Nghị định 18/2005/NĐ-CP về thành lập, tổ chức và hoạt động của tổ chức bảo hiểm tương hỗ

DECREE

REGULATIONS ON THE FORMATION, ORGANIZATION AND OPERATION OF RECIPROCAL INSURANCE ORGANIZATIONS

GOVERNMENT

Pursuant to the Law on Government organization dated December 25, 2001; Pursuant to the Law on Insurance Business dated December 09, 2000; At the proposal of the Minister of Finance,

DECREE

Chapter 1:

GENERAL PROVISIONS

Article 1. Regulated entities

This Decree regulates the establishment, organization and operation of reciprocal insurance organizations in insurance business.

Article 2. Principles of organization and operation of reciprocal insurance organizations

Reciprocal insurance organizations are organized and operated under the following principles:

1. Reciprocal insurance organization is a legal corporation that is formed to carry out insurance business for the purpose of helping each other among members as Vietnamese organizations, individuals operating in the same area, branch or living in the same administrative division and facing the same type of risk.

Name of a reciprocal insurance organization must clearly represent reciprocity and contain a phrase “reciprocal insurance”.

2. A member of a reciprocal insurance organization is simultaneously insurance buyer and owner of such reciprocal insurance organization.

3. Members of a reciprocal insurance organization equally have the right to engage in the management, inspection and overseeing of the reciprocal insurance organization’s activities.

4. A reciprocal insurance organization shall be responsible for its own business performance within the scope of capital and assets of its own.

Article 3. Rights of a reciprocal insurance organization

A reciprocal insurance organization shall have the following rights:

1. Possess, use and determine assets of its own.

2. Carry out business activities according to the provisions of law

3. Decide level of premium to be paid by its members; receive or reject premiums according to the provisions set out in the Statute of the reciprocal insurance organization and other relevant law provisions.

4. Take the initiative in deciding on insurance services, operating areas, appropriate size and organizational structure.

5. Decide distribution of earnings and handle losses in the reciprocal insurance organization according to the provisions set out in the Statute of the reciprocal insurance organization and other relevant law provisions.

6. Other rights

Article 4. Obligations of a reciprocal insurance organization

A reciprocal insurance organization shall have the following obligations:

1. Carry out its business within scope, administrative division and services as defined in the establishment and operation license.

2. Comply with the provisions of the Law on Accounting and Financial Regime

3. Maintain and develop business capital according to the provisions of law.

4. Be responsible for payables and other financial obligations in the company with its own scope of assets.

5. Ensure the rights of its members and make commitments to them

6. Pay taxes and fulfill financial obligations according to the provisions of law.

7. Other obligations

Chapter 2:

MEMBERS

Article 5. Minimum number of members in a reciprocal insurance organization

1. Minimum number of members in a reciprocal insurance organization shall not be less than 10.

2. In case the number of members in a reciprocal insurance organization is less than the minimum number as defined in Clause 1 of this Article, the reciprocal insurance organization must report to the Ministry of Finance immediately on real situations, causes and remedial measures.

In case a reciprocal insurance organization is unable to increase number of members according to the plan approved by the Ministry of Finance, the Ministry of Finance in reliance on specific situations shall decide termination of the operation of the reciprocal insurance organization or convert it into another form of insurance company according to the provisions of law.

Article 6. Founder members of a reciprocal insurance organization

1. Founder members of a reciprocal insurance organization are organizations, individuals that meet the conditions as defined by the law for the formation of a reciprocal insurance organization and are committed to buying insurance from the reciprocal insurance organization right after it is granted the establishment and operation license.

2. Founder members shall not be entitled to any preferential treatment better than other members of a reciprocal insurance organization unless otherwise as regulated by its Statute.

Article 7. Members of a reciprocal insurance organization

Organizations, individuals that qualify for entering an insurance contract according to the provisions of law and already entered an insurance contract with a reciprocal insurance organization shall be referred to as members of a reciprocal insurance organization.

