We have teamed up with legal experts RHTLaw to deliver a three-part series discussing key Cambodian business and investment laws and regulations surrounding business and investment in Cambodia in 2023.
Here in Part 1, you will find everything you need to know about the current law on business in Cambodia, including application, set-up, tax incentives on investment and businesses, foreign ownership laws and regulations and more.
For further advisory information regarding anything involving business within Cambodia, you can contact the in-market experts AquariiBD here. This information is courtesy of the legal experts at RHTLaw.
Who deals with the establishment of business in Cambodia?
The establishment of a business in Cambodia is governed by the Law on Commercial Enterprise, Law on Commercial Rules, and Register and regulated by the Ministry of Commerce.
What types of companies can be established under Cambodian law?
Cambodian Law on Commercial Enterprise allows for the establishment of the following types of companies: sole proprietorship, partnership, limited liability Companies, and foreign business entities. The partnership includes general partnership and limited partnership. The limited liability companies comprise private limited liability companies and public limited companies, whiles the foreign business entities include representative offices, branch offices, and subsidiaries. Cambodian Law on Investment also offers a type of company called Investment Project which includes qualified investment projects (QIP), expanded qualified investment projects, and guaranteed investment projects.
Are foreign companies interested in investing in Cambodia required to have company addresses in the preparation stage of establishing the business?
Yes, since foreign companies and local companies are subjected to the same provision of business registration, foreign companies shall specify a location of their business in Cambodia in the Memorandum and Articles of
Association. The requirement can be satisfied by entering into a lease or through shareholder contribution.
Can a foreign company open a Representative Office in Cambodia?
According to Cambodian business and investment law, foreign companies may open representative offices upon approval from the Commercial Registration Bureau at the Ministry of Commerce (MOC) except where a Commercial Registration Branch is available in their provinces.
What documents are required to establish a branch of a foreign company in Cambodia?
All foreign branches may request approval from the Business Registration Bureau at the Ministry of Commerce except where a Commercial Registration Branch is available in their provinces by submitting the following documents:
- Application Form E (3 sets include 2 originals and 1 copy),
- Certified true copy of the Articles of Incorporation of the holding company (1 set),
- Certified true copy of the certificate of incorporation of the holding company (2 sets),
- Photographs (4×6 cm) of the director or manager (3 photos),
- Letter of appointment by the holding company appointing its director or manager of the local branch (1 original),
- Copies of the passport or ID of the director or manager with his/her original signature (3 copies).
Does a registered company need to obtain VAT and a Patent?
It is only after receiving a stamped Memorandum of Articles of Association and Certificate of Incorporation that registered companies can proceed to the Tax Department for VAT and Patent (business) registration. Patents are registered following 15 days after the date of incorporation.
Does a registered company need to obtain VAT and a Patent?
It is possible to assign a license, but the owner must receive approval from the Ministry of Commerce and the Tax Department by filing a request. Specialized licenses may also need prior approval from the relevant ministries or government institutions.
What is the minimum price to purchase shares in a limited company?
According to Cambodian business and investment law, the new amendment of the Law on Commercial Enterprises removed the minimum price to purchase shares in a limited company. Accordingly, there is no minimum price requirement for the share value in Cambodia.
Can foreigners own 100% of the share, or are they required to have a Cambodian partner?
Foreigners can own 100% of the share in a Cambodian commercial company. However, it shall be considered a foreign company if less than 51% of the share of the company is held by a Cambodian. The nationality of the company is critical for land ownership in Cambodia since there are restrictions for foreigners to own land in the Kingdom.
Does a company have to file an annual declaration?
All companies are required to file an Annual Declaration of Commercial Enterprise (ADCE) to the Ministry of Commerce using its online system. In the annual declaration, each partnership or company is required to report changes to any of the items of information. The submission of an ADCE via on online system is compulsory and must be filed no later than three months from the anniversary of its business registration date. The failure to comply with such an obligation will be subjected to KHR 2 million (around USD 500), according to Cambodian business and investment law.
When can a company dissolute in Cambodia?
A company may be dissolved on its decision by submitting the articles of dissolution to the Ministry of Commerce’s office in charge of company administration in order to receive a certificate of dissolution However, the company that has applied for bankruptcy at the court does not apply under this condition. Currently, the commercial court is being established in Cambodia
Does Cambodian business and investment law accommodate foreign business ownership and investment?
Managing Partner at RHTLaw Mr. Houn Vannak said Cambodia has a business-friendly legal framework and regulations which allow both local and foreign investor to enjoy her market potential and investment opportunities in Cambodia.
“Cambodia’s new Law on Investment provides a roadmap for investor to acquire various investment incentives and enables Cambodia to become an open, transparent, and conducive investment destination for local and foreign investors.
“This is possible because of the shortening of the application period, as well as through making administrative and institutional mechanism more convenient for investors with the introduction of the online portal services where investment applications may be submitted through information technology platform.”
How does Cambodian business and investment law attract foreign investment?
Mr. Vannak said that Cambodia is on the path of investment diversification. It is an opportunity for investor to enter Cambodian market to enjoy the benefit of investment incentives and investment protection.
“The current regulatory frameworks concerning investment in Cambodia are expected to enhance the Kingdom’s competitiveness and attractiveness, modernization, economic diversification, private sector development, and improving the post-Covid-19 recovery.”
Part two of this three-part business and investment law series will be released next week on the AquariiBD platform.