Chief accountants, apart from satisfying the standards in Clause 1, Clause 2 and Clause 3 this Article, must also satisfy the conditions and standards of Chief accountants prescribed in legal documents on accounting and have at least 3 years of experience in insurance accounting or audit.

6. Residing in Vietnam when holding the position

Article 28. Standards of department managers

The managers of the departments of service development, sales, appraisal, indemnity, reinsurance, investment, and internal inspection, must satisfy the following conditions:

1. Satisfying the general standards prescribed in Article 23 of this Circular.

2. Having a higher education degree.

3. Having certificates qualifications in insurance issued by legitimate foreign or domestic training institutions. The managers of the reinsurance department and investment department must have certificates or qualifications in reinsurance or investment.

4. Having at least 3 years of experience in the area anticipated to work in.

5. Residing in Vietnam when holding the position

Article 29. Principles of appointment

1. Members of the Board of Directors, members of the Member assembly of an insurance enterprise must not concurrently be members of the Board of Directors or members of the Member assembly of another enterprise operating in the same area (non-life insurance, life insurance, reinsurance, or insurance brokerage).

2. The General Director (Director), Deputy General Director (Deputy Director) of an insurance enterprise or a foreign branch must not concurrently work for another insurance enterprise or foreign branch that operate in the same area in Vietnam; the General Director (Director) of an insurance enterprise or a foreign branch must not be a member of the Board of Directors or the Member assembly of another insurance enterprise operating in the same area in Vietnam.

3. The General Director (Director), Deputy General Director (Deputy Director) of an insurance enterprise may concurrently hold the managerial title of one branch or representative office or a department of the insurance enterprise. The General Director (Director), Deputy General Director (Deputy Director) of foreign branch may concurrently hold the managerial title of only one department of an that branch.

Article 30. Tasks of actuaries in life insurance enterprises

1. Life insurance enterprises must employ actuaries to perform the following tasks:

a) Formulating the principles, terms, and calculating the insurance premiums of the insurance services; assessing the difference between the estimated and practical cost of each service.

b) Making insurance reserves as prescribed by law.

c) Splitting funds and distribute annual surplus of the insurance policy holders’ fund equitably, reasonable and legally. At the end of the fiscal year, the actuary must make written reports on the insurance business, including the reports on the fund extraction and profit distribution; submit proposals on the amount of profit being distributed to the insurance policy holders to competent persons of enterprises for decisions.

d) Assessing the solvency of the life insurance enterprise and send reports to the Ministry of Finance on every 15^th.

dd) Submitting written reports to the Board of Directors (the Member assembly, the company president) on the financial situation and forecast the future financial situation of the life insurance enterprise every quarter and every year.

e) Promptly submitting written reports to the General Director (Director), the Board of Directors (the Member assembly, the company president) on the unusual issues that may negatively affect the finance of the life insurance enterprise and suggesting solutions. Sending reports to the Ministry of Finance on the serious issue that may affect the solvency of the life insurance enterprise.

g) Assessing the reinsurance program and reinsurance contracts before submitting them to the Board of Director, (the Member assembly, the company president) for approval.

h) Other tasks to ensure the financial security for the life insurance enterprise.

2. Every year, within 90 days after the last day of the fiscal year, the actuary must report the issues related to his or her tasks to the Ministry of Finance as prescribed in Clause 1 this Article under the form in Annex 10 promulgated together with this Circular.

Article 31. Standards of actuaries in life insurance enterprises

1. Trained and having at least 10 years of experience in life insurance calculation, and having worked in area for at least 01 year as from being a fellow of one of the accredited associations of international actuaries such as the Association of Actuaries of UK, Scotland, US, Australia, Canada, or the associations of actuaries being official members of the international associations of actuaries; or having at least 05 years of experience in life insurance calculation as from being a fellow of one of the associations above.

2. Having not violated the actuarial ethics; not being liable to criminal prosecution against the crimes related to the profession.

3. Being an employee at the life insurance enterprise.

4. Residing in Vietnam when holding the position

Article 32. Procedures for appointing, replacing, discharging actuaries of life insurance enterprises

1. Appointing actuaries

a) The Board of Directors (the Member assembly, the company president) of a life insurance enterprise, or the General Director (Director) (in case the enterprise does not have the Board of Directors, the Member assembly, or the company president) must appoint actuaries to perform the tasks prescribed in Article 30 of this Circular. Before appointing an actuary, the life insurance enterprise must send 01 notification dossier to the Ministry of Finance and must receive the written approval from the Ministry of Finance.

b) The dossier on the appointment of the actuary includes:

- The written notification of the appointment of the actuary signed by President of the Board of Directors (the Member assembly, the company president) or the General Director (Director) (in case the enterprise does not have the Board of Directors, the Member assembly, or the company president);

- The certificates and qualifications (notarized copies) proving the credentials, and proof of work experience in life insurance calculation of the person being appointed as an actuary;

- The membership certificate of an accredited Association of actuaries (notarized copies) as prescribed in Clause 1 Article 31 of this Circular;

- The principle contract sign between the appointed person and the insurance enterprise that the person appointed as an actuary will become an employee of the enterprise after the Ministry of Finance approve (authenticated copy);

- The written certification of the international association of actuary specified in Clause 1 Article 31 of this Circular, of which the actuary is a member, that the actuary appointed has not violated any actuarial ethics of until the time of appointment (original);

- The judicial résumé of the person being appointed (original).

2. Replacing actuaries:

a) Before replacing an actuary, the life insurance enterprise must send 01 notification dossier to the Ministry of Finance and must receive the written approval from the Ministry of Finance.

b) The dossier on the replacement of the actuary consists of:

- The written notification on discharging the actuary approved by the Ministry of Finance. a) The written notification of the insurance enterprise must be signed by the President or the General Director (Director) (in case the enterprise does not have the Board of Directors, the Member assembly, or the company president);

- Other documents prescribed in Point b Clause 1 this Article.

