Guide for Directors and Senior Managers of Insurance Companies | Vietnam | Asia Pacific Insurance

Does the CEO, director or senior executives of an insurance company need to be registered or licensed by the insurance regulatory authority?

The approval of the Ministry of Finance's Insurance Supervisory Authority (MOF) is required for the appointment or change of certain positions.

Is approval from the regulator required for the appointment of a director/senior management of an insurance company? Is there any distinction between persons acting in an executive capacity and persons in a non-executive capacity?

Yes. Prior approval from the MOF is required for the appointment of the chair of the board of members (or the board of management or the company president), the general director and an appointed actuary. For other senior executives or managers, no prior approvals from the MOF are required, but the local insurer must conduct internal assessments and procedures to ensure that appointed persons meet required criteria and qualifications.

There is no distinction between executive directors and non-executive directors.

Is there generally any distinction between EDs and NEDs?

No. There is no distinction between the appointment of executive directors and non-executive directors as Vietnamese law does not distinguish between them. However, a general director can be considered equivalent to an executive director due to holding responsibility for the day-to-day operations of the local entity and the requirement to be a resident of Vietnam. Members of the board (or the board of management) can be considered equivalent to non-executive directors, as they are not responsible for the day-to-day operations of the local entity and act as
authorized representatives of the local insurer's investors or shareholders.

Is approval from the regulator required for the resignation or removal of a director/senior management of an insurance company? Is there any distinction between EDs and NEDs?

Yes. Resignation or removal for the positions of the chair of the board of members (or the board of management or the company president), the general director and an appointed actuary requires approval from the MOF under the same applications for appointments of new persons.

Is there any nationality requirement for directors/senior management of an insurance company? If so, do any exemptions exist?

No. However, residency requirements may apply.

Is there a minimum qualification or minimum number of years of relevant experience applicable to directors/senior management of an insurance company?

Yes. Vietnamese law provides for both minimum qualifications and minimum years of experience. These requirements vary depending on the position.

Are there any other fitness and propriety requirements that apply to directors of an insurance company? What are they?

Yes. Candidates must satisfy the criteria of having full civil-act capacity, having no criminal conviction and not having been sanctioned or disciplined at certain levels during three consecutive years before being appointed, not being government officials and civil servants, and not having a bankruptcy status for three years.

Are there any other negative factors which will disqualify a candidate from becoming a director of an insurance company?

Yes. These include past convictions relating to criminal offenses for the past three years, having been subjected to certain administrative sanctions (within three years) in the insurance field by the MOF, dismissal from an insurance company due to violations of internal regulations, and having been prohibited from managing a company due to past management of a bankrupt company and past violation of bankruptcy law requirements.

Is there a residency requirement for directors/senior management of an insurance company (e.g., primary residence must be in each local jurisdiction)?

Yes. The general director (or the legal representative), deputy general directors, chief accountant, branch managers, heads of regional offices, managers/directors/heads of departments and the appointed actuary must reside in Vietnam during their term of office.

Does the insurance company need to evaluate its directors/senior management before appointing such persons? What certifications, if any, must the insurance company provide to the insurance regulatory authority in respect of its directors/senior management?

Yes. An insurance company must evaluate if executives and managers satisfy legal requirements, and whether the appointment will cause
any conflicts of interest.

Depending on the position, local insurance companies must submit certain certifications and documents to MOF, including educational
degrees, diplomas and professional qualifications; personal particulars or employment documents evidencing the satisfaction of minimum
experience requirements; and a certificate of no criminal conviction.

For an appointed actuary, a certificate of fellowship by an accredited association of actuaries and a certificate of no violation of the code
of conduct of actuaries also need to be submitted to the MOF.

Generally, are there any distinctions in the duties and responsibilities or the regulatory treatment for EDs and NEDs?

There is no distinction in regulatory treatment of executive directors and non-executive directors as Vietnam does not distinguish between executive directors and non-executive directors.