Article 8. Rights of members of a reciprocal insurance organization

Members of a reciprocal insurance organization shall have the following rights:

1. Enjoy benefits under an insurance contract entered with a reciprocal insurance organization by such member.

2. Enjoy outcome of business performance by a reciprocal insurance organization according to the provisions set out in the Statute of a reciprocal insurance organization.

3. Take part or empower others to take part in general membership meeting organized by the reciprocal insurance organization; run, vote for election to the management and other titles in a reciprocal insurance organization according to the provisions set out in the Statute of a reciprocal insurance organization.

4. Other rights

Article 9. Obligations of members of a reciprocal insurance organization

Members of a reciprocal insurance organization shall have the following obligations:

1. Fulfill obligations of an insurance buyer according to the provisions set out in an insurance contract and the Law on Insurance Business.

2. Comply with regulations, rules, and operation regulation of a reciprocal insurance organization and Resolutions ratified in the general membership meeting.

3. Be responsible for payables, losses in a reciprocal insurance organization within insurance premium paid to the reciprocal insurance organization.

4. Founder members of a reciprocal insurance organization must be committed to buying insurance from the reciprocal insurance organization right after it is granted the establishment and operation license.

5. Other obligations

Article 10. Termination of membership status in a reciprocal insurance organization

1. Membership status in a reciprocal insurance organization shall be terminated in one of the following cases:

a) Insurance contract between the member and the reciprocal insurance organization is terminated or transferred according to the provisions of law;

b) Members of a reciprocal insurance organization are deceased individuals; or members of a reciprocal insurance organization are entities that are dissolved, bankrupt, merged or stop operation;

c) Other cases as regulated in the Statute of a reciprocal insurance organization.

2. Unless otherwise as regulated in the Statute of a reciprocal insurance organization, founder members are not allowed to unilaterally terminate membership status for a period of three years since the reciprocal insurance organization is granted the establishment and operation license.

3. Handling of the rights and obligations with respect to the members as defined in the provisions of Clause 1 of this Article shall be done under the Statute of the reciprocal insurance organization and the insurance contract signed with the reciprocal insurance organization.

Chapter 3:

GRANTING OF ESTABLISHMENT AND OPERATION LICENSE

Article 11. Granting establishment and operation license to a reciprocal insurance organization

The granting of establishment and operation license to a reciprocal insurance organization shall be done according to the provisions related to the Law on Insurance Business and other guiding documents. The Ministry of Finance shall provide specific guidance on the granting of establishment and operation license to a reciprocal insurance organization.

Article 12. Contract signed before the establishment and operation license is granted

1. A contract serving the formation of a reciprocal insurance organization may be signed by founder members.

2. When a reciprocal insurance organization is formed, such company shall accept the rights and obligations arising from the signed contract according to the provisions set out in Clause 1 of this Article unless otherwise as regulated.

3. In case a reciprocal insurance organization is not formed, founder members shall be responsible for the implementation of such contract.

Article 13. Contribution of capital for the formation of a reciprocal insurance organization

Capital for the formation of a reciprocal insurance organization shall be contributed in cash (or valuable papers) into an escrow account opened at a bank legally operating in Vietnam. The escrow account shall start its transaction right after the establishment and operation license is granted to a reciprocal insurance organization.

Article 14. Statute of a reciprocal insurance organization

1. Statute of a reciprocal insurance organization must conform to the provisions hereof and other relevant law provisions.

2. Statute of a reciprocal insurance organization shall be constructed by founder members in preparation for the formation of a reciprocal insurance organization and must bear signatures of the founder members.

3. Statute of a reciprocal insurance organization shall include the following information:

a) Name and location where headquarter of a reciprocal insurance organization is situated; symbol of a reciprocal insurance organization (if any).

b) Purpose of the formation of a reciprocal insurance organization

c) Scope, operating area and duration;

d) Determination of membership status, rights and obligations of members of a reciprocal insurance organization;

dd) Voting by members;

d) Name, address, rights and obligations of founder members of a reciprocal insurance organization; legal representatives;

f) Capital contributed for the formation of a reciprocal insurance organization; method of contribution and refund of capital, other expenses pertaining to the formation of a reciprocal insurance organization;

g) Financial regulations; principles and foundations for reduction of insurance premium; division of business performance outcome;

h) Organizational structure, apparatus and working regulations of the general membership meeting, Board of Directors and the Control Board; entitlements of managers, executive officials; manner of voting, ratification of resolutions; principles for settling internal disputes;

i) Other provisions of the Statute suggested by members but not running contrary to relevant law provisions.

