Individual shareholders of a reinsurance company cannot own more than 10% of the company’s charter capital, right?

Individual shareholders of a reinsurance company cannot own more than 10% of the company’s charter capital, right?

The maximum charter capital ratio of individual shareholders in a reinsurance company is specified in clause 2 Article 66 of the Insurance Business Law 2022 is as follows:

Conditions on the structure of shareholders contributing capital to establish an insurance enterprise, a reinsurance enterprise in the form of a joint stock company

The establishment of an insurance enterprise, a reinsurance enterprise in the form of a joint stock company must meet the general conditions specified in Article 64 of this Law and the following conditions here:

1. There are at least 02 shareholders who are organizations and each shareholder meets the following conditions:

a) Must contribute 10% or more of the charter capital of the insurance enterprise or reinsurance enterprise;

b) Conditions specified in Article 65 of this Law;

2. An individual shareholder may not contribute more than 10% of the charter capital of an insurance enterprise or reinsurance enterprise.

According to the above regulations, an individual shareholder of a reinsurance company cannot contribute more than 10% of the charter capital of this company.

Can shareholders use investment trust capital to contribute capital to a reinsurance company?

Can shareholders of a reinsurance company use investment trust capital to contribute capital to the company, according to the provisions of Article 64 of the Law on Insurance Business 2022 as follows:

General conditions for issuance of establishment license and operations of insurance enterprises and reinsurance enterprises

1. Conditions for shareholders and members contributing capital to establish:

a) Organizations and individuals have the right to establish and manage businesses in Vietnam according to the provisions of the Enterprise Law;

b) Organizations have legal status and are operating legally; In case of contributing 10% or more of charter capital, the business must be profitable for the last 3 consecutive financial years up to the time of submitting the application for license and meet the financial conditions according to the Government’s regulations;

c) Insurance enterprises and reinsurance enterprises that have been licensed to establish and operate in Vietnam must contribute capital to establish a new insurance enterprise or reinsurance enterprise for the last 03 consecutive financial years up to the time of submitting the application for license and meet the capital adequacy ratio as prescribed by this Law.

2. Capital conditions:

a) charter capital is contributed in Vietnam Dong and not lower than the minimum level as prescribed by the Government;

b) Shareholders and founding members are not allowed to use loans or investment trust capital from other organizations or individuals to contribute capital.

3. Personnel conditions: have a Chairman of the Board of Directors or Chairman of the Board of Members, Director or General Director, legal representative, Actuarial expert expected to meet the conditions and standards of management capacity, experience and professional expertise specified in Article 81 of this Law.

4. Have an organizational form according to the provisions of this Law and have a draft charter in accordance with the provisions of the Enterprise Law.

Accordingly, shareholders of a reinsurance company are not allowed to use the investment trust capital of other organizations or individuals to contribute capital to the reinsurance company.

What content does a reinsurance company operate under?

The content of operations of a reinsurance company is stipulated in Clause 2, Article 63 of the Law on Insurance Business 2022 as follows:

The content of operations of insurance enterprises, reinsurance enterprises, and foreign branches in Vietnam Male

1. The activities of insurance enterprises and branches of foreign non-life insurance enterprises include:

a) Insurance business, reinsurance business, reinsurance transfer;

b) Managing funds and investing capital from insurance business activities;

c) Providing insurance auxiliary services insurance;

d) Other activities directly related to insurance business activities.

2. Activities of reinsurance enterprises and branches of foreign reinsurance enterprises include:

a) Reinsurance business; ceding reinsurance;

b) Managing funds and investing capital from reinsurance business activities;

c) Other activities directly related to reinsurance business activities.

3. Insurance enterprises and branches of foreign non-life insurance enterprises are only allowed to do business in one type of insurance specified in Clause 1, Article 7 of this Law, except for the following cases:

a) Life insurance enterprises doing health insurance business;

b) Non-life insurance enterprises, branches of foreign non-life insurance enterprises trading in health insurance products Health insurance products have a term of 01 year or less and insurance products for the risk of death have a term of 01 year or less;

c) Health insurance enterprises sell insurance products for the risk of death with a term of 01 year or less.

Thus, reinsurance companies can operate according to the following contents:

– Reinsurance business; reinsurance ceded.

– Manage funds and invest capital from reinsurance business activities.

– Other activities directly related to reinsurance business.