3. Annulling the legal status of actuaries

a) An actuary shall have his or her legal status annulled in the following cases:

- The membership certificate of an accredited Association of actuaries is canceled;

- The life insurance enterprise requests the annulment of the legal status of the actuary.

b) The life insurance enterprise must notify the Ministry of Finance in writing when annulling the legal status of an actuary.

4. Within 11 days as from receiving the complete and valid dossiers prescribed in Point b Clause 1 or Point b Clause 2 this Article, the Ministry of Finance shall make the written approval or refusal of the appointment of replacement of the actuary of the life insurance enterprise. The refusal must be explained in writing by the Ministry of Finance. If the Ministry of Finance does not respond after such period, the appointment of replacement of the actuary of the life insurance enterprise is implicitly accepted.

Article 33. Tasks of actuaries of non-life insurance enterprises, health insurance enterprises, and foreign branches

1. Non-life insurance enterprises, health insurance enterprises, and foreign branches must employ actuaries to perform the following tasks:

a) Formulating the principles, terms, and calculating the insurance premiums of the insurance services; assessing the difference between the estimated and practical cost of each service annually;

b) Making insurance reserves as prescribed by law.

c) Assessing the indemnity expenditure of the non-life insurance enterprise, health insurance enterprise, or foreign branch;

d) Calculating the solvency of the non-life insurance enterprise, health insurance enterprise, or foreign branch quarterly, and certifying and sending the solvency calculation report to the Ministry of Finance as prescribed by law;

g) Assessing the reinsurance program and reinsurance contracts before submitting them to the Board of Directors, (the Member assembly, the company president) for approval.

e) Make reports on the investment results of the non-life insurance enterprise, health insurance enterprise, or foreign branch at the end of the fiscal year, specifying the arising risks and make proposals on the investment asset and investment period of each kind of the asset that ensure the comparability between the investment asset and the obligations committed in the insurance contract.

2. Within 02 years as from this Circular takes effect, non-life insurance enterprises, health insurance enterprises, and foreign branches must employ actuaries to perform the tasks specified in Clause 1 this Article.

Article 34. Standards of actuaries of non-life insurance enterprises, health insurance enterprises, and foreign branches

1. Having a higher education degree.

2. Having at least 5 years of experience in insurance.

3. Having qualifications in insurance issued by domestic or foreign accredited training institutions.

4. Not subject to administrative sanctions against violations of insurance business in the previous 03 years preceding the time of appointment.

5. Residing in Vietnam when holding the position

Article 35. Registration of actuaries of non-life insurance enterprises, health insurance enterprises, and foreign branches

1. The non-life insurance enterprise, health insurance enterprise, or foreign branch must submit 01 dossier on registering the actuary to the Ministry of Finance. The registration dossier includes:

a) The written registration of the actuary signed by the President or the Director (Director) of the non-life insurance enterprise, health insurance enterprise, or foreign branch;

b) The certificates, qualifications (notarized copies) and resume of the person being appointed as an actuary of the enterprise or the branch.

2. The Ministry of Finance shall appraise the dossier on registering the actuary of the non-life insurance enterprise, health insurance enterprise, or foreign branch. If necessary, the Ministry of Finance may request the person being appointed as the actuary to describe his or her credentials that satisfy the requirements specified in Clause 1 Article 33 of this Circular.

3. Within 11 days as from receiving the complete and valid dossier prescribed in Clause 1 this Article, the Ministry of Finance shall issue the written approval or refusal. The refusal must be explained in writing by the Ministry of Finance. If the Ministry of Finance does not response after such period, the registration for the actuary of the non-life insurance enterprise, health insurance enterprise, or foreign branch is implicitly accepted.

Article 36. Internal inspection and control

Insurance enterprises and foreign branches shall carry out the internal inspection and control in accordance with the Decree No. 45/2007/NĐ-CP and the following guidance:

1. Insurance enterprises and foreign branches must formulate and promulgate the professional procedures as prescribed in Clause 1 Article 15 of the Decree No. 45/2007/NĐ-CP and organize the internal inspection and control.

2. The professional procedures of insurance enterprises and foreign branches are the documents stipulating the operation, functions, duties, responsibility, and entitlements of each officer of each department, and the cooperation mechanism between the officers and the departments in insurance enterprises and foreign branches. The professional procedures must satisfy the following requirements in order to serve the internal inspection and control:

a) Clearly and transparently distributing the tasks and powers to the individuals and departments in insurance enterprises and foreign branches;

b) Specifying the responsibility of each individual and department in each transaction.

3. The internal inspection and control must be independent from the operation, the business, must assess, detect and report every risk that may negatively affect the efficiency and target of the insurance enterprise or foreign branch to the competent persons of the insurance enterprise or foreign branch for appropriate solutions.

4. The persons in charge of internal inspection and control must have higher education degrees and at least 03 years of experience in insurance, finance, or banking.

5. Requirements for the process of internal inspection and control:

The process of internal inspection and control must be prescribed in the Charter of organization and operation (of insurance enterprises) or the Regulation on organization and operation (of foreign branches), and must satisfy the following requirements:

a) Allowing cross-inspection among the individuals and departments participating in the same professional process;

b) The insurance enterprise or foreign branch must notify their process of internal inspection and control to all of their employees so that they can be aware of its importance and participate efficiently in the internal inspection and control;

c) The managers of professional departments and relevant individuals must regularly consider and assess the effect of the internal inspection and control system; all the drawbacks of this system must be reported to the direct managerial level; the considerable drawbacks that may cause damage or high risks must be promptly reported to the General Director (Director), the President of the Board of Directors (the President of the Member assembly, the Company president), the Control Board;

The department managers of insurance enterprises and foreign branches shall report and assess the results of the internal inspection and control carried out at their department or within their authority; submitting proposals on handling measures for the remaining issues (if any) to the direct leaders periodically or irregularly on demand of the direct leaders.