4. Abrogation, replacement, supplements and amendments to the Statute shall be decided in the general membership meeting.

Article 15. Branches and representative offices

The opening of branches and representative offices of a reciprocal insurance organization shall be done according to the provisions of the Law on forms of insurance enterprises.

Chapter 4:

ORGANIZATION AND MANAGEMENT

Article 16. Structure of organization and management of a reciprocal insurance organization

Organization of a reciprocal insurance organization consists of the general membership meeting, board of directors, Director (General Director) and the Control Board.

Article 17. General membership meeting of a reciprocal insurance organization

1. General membership meeting is the top decision-maker of a reciprocal insurance organization. General membership meeting of a reciprocal insurance organization consists of general meetings, general annual meetings and extraordinary general meetings.

2. A general meeting of a reciprocal insurance organization shall be summoned under the following provisions:

a) Within three months at the latest since the Ministry of Finance grants the establishment and operation license, founder members must summon a general meeting with participants including founder members.

b) General meeting shall focus and vote on the key points as follows:

- Statute of a reciprocal insurance organization;

- Structure of organization and management of a reciprocal insurance organization

c) Decisions passed by the general meeting shall be considered valid provided they are passed by all the founder members with an approval from the Ministry of Finance.

3. A general annual meeting is usually summoned at least once a year by the board of directors within three months since the end of the fiscal year.

4. An extraordinary general meeting of a reciprocal insurance organization shall be organized in the following cases:

a) An extraordinary general meeting summoned by the board of directors or the control board of the company to decide important issues beyond authority of the board of directors or the control board according to the provisions hereof and the Statute of a reciprocal insurance organization.

b) In case there are at least a third of the total number of members who submit their request to the board of directors or the control board for the summoning of the general membership meeting, within 15 days since receipt of adequate documents, the board of directors must summon the meeting. If the board of directors fails to summon the general membership meeting after this period, an extraordinary general meeting shall be summoned by the control board to settle issues raised in the request form.

Article 18. Program and agenda in the general membership meeting

1. Those who are responsible for summoning the general membership meeting must prepare the program and agenda

2. In case an extraordinary general meeting is summoned according to Point b, Clause 4, Article 17 hereof, the number of members representing a third of the total members of the reciprocal insurance organization (as mentioned above) shall have the right to propose raising the issues in the general membership meeting. Proposals must be made in writing and sent to the reciprocal insurance meeting at least three days at the latest prior to the opening day. Proposals must specify names of the members as advocates for the issues to be put into the meeting agenda.

3. Those who summon the general membership meeting shall have the right to reject the proposals as stipulated in Clause 2 of this Article if:

a) Submission of the proposals fails to meet the deadline, quantity or with wrong information;

b) The issues proposed are out of the deciding authority of the general membership meeting;

c) Other cases as regulated in the Statute of a reciprocal insurance organization.

Article 19. Notification for the summoning of a general membership meeting

1. Within 10 days at the latest prior to the opening day of the general membership meeting, those who summon the meeting shall issue written notice (invitation letter) to individual members about the time and venue of the meeting. The written notice shall be enclosed with the meeting agenda, materials for discussion.

2. The general membership meeting shall only discuss and decide issues stated in the agenda and other issues raised by at least a third of the reciprocal insurance organization’s members.

Article 20. Rights to attend a general membership meeting

1. Members may attend or authorize others in writing to attend the general membership meeting.

2. In case an insurance contract is transferred within a period from the formation to the opening day of the general membership meeting, the transferee thereto has the right to attend the meeting.

Article 21. Agenda in the general membership meeting

General membership meeting shall focus and vote on the points as follows:

1. Annual reports on business performance of the reciprocal insurance organization, activities of the board of directors and the control board.