Are there any overarching duties and responsibilities for directors/senior management of insurance companies arising from insurance regulations (in addition to general corporate laws)?

In addition to the duties and responsibilities for executives and managers under the Law on Enterprises, general directors, directors and senior management are responsible for the insurer's operations, including compliance with applicable insurance-specific requirements under the Law on Insurance Business.

Will directors/senior management be personally liable for breach of insurance regulations by the insurance company? What penalties are there, if any?

Yes. The general director or chair may be personally liable, if he/she commits the following:

does not properly exercise rights and duties
fails to implement a decision of the board of members/board of management
exercises assigned rights and duties contrary to law or the company charter
uses information, know-how or business opportunities of the company for his/her personal benefit or for that of another entity
abuses his/her position for his personal benefit or for that of another entity

The general director/chair may be sued by other members or shareholders of the company for civil liabilities. In addition, there may be administrative sanctions imposed on an appointed actuary if he/she fails to fulfill the tasks and requirements provided by law. Serious violations may also be subject to criminal liability.

Are directors/senior management of an insurance company subject to any periodic filing/notification requirements? What are they?

No. Generally, no periodical filings apply specifically to directors, with the exception of appointed actuaries of life insurers who are required to report to the MOF on an annual basis on the matters required under their duties. Reporting requirements generally apply to insurance companies.

Is there a requirement on minimum number of the board of directors of an insurance company?

Yes. Joint stock companies must have at least three members on the management board. For a multiple-member LLC, the board of members must include at least two members. A single-member LLC may have a president or a board of members (including at least three members).

Are there any rules around composition of the board of directors or equivalent (e.g., independence requirement or the number of executive- or management-level directors)?

Generally, no. However, an organization, being a member of a limited liability company owning at least 35% of the charter capital, may appoint no more than three members to participate in the board of members. An organization being a shareholder of a joint stock company owning at least 10% of the total number of ordinary shares may authorize a maximum of three people to attend a general meeting of shareholders.

Are there any mandatory requirements for setting up of other committees (e.g., audit, remuneration committees)? If so, briefly describe the responsibilities of these committees.

Yes. An insurance company is required to set up the following committees:

Supervisory board (or board of controllers) – If a limited liability company has 11 members or more, or if a joint stock company has more than 11 shareholders being individuals, or has a shareholder being an organization, which holds more than 50% of the total shares, the company must set up such supervisory board (or board of controllers). The supervisory board will supervise the management and administration of the company by the board of members/board of management and will monitor the lawfulness thereof, particularly with respect to the preparation of financial statements. Under the Enterprise Law, for joint stock companies without a supervisory board, at least 20% of the members of the board of management must be independent members, and there must be an internal audit committee under the board of management.
Investment council/committee – approves the sale of unit-linked insurance products

Vietnamese law requires internal audit activities. While it is encouraged, there are no legal requirements for the establishment of audit or
remuneration committees.

Are directors of an insurance company permitted to hold other passive business interests (e.g., non-executive directorships and investments/shareholdings in other corporations)? What disclosures, if any, need to be made to the relevant regulatory authorities? Are there restrictions on the number of positions board members can hold?

A member of the board of members/board of management may not be a member of such board of another insurer operating in the same domain (non-life insurance or life insurance, reinsurance or insurance brokerage).

The general director or deputy general directors may not work for another insurer operating in the same domain.

The general director may not be a member of the board of another insurance company operating in the same domain.

The general director or deputy general director of an insurer can act as the head of only one branch, representative office or functional department of such insurer.

The general director or deputy general directors of a foreign branch can act as the head of only one functional department of such branch.

An appointed actuary may not concurrently hold the position of general director (director) or chief accountant of an insurer.

Is there any requirement or prohibition for an insurance company to make a payment to its directors/senior management?

No specific requirement or prohibition in this regard. However, transactions between the company and its directors/senior management may be considered related person transactions and, as such, are subject to approval from the board of members/board of management. Members of these boards who are related to such transactions are not entitled to vote.

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