SECTION 4. SELLING INSURANCE

Article 37. General principle of selling insurance

1. Insurers and foreign branches must sell insurance on the following principles:

a) Honest, open, and upright, avoiding misunderstanding of customers about the products and services provided by insurers and foreign branches;

b) Employees of insurers and foreign branches must be professionally competent and ethical. The employees that directly introduce, offer the insurance and arrange the contract conclusion must possess insurance agent certificates or certificates about the insurance services being provided. The employees in charge of reinsurance, indemnity survey, and insurance payment approval must possess certificates in such works issued by legitimate insurance training institutions;

c) Getting the customer’s information, calculating the finance and professional capability of the enterprise before concluding the insurance contract, maintaining the financial sources, the solvency and risk management system; ensuring no discrimination by insurance conditions and insurance premiums among the insured at the same level of risk;

d) The introduction documents about the products and services of insurers and foreign branches must be clear and comprehensible, without any information that may lead to misinterpretation, and must not contradict the principle and insurance terms of the products allowed to be provided by insurance enterprises and foreign branches;

dd) The illustration documents about the insurance products (life insurance and health insurance) being directly provided for the customers, or through insurance agents or insurance brokerage enterprises allowed to operate in Vietnam, must satisfy the following principles:

- The illustration documents must be approved by the actuaries (of life insurance enterprises, non-life insurance enterprises, insurers, and foreign branches) regarding the hypotheses for calculation before being provided to customers. The illustration documents must be clear, complete and accurate so that customers may make appropriate selections;

- For products with refundable value, the conditions for refund must be provided in the illustration documents, together with the benefits and amount of money received by the customers. It is required to specify that whether such benefits are underwritten or not;

- Insurers and foreign branches must be responsible for the accuracy and the update of the introduction documents of their products and services, the illustration documents during the entire use period;

- The language of illustration documents must be suitable for customers.

e) When making the insurance policy, insurance enterprises and foreign branches must notify their customers in writing of the following information if they are not specified in the insurance policy:

- The insurance period or insurance premium term (if any);

- The name of the individual or affiliated services of the insurer or foreign branch, the address for settling complaints, enquiries, and disputes over the conclusion, execution and termination of insurance contracts;

- The insurance buyers must notify the insurer or foreign branch if their address is changed;

- Every year, life insurance enterprises must notify their insurance buyers of their contract status (for life insurance);

g) Insurers and foreign branches must analyze the customers’ need in order to offer them appropriate insurance products and premium. The analysis of need and consultancy must be made in writing (for life insurance);

h) Insurers and foreign branches shall provide clear explanation to and request information from the insurance buyers. Insurance buyers must provide information related to the insured for insurers and foreign branches;

i) When concluding insurance contracts, insurers and foreign branches must provide sufficient information related to the insurance contracts, the insurance terms and conditions to the insurance buyers. The information provided by the insurers and foreign branches is part of the insurance contracts.

k) Life insurance enterprises must notify the following information to their customers:

- The conclusion of auxiliary insurance contracts together with the primary insurance contract is not a necessary condition for sustain the validity of the primary insurance contract;

- The life insurance contract is refundable when it takes effect and at least 24 months of insurance premium has been paid or less, depending on the agreement in the insurance contract (for insurance contracts periodically paid), or takes effect immediately (for insurance contracts paid as a lump sum);

- Insurers may deduct the outstanding debts before paying the refundable value to the insurance buyer.

Article 38. Prohibited acts in selling insurance

1. Organizations and individuals are forbidden to illegally interfere the selection of insurers, insurance brokerage enterprises, or foreign branches of insurance buyers.

2. It is prohibited to exert the influence of any organization or individual to request, prevent, or force inferior units or relevant persons to buy insurance from an insurer or foreign branch in any way.

3. Insurers and foreign branches are forbidden to take advantage of the reputation, influence or direction of any organization or individual to provide insurance services that affect the legitimate rights and interests of the insurance buyer.

Article 39. Approving life insurance products and health insurance products

1. Before a life insurance enterprise launches a life insurance product, before an insurer or foreign branch launches a health insurance product, they must send 01 application to the Ministry of Finance for approving the insurance products planned to be launched. Insurers and foreign branches must comply with the principles, terms, and insurance premiums approved by the Ministry of Finance.

2. When a life insurance enterprise sell life insurance, an insurer or foreign branch sell health insurance directly to the buyer without paying commission to the agents of insurance brokers, the insurance premiums may be reduced but must not exceed the insurance commission prescribed in this Circular. Insurers and foreign branches must formulate the price reduction process to ensure the equity among the customers. The Member assembly (the Board of Directors, the Company President) of the insurance enterprise, the General Director (Director) of the foreign branch must appraise and approve the price reduction process and rate applicable to the insurance buyers and send written notification to the Ministry of Finance before the application.

3. The application for approving life insurance products or health insurance products includes:

a) The written request for the Ministry of Finance’ approving the product, committing that the insurer or the foreign branch is responsible for the contents and the legitimacy of the insurance terms and conditions;

b) The principles, terms, and insurance premiums of the insurance products planned to be launched must satisfy the requirements in Clause 4 Article 20 of the Decree No. 45/2007/NĐ-CP Insurers and foreign branches are recommended to use the model insurance principles and terms formulated by the Association of Vietnamese Insurers;

c) The formula, method and technical basis for calculating prices and reserves of the insurance products planned to be launched.

For life insurance products that distribute profits, the life insurance enterprise must specify the method and rate of profit distribution in the price calculation basis of the insurance product to be launched.

d) The relevant documents include: the written request for insurance, the introduction and illustration documents, the applications declared and signed by the customer when buying insurance. Those documents are part of the insurance contract;

The application for approving the life insurance or health insurance products must be signed by the legal representative of the insurer or the foreign branch, and certified by the actuary (of the life insurance enterprise, non-life insurance enterprise, health insurance enterprise, or foreign branch).