2. Operation plan, business and financial plans in the following year.

3. Refund of capital for the formation; formation of funds according to law provisions; reduction of insurance premiums for members in the following financial year as proposed by the board of directors.

4. Decision on mobilization of additional capital

5. Election, revocation of membership status of members in the board of directors and the control board.

6. Amalgamation, separation, merging or dissolution of a reciprocal insurance organization

7. Amendments, supplements to the Statute of a reciprocal insurance organization

8. Rewards to members of the board of directors and the control board and other titles (if any) of a reciprocal insurance organization.

9. Other issues as suggested in writing by the board of directors or by at least a third of the total number of members in the reciprocal insurance organization.

Article 22. Regulations on number of attendees and voting in a general membership meeting

1. The general membership meeting must ensure minimum number of attendees according to the Statute of a reciprocal insurance organization. If the minimum number of attendees is not adequate, the general membership meeting must be temporarily postponed. In case the number of attendees in the second summoning is still not enough, the meeting shall be summoned regardless of the number of attendees.

2. Decisions on the amendments to the Statute, amalgamation, merging, separation and dissolution of a reciprocal insurance shall be passed when they are approved by at least third forth of the attendees in the meeting. Decisions on other issues shall be passed when they are approved by more than half of the attendees in the meeting.

3. Voting in a general membership meeting shall be conducted according to the Statute of a reciprocal insurance organization.

Article 23. Board of directors a reciprocal insurance organization

1. The board of directors is a management apparatus of a reciprocal insurance organization that has full powers to decide everything concerning purpose and benefits of the reciprocal insurance organization except issues under the authority of the general membership meeting.

2. Rights and obligations of the board of directors:

a) Decide development strategy of a reciprocal insurance organization;

b) Make proposals in the general membership meeting for decision to reduce insurance premiums for the members in the following financial year; decide or handle losses arising during the operation.

c) Decide investment plan;

d) Decide market development solution, marketing and technology; ratify contracts for purchase and sale, contracts for lending, borrowing money, or other contracts with values equal or more than 50% of the total assets recorded in the company’s account book or other lower ratio defined in the Statute of a reciprocal insurance organization;

dd) Appoint or dismiss directors, general directors and other key administrative officers in a reciprocal insurance organization; decide level of salary and other benefits for such officers;

e) Decide organizational structure, internal management regulation of a reciprocal insurance organization; open, terminate operation of branches, representative offices, contribution of capital and purchase of shares from other enterprises;

f) Make submission of annual financial report to the general membership meeting;

g) Give approval to the program, agenda and documents serving the general membership meeting, convene the general membership meeting or prepare procedures for enquiry so that a decision can be passed in the meeting;

h) Make proposals for re-formation, conversion or dissolution of a reciprocal insurance organization;

i) Other rights and obligations according to the law provisions and the Statute of a reciprocal insurance organization.

3. The board of directors shall ratify a decision through voting in the meeting, collecting suggestions in writing or other forms according to the Statute of a reciprocal insurance company. Each member of the board of directors has a vote.

4. The board of directors consists of a maximum of 11 members. Tenure, standard, specific number, election and discontinuity of members of the board of directors are regulated in the Statute of a reciprocal insurance organization. Members of the board of directors are not allowed to be a chief accountant and a cashier simultaneously, or their parents, spouse, children, sisters and brothers.

Article 24. Chairman of the board of directors

1. The board of directors shall elect chairman of the board of directors among the number of members of the board of directors. Chairman of the board of directors must be a person who has good reputation, professional ethics and experience in insurance business. Appointment or replacement of the chairman of the board of directors must be approved by the Ministry of Finance. Chairman of the board of directors may hold position of a director or general director concurrently in a reciprocal insurance organization unless otherwise as regulated in the Statute of a reciprocal insurance organization.

