Chapter V

FINANCE, COST ACCOUNTING AND FINANCIAL REPORT

Article 94.- Legal capital, charter capital

1. The Government shall stipulate the levels of legal capital of insurance enterprises and insurance brokerage enterprises.

2. In the course of operation, the insurance enterprises and the insurance brokerage enterprises must always maintain the contributed charter capital at the level not lower than the legal capital level.

Article 95.- Escrow account

1. The insurance enterprises shall have to use part of their charter capital for escrow account at commercial banks operating in Vietnam.

2. The Government shall prescribe the escrow account amounts and the ways of using the escrow account money.

Article 96.- Professional reserves

1. Professional reserves are the money amounts which must be set up with deductions by the insurance enterprises for the purpose of paying for insured liabilities, which have been pre-determined and arisen from the concluded insurance contracts.

2. The professional reserves must be established separately for each insurance operation and must correspond to the proportion of liability of the insurance enterprises.

3. The Finance Ministry shall specify the levels and methods of deduction for establishment of the professional reserve for each insurance operation.

Article 97.- Reserve funds

1. The insurance enterprises and the insurance brokerage enterprises must set up compulsory reserve funds in order to supplement their charter capital and ensure their solvency. The level of 5% of the after-tax profits shall be deducted annually for the compulsory reserve funds. The maximum level of this fund shall be prescribed by the Government.

2. Apart from the compulsory reserve fund prescribed in Clause 1 of this Article, the insurance enterprises and the insurance brokerage enterprises may set up other reserve funds from after-tax profits of the fiscal year as provided for in the charters of the insurance enterprises or insurance brokerage enterprises.

Article 98.- Capital investment

1. The investment of capital by insurance enterprises must ensure safety and efficiency, and satisfy the requirements of regular payment for the commitments under the insurance contracts.

2. The insurance enterprises may only use their idle capital for investment in Vietnam in the following domains:

a) Buying Government bonds;

b) Buying shares, enterprise bonds;

c) Dealing in real estates;

d) Contributing capital to other enterprises;

e) Providing loans according to the provisions of the Law on Credit Institutions;

f) Making deposits at credit institutions.

3. The Government shall specify the list of investment in the domains prescribed in Clause 2 of this Article and the percentage of idle capital allowed for investment in each list of investment in order to ensure that the insurance enterprises can always maintain their solvency.

Article 99.- Financial revenue, expenditure

1. The financial revenues and expenditures of insurance enterprises and insurance brokerage enterprises shall comply with the provisions of law.

2. The Finance Ministry shall guide and inspect the implementation of the financial regimes by the insurance enterprises and the insurance brokerage enterprises.

Article 100.- Fiscal year

The fiscal year of the insurance enterprises and the insurance brokerage enterprises commences on January 1 and ends on December 31 of the same calendar year. The first fiscal years of the insurance enterprises and the insurance brokerage enterprises shall start from the dates they are granted the establishment and operation licenses and end on the last day of the same year.

Article 101.- The accounting regime

The insurance enterprises and the insurance brokerage enterprises must observe the financial regimes applicable to the insurance enterprises according to the provisions of the legislation on accounting.

Article 102.- Auditing

The annual financial reports of the insurance enterprises and the insurance brokerage enterprises must be certified by independent auditing organizations.

Article 103.- Financial report

1. The insurance enterprises and insurance brokerage enterprises must observe the financial reporting regimes as prescribed by the legislation on accounting and make periodical reports on their professional activities as stipulated by the Finance Ministry.

2. Apart from the periodical reports, the insurance enterprises shall also have to report to the Finance Ministry in the following cases:

a) When abnormal developments occur in the enterprises’ business operations;

b) When they fail to meet the prescribed financial requirements for the fulfillment of commitments to the insurance buyers.

Article 104.- Making public financial reports

After the end of a fiscal year, the insurance enterprises and the insurance brokerage enterprises must publicize the financial reports as provided for by law.