4. Life insurance and health insurance product appraisal contents

a) Examining the validity of the application for the insurance product, and the conformity of the insurance principles and terms with current law provisions. If the insurance product is developed based on the model insurance principles and terms, the Ministry of Finance shall only examine the validity of the application for the insurance product;

b) Appraising the economic and technical feasibility of the insurance product after obtaining the opinion from the actuary (of the life insurance enterprise, non-life insurance enterprise, health insurance enterprise, or foreign branch).

c) Non-life insurance enterprises and foreign branches selling comprehensive insurance including health insurance must comply with this Article.

5. The period of approving life insurance and health insurance products

Within 30 days as from receiving the complete and valid dossier prescribed in Clause 3 this Clause, the Ministry of Finance shall make the written approval or refusal. The refusal must be explained by the Ministry of Finance.

6. Non-life insurance enterprises may not implement the procedures for approving health insurance products that have been launched before this Circular takes effect. When such insurance products are changed or supplemented, non-life insurance enterprises must implement the procedures for approving the products as prescribed in Clause 3 and Clause 4 this Article.

Article 40. Launching non-life insurance products

Non-life insurance enterprises and foreign branches must launch non-life insurance products in accordance with Clause 3 and Clause 4 Article 20 of the Decree No. 45/2007/NĐ-CP Clause 4 Article 26 of the Decree No. 123/2011/NĐ-CP and the following guidance:

1. The insurance premium in the original insurance contract must not be lower than the fee for reinsurance transfer of that contract.

2. In case the principles, terms, and price of an insurance product do not ensure the financial security of the non-life insurance enterprise or the foreign branch, and affect the interest of the insurance buyers, the Ministry of Finance shall request the non-life insurance enterprise or the foreign branch to stop launching such product to adjust.

3. Based on the requirements of the Ministry of Finance prescribed in Clause 2 this Article, the non-life insurance enterprise or the foreign branch must revise the principles, terms, and price list of the insurance product, and send a report to the Ministry of Finance before launching. The report includes:

a) The report on the revision based on the requirements from the Ministry of Finance, signed by the legal representative of the non-life insurance enterprise or the foreign branch;

b) The revised principles, terms, and price list of the insurance product;

c) The revised explanation of the technical basis for calculating insurance premiums of the insurance product signed by the actuary;

Within 15 days as from receiving the complete and valid dossier, the Ministry of Finance shall make the written approval or refusal. If approved, the non-life insurance enterprise or the foreign branch must launch the insurance product in accordance with the principles, terms, and price list approved by the Ministry of Finance. The refusal must be explained in writing by the Ministry of Finance.

4. Within 15 first days of the month, the non-life insurance enterprise or the foreign branch must report on the products being launched in the preceding month (if any) to the Ministry of Finance under the form in Annex 8 promulgated together with this Circular.

Article 41. Insurance agent commission

1. Insurance agent commission is payments directly made by insurers and foreign branches to insurance agents after the insurance agents provide services for the insurers and foreign branches.

2. Insurers and foreign branches may use the commission paid to insurance agents to perform the following tasks:

a) Introducing or offering insurance;

b) Arranging the insurance contract conclusion;

c) Collecting insurance premiums;

d) Settling complaints, paying indemnity when the insurance matures;

dd) Perform other tasks related to the execution of insurance contracts.

3. The maximum insurance agent commission that an insurer or foreign branch may pay to insurance agents on each type of insurance contracts must comply with the following provisions (except for the cases prescribed in Point 3.5 this Clause):

3.1. Maximum commission on non-life insurance contracts:

3.2. Maximum commission on life insurance contracts:

a) For personal life insurance services:

- For each separate insurance services: life insurance commission is applicable to the primary insurance products as follows:

- When combining separate insurance services: the life insurance commission calculated on the total commission of the life insurance services stated above.

b) For group life insurance: the maximum commission is 50% of corresponding commissions applicable to personal life insurance services of the same type.

3.2. Maximum commission on health insurance contracts is 20%.

3.4. Insurance agent commission on comprehensive insurance contracts is the total commission of each insured risk in the universal contract.

3.5. For the insurance services launched in the pilot program under the Prime Minister’s decisions, and other insurance services apart from that prescribed in Point 3.1, 3.2 and 3.3 Clause 3 this Article, insurers and foreign branches must follow the Ministry of Finance’s guidance.

4. Insurers and foreign branches must not pay insurance agent commission when they provide insurance services by bidding as prescribed in Article 24 of the Decree No. 123/2011/NĐ-CP.

5. Insurers and foreign branches to insurance agents shall formulate and uniformly, openly apply the regulations on paying insurance agent commission depending on the current provisions on insurance agent commission and their conditions and characteristics.

Article 42. Loss prevention and limitation

1. Insurers and foreign branches may use up to 2% of the collected insurance premium to pay for the precautionary measures and loss prevention.

2. The expenses on precautionary measures and loss limitation are prescribed in Clause 2 Article 25 of the Decree No. 45/2007/NĐ-CP.