2. Rights and obligations of chairman of the board of directors:

a) Establish operation program and plan for the board of directors

b) Prepare the program, agenda and documents serving the meeting; convene and preside over the meeting of the board of directors;

c) Sign resolutions and documents passed by the board of directors; organize ratification of decision by the board of directors in other forms;

d) Oversee the implementation of decisions passed by the board of directors;

dd) Preside over a general membership meeting;

e) Other rights and obligations as defined hereof and by the Statute of a reciprocal insurance organization.

3. In case chairman of the board of directors is absent or loses capacity for performing assigned duties, a member empowered by the board of directors shall carry out the rights and obligations of a chairman of the board of directors. In case no member is empowered, the remaining members shall choose one among them to temporarily hold the position of chairman of the board of directors.

Article 25. Meeting of the board of directors

1. Chairman of the board of directors has the right to summon a meeting of the board of directors:

a) Meeting must be summoned at least once a quarter. In case of necessity, an extraordinary meeting may be summoned.

b) As proposed by the control board or other people defined in the Statute of a reciprocal insurance organization.

2. Meeting of the board of directors shall be summoned when the number of attendees reaches at least second third of the total members. Decision given by the board of directors shall be passed if it is approved by a majority of attendees in the meeting.  In case number of approvals and disapprovals is equal, the final decision shall be based on opinions from chairman of the board of directors.

3. Procedures for the organization of meeting of the board of directors shall be regulated in the Statute or internal management regulation of a reciprocal insurance organization.

4. Meeting of the board of directors must be fully documented. Chairman and secretary must be jointly responsible for accuracy and authenticity of the minutes of the board of directors’ meeting.

Article 26. Discontinuity and addition of members of the board of directors

1. Members of the board of directors shall be discontinued from office in the following cases:

a) Passed away or restricted in legal competence;

b) Resignation;

c) Other cases as regulated in the Statute of a reciprocal insurance company.

2. Members of the board of directors shall be discontinued from office according to the decision by the board of directors.

3. In case the number of members of the board of directors is reduced by a third in comparison with the provisions set out in the Statute of a reciprocal insurance organization, the board of directors shall summon a general membership meeting within 60 days for election of members to the board of directors.

In other cases, election of new members to the board of directors as substitutes for discontinued ones shall be conducted in a closest general membership meeting.

Article 27. Director, general director of a reciprocal insurance company

1. Board of directors shall appoint one among them or others as director, or general director. Chairman of the board of directors may hold position of a director or general director concurrently in a reciprocal insurance organization. In case the Statute of a reciprocal insurance organization does not define chairman of the board of directors as legal representative, director, or general director shall be legal representative of a reciprocal insurance organization.

Director, or general director shall be a person who manages daily activities of a reciprocal insurance organization and takes legal responsibility for the fulfillment of all the assigned duties.

Director, or general director of a reciprocal insurance organization must be a person who has good reputation, professional ethics and practical experience of at least three years in insurance business or state management and must be a permanent resident in Vietnam during the tenure.

Appointment or replacement of director, or general director of a reciprocal insurance organization must be approved by the Ministry of Finance.

2. Rights and obligations of director, or general director:

a) Decide all matters concerning daily activities of a reciprocal insurance organization including contracts for purchase and sale, contracts for lending, borrowing money, or other contracts with values less than 50% of the total assets recorded in the company’s account book of a reciprocal insurance company;

b) Organize the implementation of decisions passed by the board of directors;

c) Organize the implementation of the business plan and investment plan of a reciprocal insurance organization;

d) Propose organizational structure arrangement plan and internal management regulation of a reciprocal insurance organization;

dd) Appoint, discontinue and dismiss management titles in a reciprocal insurance organization except the titles appointed, discontinued or dismissed by the board of directors;

e) Decide level of salary and allowances (if any) for employees in a reciprocal insurance organization including management officers within authority of appointment of director, or general director;

f) Other rights and obligations according to the law provisions, the Statute of a reciprocal insurance company and decision made by the board of directors.

Article 28. Obligations of mangers in a reciprocal insurance company

The board of directors, director or general director, other management officers in a reciprocal insurance organization within their own scope of responsibility and authority shall undertake the following obligations;

1. Fulfill the rights and obligations honestly and diligently for the benefits of the reciprocal insurance organization and its members.

