Business & M&A, Legal Knowledge

Charter Capital of Insurance Enterprises

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Short answer: Unlike ordinary enterprises, insurance enterprises must satisfy a minimum charter capital (legal capital) level set by the Government, differentiated by type: life insurance, non-life insurance, health insurance, reinsurance, and insurance brokerage. The specific amounts are set out in Decree 46/2023/ND-CP. In addition, insurance enterprises must maintain their solvency margin throughout their operations.

Legal basis

  • Law on Insurance Business 2022 (No. 08/2022/QH15);
  • Decree 46/2023/ND-CP providing detailed guidance.

Principles of charter capital

  • Registered charter capital must be no lower than the minimum level for the business type;
  • Capital must be fully contributed in cash as prescribed before the license is granted;
  • Increasing or decreasing charter capital requires Ministry of Finance approval.

Minimum capital levels by type

  • Non-life insurance: minimum level as prescribed (differentiated by whether aviation, satellite insurance is conducted…);
  • Life insurance, health insurance: higher minimum levels, corresponding to long-term risks;
  • Reinsurance: a separate minimum level;
  • Insurance brokerage: a lower level, but still subject to the legal capital requirement;
  • Detailed figures for each level should be checked directly against Decree 46/2023/ND-CP at the time of implementation.

Obligation to maintain financial capacity

  • Maintain a solvency margin no lower than the minimum solvency margin;
  • Make full technical provisions as prescribed;
  • Report and publicly disclose financial conditions periodically to the Ministry of Finance;
  • When failing to meet requirements: must have a recovery plan, and may be placed under special control.

If you need to determine the right approach for your specific situation, you should discuss it with a lawyer in advance for a review of your documents and advice on the course of action.

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