The statutory capital of an insurance brokerage enterprise refers to the minimum capital amount that an insurance brokerage enterprise is required to have in order to be granted an operating license in accordance with applicable laws. The purpose of imposing statutory capital requirements is to ensure that enterprises possess sufficient financial capacity to fulfill their obligations, protect the legitimate rights and interests of clients, and maintain stable and transparent operations.
I. Overview of the statutory capital of insurance brokerage enterprises
The statutory capital of an insurance brokerage enterprise refers to the minimum capital amount that an insurance brokerage enterprise is required to have in order to be granted an operating license in accordance with applicable laws. The purpose of imposing statutory capital requirements is to ensure that enterprises possess sufficient financial capacity to fulfill their obligations, protect the legitimate rights and interests of clients, and maintain stable and transparent operations.
In Vietnam, regulations on the statutory capital of insurance brokerage enterprises are stipulated in various legal instruments, notably the Law on Insurance Business 2022 and Decree No. 46/2023/ND-CP. Accordingly, insurance brokerage enterprises must satisfy the minimum capital requirements prior to being licensed for operation.
II. Legal regulations on the statutory capital of insurance brokerage enterprises
1. What is the statutory capital of an insurance brokerage enterprise?
Pursuant to Clause 21, Article 4 of the Law on Insurance Business 2022, an insurance brokerage enterprise is an enterprise established, organized, and operating in accordance with this Law and other relevant laws for the purpose of conducting insurance brokerage activities. Insurance brokerage activities include providing information and consultancy to insurance purchasers regarding types of insurance, insurance products, insurance programs, terms and conditions, insurance premiums, insurers, reinsurers, and foreign insurers’ branches in Vietnam; as well as activities related to negotiating and arranging the conclusion, and executing insurance and reinsurance contracts.
Accordingly, it can be understood that the statutory capital of an insurance brokerage enterprise is the minimum capital level that such enterprise must have in order to be licensed to conduct insurance brokerage activities in accordance with the law.
2. How is the statutory capital level of insurance brokerage enterprises prescribed?
Pursuant to Article 81 of Decree No. 46/2023/ND-CP, the statutory capital of insurance brokerage enterprises is prescribed as follows:
- Insurance brokerage or reinsurance brokerage business: 5 billion VND;
- Both insurance brokerage and reinsurance brokerage business: 10 billion VND.
3. Time and procedures for contributing statutory capital of insurance brokerage enterprises
- Time for capital contribution:
Pursuant to Clause 2, Article 75 and Clause 2, Article 47 of the Law on Enterprise 2020, for limited liability companies, charter capital must be fully contributed within 90 days from the date of issuance of the Enterprise Registration Certificate.
For joint-stock companies, pursuant to Article 113 of the Law on Enterprise 2020, shareholders are required to fully pay for the registered subscribed shares within 90 days from the date on which the company is granted the Enterprise Registration Certificate.
- Procedures for contributing statutory capital:
- Step 1: Registering the establishment of the enterprise;
- Step 2: Ensuring full compliance with statutory capital requirements;
- Step 3: Applying for the License for establishment and operation of insurance brokerage activities.
Note: When submitting the application dossier for the operating license, the enterprise is required to enclose documents evidencing the contributed capital amount and capital contribution method, a list of founding organizations and individuals or members and shareholders expected to contribute 10% or more of the charter capital, along with documents proving satisfaction of the operational conditions.
III. Questions regarding the statutory capital of insurance brokerage enterprises
1. When is an insurance brokerage enterprise required to supplement its statutory capital?
Pursuant to Clause 3, Article 81 of Decree No. 46/2023/ND-CP, on a quarterly basis, insurance brokerage enterprises must reassess their equity capital. In cases where the equity capital fails to meet the requirements specified in Clause 2 of this Article, the insurance brokerage enterprise must implement procedures to request a capital increase within 03 months from the end of the quarter and must complete the capital increase to ensure compliance within 06 months from the end of the quarter.
In addition, insurance brokerage enterprises established prior to the effective date of Decree No. 46/2023/ND-CP (July 1, 2023), whose charter capital is lower than the minimum charter capital stipulated therein, are required to complete the supplementation of charter capital in full compliance with Decree No. 46/2023/ND-CP before January 1, 2028.
2. May the statutory capital of an insurance brokerage enterprise be contributed in foreign currency?
Pursuant to Point a, Clause 2, Article 33 of the Law on Insurance Business 2022, the statutory capital of an insurance brokerage enterprise must be contributed in Vietnamese Dong (VND).
Accordingly, the statutory capital of insurance brokerage enterprises in Vietnam is not permitted to be contributed in foreign currency, but must be contributed in Vietnamese Dong in compliance with regulations on insurance business and domestic financial management.
3. What procedures are required when changing the statutory capital level of an insurance brokerage enterprise?
Pursuant to Point b, Clause 1, Article 136 of the Law on Insurance Business, insurance brokerage enterprises must obtain prior written approval from the Ministry of Finance before changing certain contents, including the charter capital level.
Accordingly, when changing the statutory capital level of an insurance brokerage enterprise, it is required to implement procedures to request the Ministry of Finance’s in-principle approval for the charter capital change.
IV. Legal consulting services related to the statutory capital of insurance brokerage enterprises
The above constitutes all detailed information provided by NPLaw to support clients regarding the statutory capital of insurance brokerage enterprises. Should you have any questions related to the above matters or other legal issues, please do not hesitate to contact NPLaw for direct consultation and guidance from our legal team.
