Client: I’m managing an insurance brokerage LLC based in London. I’m advising expatriates with their international health insurance.
My clients are expatriates based anywhere in the world and I am paid by commission directly from the insurance companies on my England business account so I don’t have money flow outside of England.
Also, insurance contracts are signed directly between insurance companies and clients. I’m acting as an advisor and have my English license for that (insurance broker) and professional liability.
However, as I’m physically based in Vietnam, I’d like to open a representative office so that I can recruit some staff to help me in the back office.
Can SBLaw help me in setting up this rep office or would you recommend setting up a LLC?
Also, would I need to produce any specific documents related to insurance brokerage?
Thanks in advance for your support.
Lawyer: We refer with thanks to the conversation between two parties from which we were requested to advice on possibilities of setting up a foreign invested company for doing the business of insurance brokerage or setting up a representative office in the field of insurance brokerage in Hanoi, Vietnam (hereinafter referred to as “FIC”) by your Company in England (hereinafter referred to as “Client”).
Therefore, we are grateful to set our legal services proposal for your review and consideration as follows:
1. BRIEF SUMMARY OF BACKGROUND AND OUR COMMENTS
1.1. Initial advices
With regard to the Insurance Brokerage, under the Vietnam’s WTO Commitment and Vietnam’s legal regulations, insurance brokerage is one of the conditional sectors.
Accordingly, if Client wants to set up foreign owned company or set up its representative office in Vietnam, Client must satisfy following conditions as bellows:
A. For establishment of Foreign Owned Insurance Brokerage Company:
a) Client must be an insurance company or an insurance brokerage (hereinafter referred to as “insurance enterprise”);
b) The foreign insurance enterprise has permission from the competent body of the foreign country to conduct insurance brokerage in Vietnam;
c) The foreign insurance enterprise has been legally operating for at least ten (10) years pursuant to regulations of the country where it has its head office, calculated up to the date of lodging the application file for grant of a license;
d) The foreign insurance enterprise had total assets of a minimum vale equivalent to two billion USD in the year prior to the year of lodging the application file for grant of a license;
e) The foreign insurance enterprise has not committed a serious breach of the law on insurance business or of other laws of the country where it has its head office for a period of three consecutive years up to the year of lodging the application file for grant of a license;
f) The foreign insurance enterprise invests into the foreign owned company in Vietnam at least 4 billion Vietnamese Dongs (equivalent to 200,000 US Dollar) because this amount is the compulsory registered capital of insurance brokerage in Vietnam;
g) The managers of insurance brokerage possess a university or postgraduate diploma; having directly worked in the domain of insurance or banking or having managerial or executive experience at an enterprise with a charter capital equivalent to that of the insurance brokerage enterprise which he/she is expected to be in charge of.
B. With regard to Representative Office, foreign investors must have some following conditions:
a) The foreign insurance enterprises and insurance brokerage enterprises have operated for five years or more; b) The foreign insurance enterprises and insurance brokerage enterprises have cooperativeness with Vietnamese agencies, organizations.
We would like to note that, the procedures for setting up the insurance brokerage company in Vietnam and for setting up representative office of foreign insurance brokerage in Vietnam are rather complicated. According to Vietnamese prevailing legal regulations, the duration of time for obtaining the Incorporation and Operation Certificate of insurance brokerage company in Vietnam is at least 60 working days.
Meanwhile, it shall take at least 30 working days since the official & adequate submission to the Ministry of Finance of Vietnam to setup representative offices of foreign insurance brokerage in Vietnam.
However, in practice, this time shall be prolonged because the Ministry of Finance must get approval from other competent authorities such as the Ministry of Industry and Trade, the Ministry of Investment, especially, the Prime Minister of Vietnam before issuing such above certificate and license.
After obtaining the Incorporation and Operation Certificate for insurance brokerage company in Vietnam, this newly set-up insurance brokerage company maybe need to apply for issuance of Business Registration Certificate to the Investment and Planning Department where the head office of newly set-up company shall be located. This procedure is compulsory or not basing on guidance of the competent authority in coming time because at this time there has not yet any instruction to this matter.
1.2. Procedures
Preparing the application dossier: We shall collect necessary information and documents from Client. Upon receipt of necessary information and documents from you, we shall translate documents from English into Vietnamese and prepare the application dossier under the standard forms. The initial drafted application dossier shall be sent to you for your comments. Then, after updating the application dossier based on your comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for you to sign and seal. With regard to some technical documents on the insurance brokerage such as Operational plan for the first five years having the contents of method for establishing reserves; investment of capital; business effectiveness; liquidity; economic benefits arising from establishment of the enterprise; and enclosing rules, internal control rules, and risk management rules, we shall revise them to comply with Vietnamese rules. We anticipate that this phase shall be completed within 20 working days.
Submission of application dossier: Within 02 working days from receipt of duly signed and sealed application dossier, we shall submit the application dossier to the competent authority.
Licensing Process:
Within 180 working days from submission of application dossiers to the Ministry of Finance, we will obtain the Incorporation and Operation Certificate of insurance brokerage company and for the representative office of foreign insurance brokerage shall be 100 working days.
Post licensing: Within 20 working days from completion of respective Licensing Process we shall complete the post licensing procedures including publishing the information of the Company in News Paper, obtaining seal and tax code registration.