SECTION 5. REINSURANCE

Article 43. Reinsurance program management

1. Approving reinsurance program management:

a) In order to ensure the security and efficiency of reinsurance business, the Board of Directors, (the Member assembly, the Company president), the General Director (Director) of insurers, reinsurance enterprises, the General Director (Director) of foreign branches must appraise and approve the reinsurance program suitable for the financial capability and business scale of the enterprises, the branches and current law provisions; consider, assess, and adjust the reinsurance program annually or when the market changes.

b) The reinsurance program includes the following primary contents:

- c) Assessing the indemnity expenditure of the non-life insurance enterprise, health insurance enterprise, or foreign branch;

- Determining the retention rate suitable for the accepted insurance risk, the limits of retention rate on one risk unit and the maximum protection rate from the reinsurers;

- Determining the most suitable forms and methods of reinsurance for the management of accepted risks;

- The methods, standards, and process of selecting reinsurers, including the method for assessing the level of risks and financial security of the reinsurers;

- The list of anticipated reinsurers with diversification and classification;

- The method for using the deposit left by the reinsurers;

- Managing the accumulative risk of particular sectors, geographical areas and products;

- The method for controlling reinsurance programs, including the system of internal control and report.

2. Implementing the reinsurance program:

On the basis of the approved reinsurance program, the General Director (Director) of the insurer, the reinsurance enterprise, or the foreign branch must promulgate the process and direction of reinsurance business, in particular:

a) The process of selling insurance, specifying the kind of insurance products being sold; the insurance principles, terms, and the total liability by types of insurance products;

b) Determining the limit of liability being insured under the fixed reinsurance contract applicable to each kind of insurance;

c) Formulating the standards of temporary reinsurance contracts;

d) Comparing the principles and terms of the original insurance contracts with the terms of the reinsurance contract to make sure that all risks are insured (for insurers and foreign branches).

3. Insurers, reinsurance enterprises, foreign branches must regularly update the list of reinsurers, together with the information about the level of risk and the readiness of paying indemnities corresponding to the liability being reinsured; request the deposit proportionally to the level of risk and reputation coefficient of the reinsurers.

Article 44. Retention rate

1. Insurers, reinsurance enterprises, and foreign branches must calculate the retention rate of each kind of insurance and risk; the retention rate of a risk and an insurance event.

2. When calculating the retention rate, insurers, reinsurance enterprises, and foreign branches must consider the following elements:

a) The law provisions on the solvency;

b) The sale ability;

c) The financial ability;

d) The readiness to take risks of insurers, reinsurance enterprises, foreign branches;

dd) the protection for high risks and catastrophic risks;

e) The balance of business results;

g) The constituents the list of the insurance contract;

h) The situation of the domestic and international reinsurance market.

3. Insurers and foreign branches may only retain the maximum liability amount on each risk or each separate loss not exceeding 5% equity capital Reinsurance enterprises may only retain the maximum liability amount on each risk or each separate loss not exceeding 10% equity capital.

4. Insurers, reinsurance enterprises, and foreign branches must not sell reinsurance for the reinsured risks.

Article 45. Reinsurance transfer

1. Insurers, reinsurance enterprises, and foreign branches may transfer part of the insured liability to one or some other insurers, reinsurance enterprises, or foreign branches, but must not transfer all the insured liability in an insurance contract to other insurers, reinsurance enterprises, or foreign branches.

2. For finite reinsurance, before concluding a reinsurance contract, the insurer, reinsurance enterprise, or foreign branch must send a notification signed by the legal representative to the Ministry of Finance on the primary contents of the reinsurance contract, the contract purposes, the commitment on complying with law provisions on insurance business and the accounting regime applicable to the enterprise.

3. The sale of reinsurance must avoid discrimination among Vietnamese insurers, reinsurance enterprises, foreign branches and foreign insurance enterprises.

Article 46. Conditions for foreign reinsurers

1. Foreign reinsurers operating legally and satisfying the requirements for solvency margin as prescribed by the country where there head offices are situated.

2. The best reinsurers and the reinsurers that receive at least 10% of the total liability of each reinsurance contract must be rated “BBB+” according to Standard & Poor’s or Fitch, “B++” according to A.M.Best, "Baal" according to Moody’s, or equivalent ratings of other competent organizations in the nearest fiscal year until the time of concluding the reinsurance contract.

3. For reinsurance provided for a parent company overseas or for companies in the same corporation without reputation ratings as stated above, the insurer, reinsurance enterprise, or foreign branch must send the Ministry of Finance the written document from a insurance management agency of the country where the head offices of the reinsurers are situated, certifying the solvency of the reinsurers overseas in the fiscal year nearest to the year in which reinsurance is sold.

SECTION 6. INSURANCE AGENTS

Article 47. Insurance agent activities

1. Organizations and individuals running insurance agents must satisfy the conditions specified in Article 86 of the Law on Insurance Business, Clause 10 Article 1 of the Law on amending and supplementing a number of articles of the Law on Insurance Business, and must comply with the principle of insurance agents prescribed in Article 28 of the Decree No. 45/2007/NĐ-CP.

2. Insurers and foreign branches shall exercise their rights and fulfill their obligations of insurance agents as prescribed in Article 29 of the Decree No. 45/2007/NĐ-CP.

3. b) Insurance agents shall exercise their rights and fulfill their obligations as prescribed in Article 30 of the Decree No. 45/2007/NĐ-CP.

4. Insurance agents must not commit the following acts:

a) Making false information or advertisements about the contents and scope of operation of insurers and foreign branches, about the insurance conditions and terms that harm the lawful rights and interests of insurance buyers.

b) Preventing insurance buyers from providing information related to insurance contracts, or persuade insurance buyers and the insured to omit the details related to insurance contracts.

c) Attract customers by obstructing, enticing, bribing, threatening the employees or customers of other insurers, foreign branches, insurance agents, or insurance brokerage enterprises.

d) Doing illegal promotions such as promising to reduce or refund the insurance premium, or promising other benefits that the insurer or foreign branch does not provide for customers.

dd) Persuading insurance buyers to rescind their current insurance contracts so that they can buy new insurance contracts.

Article 48. Insurance agent training

1. Insurance agent training program:

1.1. Basic training program:

a) The basic training program includes:

- General knowledge of insurance (insurance principle, insurance services);

- Responsibility of agents, professional ethics of agents;

- Law provisions on insurance business;

- Rights and obligations of insurers, foreign branches and insurance agents in insurance agent activities;

b) The minimum training period is 24 hours of concentrated study.