2. Do not abuse status and powers to employ properties of the organization for personal interests or for others’ interests; do not bring properties of the organization to others; do not disclose secret information of the organization unless otherwise accepted by the board of directors.

3. When the reciprocal insurance organization fails to fulfill payment of payables and other financial obligations, it:

a) Musts make a written notice about its financial situation to all the creditors;

b) Should not rise salary, pay bonus to employees including managers;

c) Must be personally responsible for any losses caused to the creditors due to its failure to perform obligations as regulated in Points a of this Clause;

d) Propose measures to cope with financial difficulties faced by the reciprocal insurance company;

4. Other obligations according to the law provisions and the Statute of a reciprocal insurance company.

Article 29. Rights and obligations of the control board

1. A reciprocal insurance organization must have a control board that consists of three or four members elected by a general membership meeting, at least one member of which must be highly competent in accounting. The control board shall elect a head who must be a member of a reciprocal insurance organization. Rights and obligations of the control board’s head as regulated in the Statute of a reciprocal insurance company.

2. Rights and obligations of the control board’s head:

a) Examine logicality and legality in business management and in the establishment of account book and financial statement;

b) Appraise annual financial statement of a reciprocal insurance organization; examine each specific matter concerning management of the reciprocal insurance organization if it is found necessary or as decided by the general membership meeting, or at the request of the members as defined in Clause 3, Article 21 hereof;

c) Make regular notice to the board of directors about performance results; consult with the board of directors before making submission of reports, conclusions and proposals to the general membership meeting;

d) Report to the general membership meeting about accuracy, honesty and legality of the recording and storage of documentary evidence as well as the establishment of account book and financial statement, and other reports; about honesty and legality of the management of business operation in the reciprocal insurance organization;

dd) Propose measures to supplement, amend and improve the structures of organizing and managing business operation in a reciprocal insurance company.

e) Other rights and obligations according to the law provisions and the Statute of a reciprocal insurance company.

Any inspection as stipulated in the Points a, b of this Clause shall not hinder normal operation of the board of directors and shall not interrupt the management of daily business activities in reciprocal insurance company.

Article 30. Those who are not allowed to be members of the control board

1. Members of the board of directors, director, or general directors; spouse, biological or adoptive parents, biological or adopted children, brothers, sisters of the board of directors, director, or general director, chief accountant of such reciprocal insurance organization.

2. Those who face criminal prosecution or are serving prison sentence or have their practising power taken away by the Court due to illegal acts such as smuggling, counterfeits production and trading, illegal business performance, tax evasion, frauds and other crimes according to the law provisions.

Article 31. Other issues related to the control board

Tenure of the control board, work and reward regulation applied to members of the control board shall be stipulated by the Statute of a reciprocal insurance organization or decided by the general membership meeting.

The control board shall be responsible to the general membership meeting for any violation causing losses to the reciprocal insurance organization in the implementation of its duties.

Chapter 5:

FINANCIAL CAPACITY, ACCOUNTING AND FINANCIAL REPORT

Article 32. Legal capital

1. Legal capital of a reciprocal insurance organization shall not be less than VND10 billion. However, the legal capital for agricultural activities is less than the abovementioned level and separately instructed.

2. The Ministry of Finance shall provide specific guidance on level of legal capital of a reciprocal insurance company by field and branch.

Article 33. Capital source

Capital source for the formation of a reciprocal insurance company includes:

1. Contribution from founder members;

2. Advances on insurance premiums;

3. Other legal sources according to the law provisions.

Article 34. Deposit

1. Within 60 days since the establishment and operation license is granted, the reciprocal insurance organization must use part of its capital to make deposit at a commercial bank operating in Vietnam. The deposit interest rate shall be based on negotiation with the bank.

2. Level of deposit is equal to 5% of the legal capital.

Article 35. Technical reserve

1. The reciprocal insurance organization must establish a technical reserve fund from insurance premiums in insurance services for the proportion allowed.