1.2. Training program about insurance products:

a) The training program about insurance products includes:

- Insurance sales skills;

- Insurance agent practices;

- The insurance products that the agent plans to provide.

b) The minimum training period is 24 hours of concentrated study.

1.3. Insurers and foreign branches must update the contents specified in Point 1.1.a and 1.2.a Clause 1 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) Association of Vietnamese Insurers: provide basic training, or cooperate with insurers or foreign branches to provide training about their insurance products;

b) Insurers and foreign branches: provide training programs about their insurance products, and cooperate with Association of Vietnamese Insurers to provide the basic training;

c) Other training institutions in Vietnam: provide basic training in insurance.

2.2. Conditions for insurance agent training institutions

Association of Vietnamese Insurers, insurers, foreign branches, and training institutions must satisfy the following conditions to provide insurance agent training:

a) Having training programs that satisfy the requirements in Point 1.1.a, Point 1.2.a Clause 1 this Article (corresponding to the training program).

b) Having a teaching staff that satisfies the following standards:

- Possessing college degrees or higher;

- Having at least 2 years of experience in insurance business or teaching.

c) Having technical facilities that satisfy the training work;

d) Being approved by the Ministry of Finance before providing the training.

2.3. Training application procedures:

Before providing insurance agent training, the training institutions must submit 1 application to the Ministry of Finance, including:

a) The written application for providing insurance agent training under the form in Annex 11 promulgated together with this Circular;

b) The notarized copies of the License and Establishment Decision of the organization applying for providing insurance agent training;

a) The insurance agent training programs prescribed in Point 1.1.a, Point 1.2.a Clause 1 this Article (depending on the training program);

d) The list of lecturers enclosed with their résumés, qualifications, and certificates;

dd) The process of training and quality assessment;

e) The proof that technical facilities satisfy the training work;

Within 30 days as from receiving the complete and valid application, the Ministry of Finance shall make the written approval or refusal. The refusal must be explained.

2.4. When the training program is changed or the lecturers are replaced, within 30 days before the new course, the training institution must send written application for the changes to the Ministry of Finance, enclosed with the written explanation for such changes. Within 11 days as from receiving the complete and valid application, the Ministry of Finance shall make the written approval or refusal. The refusal must be explained.

Article 49. Examination and issuance of insurance agent certificates

1. The training institutions shall cooperate with the Ministry of Finance in organizing examination and issuing insurance agent certificates

2. Insurance agent certificates are issued under the form in Annex 12 promulgated together with this Circular.

3. The examination and issuance of insurance agent certificates for the pilot insurance programs under the Prime Minister’s decisions and particular insurance products are carried out as guided by the Ministry of Finance.

4. The insurance agent certificate issued before this Circular takes effect, insurance agents may use such certificate to sell the learned insurance products. Insurance agents wishing to sell new insurance products must be trained about tem (even when the agents sign contracts with new insurers).

Article 50. Report regulation

1. Annually on January 30^th of the succeeding year at the latest, insurance agents shall report the number of courses held, the number of students trained, the number of certificates issued in the year to the Ministry of Finance under the form in Annex 13 promulgated together with this Circular.

2. Insurers and foreign branches must report quarterly as follows:

a) Report the list of operating insurance agents (electronic report or paper report) under the form in Annex 14 promulgated together with this Circular on the 15^th of the first month of the succeeding month at the latest.

b) Report the list of agents that violate the regulations of agent practice or law that have been had their agent contracts terminated by insurance enterprises and foreign branches, under the form in Annex 15 promulgated together with this Circular, to the Ministry of Finance and Association of Vietnamese Insurers n the 15^th of the first month of the succeeding month at the latest, so that the Association of Vietnamese Insurers may notify other insurers and foreign branches.

SECTION 7. INSURANCE BROKERAGE

Article 51. Insurance brokerage activities

1. Insurance brokerage enterprises must make written agreement with insurance buyers when providing original insurance brokerage services for insurance buyers. The agreement must specify the content of insurance brokerage prescribed in Article 90 of the Law on Insurance Business, and the duties and obligations of each party.

The reinsurance brokerage is carried out in conformity with international practice and current law provisions.

2. Insurance brokerage enterprises may be authorized by insurers and foreign branches to collect insurance premiums, pay indemnity, or pay insurance money. The authorization must comply with the following principles:

a) The authorization must be made in writing, specifying the period and scope of authorization, the rights and duties of each party.

b) For insurance brokerage enterprises authorized to collect insurance premiums by insurers and foreign branches:

- The obligation to pay insurance premiums of the insurance buyer is fulfilled when the insurance buyer pays insurance premiums to the insurance brokerage enterprise as agreed in the insurance contracts.

- When the insurance buyer has paid the insurance premiums as agreed in the insurance contract, the insurance brokerage enterprise must pay such insurance premiums to the insurer or the foreign branch within the period agreed by the insurer or foreign branch and the insurance brokerage enterprise but not exceeding 05 working days as from receiving the insurance premiums.

c) For insurance brokerage enterprises authorized to pay insurance money or indemnity by insurers and foreign branches:

- The insurer or foreign branch is still responsible before the insured and the beneficiaries for the insurance money that the insurer or foreign branch must pay to the insured or the beneficiaries.

- The insurance brokerage enterprise must pay the insurance money to the insured or the beneficiaries within 05 working days as from receiving the insurance money from the insurer or foreign branch.

d) An insurance brokerage enterprise may perform the authorized tasks prescribed in Clause 2 this Article if such tasks are related to the insurance contracts arranged by the insurance brokerage enterprise themselves. Insurance brokerage enterprises must not collect any fee to perform the tasks authorized by insurers and foreign branches.