2. Technical reserve fund shall include:

a) Unearned premium reserve used to compensate for liability arising during the effective period of an insurance contract in the following year;

b) The outstanding claims reserve used to compensate for all claims that have been made and for which the insurer is liable, but which had not been settled at the balance sheet date;

c) Claims equalization reserve used to compensate for losses as a result of major fluctuations or for losses that total premiums remaining in the financial year after unearned premium reserve and outstanding claims reserve are established is unable to cover with respect to the proportion allowed;.

d) Other reserves as instructed by the Ministry of Finance.

3. The Ministry of Finance shall detail the establishment of a technical reserve fund of a reciprocal insurance organization.

Article 36. Division of business performance outcome

1. Profits of a reciprocal insurance organization are a difference between total revenue and total expenses.

2. Profits of a reciprocal insurance company shall be used for the following purposes:

a) Refund of capital loans for the formation of a reciprocal insurance organization;

b) Establish reserve requirement and other funds according to the law provisions;

c) Used as the basis for reducing premiums with respect to insurance contracts to be extended in the following financial year;

d) Other purposes as regulated in the Statute of a reciprocal insurance organization and other relevant legal documents.

Article 37. Financial regulations, accounting and reporting

Regulations on the management and use of capital, assets, capital investment, liquidity, revenue and expenses, reserve requirement, accounting regime, statistics, audit and financial report of a reciprocal insurance organization shall be implemented in accordance with the Government’s Decree No. 43/2001/NĐ-CP dated August 01, 2001 on financial regulations to insurance enterprises and insurance brokerage enterprises, and the instructions by the Ministry of Finance.

Chapter 6:

STATE MANAGEMENT ON A RECIPROCAL INSURANCE ORGANIZATION

Article 38. State management on a reciprocal insurance organization

1. The Ministry of Finance shall carry out state management on the formation, organization and operation a reciprocal insurance organization as follows:

a) Instruct the implementation of legal documents concerning a reciprocal insurance organization; construct relevant policies and regulations;

b) Grant and revoke the establishment and operation license from a reciprocal insurance organization;

c) Promulgate, approve and instruct the implementation of rules, provisions, fee list, insurance commission applied by a reciprocal insurance organization;

d) Take necessary measures to ensure that the reciprocal insurance organization meet financial requirements and fulfill commitments made with insurance buyers;

dd) Help construct a team of management officers and provide training in professional competence in insurance to a reciprocal insurance organization;

e) Investigate and inspect the operation of insurance business, compliance with financial regulations by a reciprocal insurance organization; settle complaints, denunciation and handle violations concerning reciprocal insurance;  

2. The ministries, ministerial-level agencies, and Governmental agencies within their scope of duties and powers shall be responsible for organization and operation of a reciprocal insurance organization according to the law provisions.

3. People’s Committees at all levels within their scope of duties and powers shall carry out state management on the organization and operation of a local reciprocal insurance organization according to the law provisions.

Article 39. Amalgamation, separation, merging, conversion, bankruptcy or dissolution of a reciprocal insurance company

1. Amalgamation, separation, merging, conversion, or dissolution of a reciprocal insurance organization shall be done in accordance with the law provisions.

2. As for bankruptcy of a reciprocal insurance organization, the provisions of the Law on Bankruptcy of Insurers shall be applied.

Article 40. Commendation and handling of violations

Commendation and handling of violations during the formation, organization and operation of a reciprocal insurance organization shall be implemented in accordance with the provisions set out in Chapter VIII of the Law on Insurance Business.

Chapter 7:

IMPLEMENTATION

Article 41. Effect

1. This Decree takes effect after 15 days since the gazette is published.

2. Any issue that is not stipulated in this Decree shall be settled in accordance with the provisions of the Law on Insurance Business and other relevant law provisions.

Article 42. Guidance on implementation

The Minister of Finance within its scope of functions, duties, and powers shall be responsible for providing guidance on the implementation of this Decree.

The ministers, heads of ministerial-level agencies, heads of Governmental agencies, presidents of the People’s Committees of central-affiliated cities and provinces shall be responsible for executing this Decree./.