3. Employees of insurance brokerage enterprises directly perform the insurance brokerage prescribed in Article 90 of the Law on Insurance Business must possess certificates in insurance or insurance brokerage issued by legitimate insurance training institutions.

Article 52. Cooperation in insurance brokerage

1. An insurance brokerage enterprise may cooperate with another insurance brokerage enterprise legitimately established and operated in Vietnam, to perform insurance brokerage.

2. The cooperation prescribed in Clause 1 this Article must be agreed in writing, specifying the responsibility, the interests, and the insurance brokerage commission distributed to each party.

Article 53. Prohibited acts in insurance brokerage

1. Preventing insurance buyers and the insured from providing information related to insurance contracts, or persuade insurance buyers and the insured to omit the details related to insurance contracts.

2. Doing promotions by promising to provide illegal interests to persuade customers to conclude insurance contracts.

3. Persuading insurance buyers to rescind their current insurance contracts to buy new insurance contracts.

4. Advising customers to buy insurance from an insurer or foreign branch with less competitive terms and conditions than that of other insurers or foreign branches in order to collect higher commission.

5. Cooperating with the organizations and individuals (except for the insurance brokerage enterprises prescribed in Clause 1 Article 52 of this Circular) to perform one or some stages of an insurance brokerage process.

Article 54. Insurance brokerage commission

1. The original insurance brokerage commission is agreed by the insurer or foreign branch and the insurance brokerage enterprise, in accordance with Vietnam’s Law. In all cases, the maximum insurance brokerage commission of each insurance service arranged by the insurance brokerage enterprise must not exceed 15% insurance premium collected by the insurer or foreign branch.

2. The reinsurance brokerage commission is agreed by the parties, in accordance with international practice.

SECTION 8. REPRESENTATIVE OFFICES OF FOREIGN INSURANCE ENTERPRISES IN VIETNAM

Article 55. Representative office license

1. A foreign insurance enterprise wishing to open representative offices in Vietnam must send 1 application for the representative office license to the Ministry of Finance as prescribed in Article 110 of the Law on Insurance Business. The documents that contain foreign stamps, signatures, and positions in the application must be consularly legalized. The Vietnamese copies and Vietnamese translations must be authenticated as prescribed by law. The investor must be responsible for the accuracy of the application for the License.

2. The application for opening representative offices in Vietnam must be signed by the President of the Board of Directors or a competent person as prescribed in the Charter of organization and operation of foreign insurance enterprise. The form of application for opening branches or representative offices in Vietnam is provided in Annex 16 promulgated together with this Circular.

3. Within 60 days as from receiving the application for the representative office license, the Ministry of Finance shall issue the representative office license to the foreign insurance enterprise in Vietnam under the form in Annex 17 promulgated together with this Circular. The refusal must be explained in writing by the Ministry of Finance.

Article 56. Reports of representative offices

Representative offices of foreign insurance enterprises in Vietnam must submit the periodic reports on their operation to the Ministry of Finance in accordance with Article 38 of the Decree No. 45/2007/NĐ-CP and the following guidance:

1. Representative offices of foreign insurance enterprises in Vietnam must report their operation every 06 months and every year to the Ministry of Finance. The report of the first six months must be sent before July 30^th, the annual report must be sent before March 01^st of the succeeding year.

2. The contents of the reports prescribed in Clause 1 this Article include:

a) The organizational structure of the representative office, the personnel, the number of Vietnamese and foreign employees working in the representative office;

b) The primary tasks of the representative office in the report period include:

- The market access;

- The relation between the representative office and insurance enterprises, foreign branches, and Vietnamese economic organizations;

- The consultation and training;

- Other tasks as prescribed law.

c) The operation plan for the future.

3. Apart from the periodic reports stated above, the Ministry of Finance may request representative offices to send reports, provide documents, and explain the issues related to their activities if necessary.

Article 57. Amending and supplementing the representative office licenses

1. When one of the following contents in the representative office license is changed, the foreign insurance enterprise must submit 01 application for amending and supplementing the license:

a) The name, nationality, or address of the foreign insurance enterprise;

b) The name of the representative office;

d) The operation of the representative office;

2. The application for amending and supplementing the license;

a) The written request for amending the representative office license under the form in Annex 18 promulgated together with this Circular;

b) The written approval from competent persons prescribed in the Charter of organization and operation of the foreign insurance enterprise for the changes prescribed in Clause 1 this Article.

3. Within 11 days as from receiving the complete and valid application as prescribed in Clause 2 this Article, the Ministry of Finance shall issue the Amendment license under the form in Annex 20 promulgated together with this Circular. The refusal must be explained in writing by the Ministry of Finance.

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

1. A foreign insurance enterprise must notify the Ministry of Finance when replacing the manager of a representative office in Vietnam.

2. A representative office must notify the Ministry of Finance when changing the office location and their employees.

3. The notification of the changes prescribed in Clause 1 and Clause 2 this Article must be made in writing under the form in Annex 19 promulgated together with this Circular within 30 days as from making changes, enclosed with the documents proving the changes, including: the résumé and notarized copies of the ID papers as prescribed by law (when replacing representative office manager), the proof of the right to use the representative office location (when changing the representative office location).

Article 59. Representative office operation extension

1. Foreign insurance enterprises wishing to extend their operation period must satisfy the following conditions:

a) The representative office of the foreign insurance enterprise in Vietnam must not receive fines of 200 million VND or more for violations of insurance business for 12 months at the time of applying for the extension;

b) The foreign insurance enterprise is operating legally and stably at the time of applying for the extension;

2. The representative office operation extension must not exceed 05 years.

3. At least 30 days before the representative office license expires, the foreign insurance enterprise wishing to extend the operation period of their representative office must submit 01 application to the Ministry of Finance, including:

a) The written request for extending the operation of the representative office under the form in Annex 16 promulgated together with this Circular;

b) The notarized copy of the Establishment and Operation License of the foreign insurance enterprise;

c) The notarized copy of the audited Financial statements of the foreign insurance enterprise in the previous 03 years preceding the year applying for the extension;

d) The résumé, notarized copies of the ID papers of the person anticipated representative office manager (when replacing the representative office manager);

4. Within 21 days as from receiving the complete application for extension, the Ministry of Finance shall make the written approval or refusal. The refusal must be explained.

Article 60. Shutting down representative offices

1. A representative office is shut down in the following cases:

a) Requested by the foreign insurance enterprise;

b) The foreign insurance enterprise shuts down;

c) The representative office license is revoked as prescribed in Clause 3 Article 37 of the Decree No. 45/2007/NĐ-CP.

2. Procedures for shutting down representative offices:

For shutting down the representative office, the foreign insurance enterprise must submit 01 Vietnamese dossier to the Ministry of Finance, including:

a) The written request for shutting down the representative office under the form in Annex 16 promulgated together with this Circular;

b) The proof that all the obligations to employees and other organizations and individuals in Vietnam have been fulfilled;

c) The original of the representative office license;

d) The relevant licenses and decisions during the operation of the representative office.

Within 11 days as from receiving the complete and valid dossier, the Ministry of Finance shall make the written approval or refusal, and notify relevant agencies.

SECTION 9. PROCEDURES AND DOSSIERS FOR TRANSFERRING INSURANCE CONTRACTS

Article 61. Transferring insurance contracts

1. During the operation, insurers and foreign branches may transfer the insurance contracts of one of some insurance services (hereinafter referred to as transfer) to other insurers and foreign branches licensed to operate in Vietnam as prescribed in Section 3, Chapter III of the Law on Insurance Business.

2. The transfer must ensure that the rights and obligations are inherited without infringing the interests of insurance buyers after the transfer.

Article 62. Transfer procedures

1. The insurer or foreign branch that transfers (hereinafter referred to as the transferor) must submit 01 application for the transfer to the Ministry of Finance, including:

1.1. The written application for the transfer, specifying the reasons for transfer;

1.2. The transfer plan, specifying:

a) The name and address of insurer or foreign branch that receives the transfer (hereinafter referred to as the transferee);

b) The type of insurance and the number of insurance contracts transferred;

c) The method of transferring the funds, reserves, and complaints related to the transferred contracts;

d) The anticipated time of transfer;

dd) The detailed explanation of the transferee for the fulfillment of the financial requirements after the transfer.

e) The transfer contract between the transferor and the transferee includes:

- The subjects of transfer;

- The anticipated time of transfer;

- The rights and obligations of the parties;

- Method for settling disputes.

1.3. The commitment of the transferee on the interests of insurance buyers under the insurance contracts being transferred after the transfer commences.

2. Within 15 days as from the application for the transfer is approved by the Ministry of Finance, the transferor must:

a) Announce the transfer on 02 central newspapers in 05 consecutive issues with the following contents:

- The name and address of the transferor and the transferee;

- The type of insurance and the number of insurance contracts transferred;

- The anticipated time of transfer;

- The address for settling complaints and enquiries of insurance buyers related to the transfer.

b) Send the notification enclosed with a summarized transfer plan to every insurance buyer right after the Ministry of Finance approves the application for the transfer. The notification sent to insurance buyers must specify the time the insurance buyers may terminate the insurance contracts if they do not concur with the transfer plan, and the effective date of the transfer plan.

3. Insurance buyers may terminate their insurance contracts within 15 days as from receiving the notification on the transfer according to the postal stamp. In case the insurance buyer terminates the insurance contract, the transferor must refund the insurance premium received corresponding to the remaining time of the insurance contract, after deducting the relevant reasonable costs (for non-life insurance); or refund the insurance premium paid by the insurance buyer after deducting the relevant reasonable costs (for life insurance).

4. As from the day the Ministry of Finance approves the application for the transfer, the transferor must not sign new insurance contracts for the transferred insurance services.

5. Within 60 days as from the application for the transfer is approved by the Ministry of Finance, the transferor shall transfer the following to the transferee:

a) All the unexpired insurance contracts belonging to the transfer plan approved by the Ministry of Finance;

c) The outstanding complaint files related to the transferred insurance services;

c) All the assets, funds and reserves related to the transferred insurance contracts and the outstanding complaint files related to the transferred insurance services;

Article 63. Approving the application for transferring insurance contracts

1. Within 30 days as from receiving the application for transferring, the Ministry of Finance shall make the written approval, refusal, or request to amend and supplement the application for transferring. Within 60 days as from receiving the request for amendment and supplementation from the Ministry of Finance, the transferor must complete and send the application to the Ministry of Finance. After the above period, the Ministry of Finance may refuse the application. The refusal must be explained in writing by the Ministry of Finance.

2. After approving the application for transferring, the Ministry of Finance shall issue the Amendment license under the form in Annex 7 promulgated together with this Circular to the transferor in accordance with the insurance services licensed to be provided by the transferor.

Article 64. Responsibility of the transferee

1. The transferee must cooperate with the transferor in formulating the transfer plan, calculating the value of assets related to the funds and reserves of the insurance contracts transferred, and make an agreement on the effective date of the transfer plan.

2. As from receiving the transfer, the transferee must fulfill the obligations of the transferred insurance contracts in accordance with the terms and conditions signed by the transferor and insurance buyers, including the obligations to settle unreported complaints.

The transferee is entitled to receive the assets related to the funds and reserves of the transferred insurance contracts, and to use such assets to fulfill the obligations under the transferred insurance contracts.

Chapter 3.

IMPLEMENTATION ORGANIZATION

Article 65. Effects

1. This Circular takes effect on October 01, 2012.

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

3. All the difficulties arising during the course of implementation must be reported to the Ministry of Finance for consideration and settlement./.