of directors; copies of all notices; securities register; shareholders’ agreements and resolutions and ac-counting records.

The companies’ law regime in Cambodia is governed by the Law on Commercial Enterprises, which was promulgated on 19th June, 2005.

Allowable business forms under this law include sole proprietorships, partner-ships and limited liability companies.

Foreign investors usually choose to register a limited liability company as a sub-sidiary of the parent com-pany to do business in Cambodia. If their activi-ties in Cambodia are more limited, a foreign investor may prefer to open a Branch or Representative Office of the parent company.

Under the Law on Com-mercial Enterprises, the investor must register one of the allowable business forms at the Ministry of Commerce (“MOC”) and file an annual declaration the status of the enterprise, also at the MOC.

In addition a company must have a legally competent natural person as a registered agent continually maintained in the Kingdom of Cambodia. There are also a number of corporate records that must be maintained at the company’s registered of-fice.

These are: the articles and by-laws; minutes of meetings and resolutions

Basic Requirements for Establishing a Business in Cambodia

Sole Proprietorship

A sole proprietorship has only one shareholder and is an enterprise which is established and operated by a single natural person who is the owner of all its capital.

The obligations and liabilities incurred in the operation of the business are thus his/her sole and exclusive responsibility.

A Sole Proprietorship

which is subject to taxation of its profits must be registered at the Ministry of Commerce. A Sole Proprietor may, at any time, subject to the applicable laws, terminate the operation of the Sole Proprietorship.

A sole proprietorship is subject to the same requirements as a limited liability company with the

exception that the sole shareholder must be a natural person and may not be another company.

The management of the sole proprietorship is per-formed by the shareholder or by an individual ap-pointed by the share-holder.

January 2009

Establishing a Business

In Cambodia

Relevant Law and Regulations

Law on Commercial Enterprises 2005

Prakas on Liability of Directors, Managers or Owners of an Enterprise for Tax Due, Additional Tax and Interest to be Paid 2005

WTO Accession Law 2004

Amendment to the Law on Commercial Rules and Registration 1999

CONTENTS:

Basic

Requirements

1

Sole

Proprietorship

1

Partnership 2

Corporate Company

2

Foreign Business in Cambodia

3

Registration Procedure

3

Company Obligations

5

A General Partnership is a contract between two or more persons to combine their property, knowledge or activities to carry on business in common with a view to profit.

The members of the General Partnership are

known as a Partner or General Partner.

All General Partners must be merchants and the liabilities of Partners with respect to the partnership’s debts are joint and unlimited on their personal property.

A general partnership acquires legal personality when it registers in accordance with the Law on Commercial Rules and Register.

A private limited company re-quires a minimum capital of US $1000.

A Private Limited company is the most common form of com-mercial entity currently used in Cambodia.

A Private Limited Company is a form of limited company that may have 2 to 30 shareholders. One person may form a company called single member limited company, having the same form and regulations as a private limited company excepting the relationship between shareholders is different. A company is treated as a private limited company from the date of registration by the Ministry of Commerce.

Partnership: General

Private Limited Company

“If a limited partnership is not registered, it is deemed to be a general partnership.”

Page 2 Establishing a Business In Cambodia

registered in accordance with the Law on Commer-cial Rules and Register.

If a limited partnership is not registered, it is deemed to be a general partnership.

A person may at the same time be both a general partner and a limited partner in the same limited partnership and such person has the rights and obligations of a general partner.

A limited partner is liable only to the extent of the sum of money or value of the property he agreed to contribute, while the gen-eral partners are jointly and severally liable for the debts of the partnership to third parties.

A limited partnership is a contract between one or more general partners who are the sole persons authorized to administer and bind the partnership, and one or more limited partners, who are bound to contribute to the capital of the partnership.

The term of the contract may not be in excess 99 years but may be extended. The limited partnership is formed on the date on which it is

Partnership: Limited

Public Limited Company

A Public Limited Company is a contract between one or more entities who agree to conduct any commercial activity. It is a form of limited company that is authorized under the law to issue securities to the public.

Currently, due to the lack of a stock exchange in Cambodia, only banks and other financial institutions are permitted to incorporate public limited companies.

According to the Law on Commercial Enterprises, a foreign business is a legal person formed under the laws of a foreign country having place of business in and doing business in the Kingdom of Cambo-dia. It is a subject to regis-tration at the Ministry of

Commerce and the three main forms are represen-tative office, branch and subsidiary.

A subsidiary is a company that is incorporated in the Kingdom of Cambodia and has at least 51% per-cent of its capital held by a foreign company. Its for-

mation, management, right and other obligations must be provided for in the memorandum and articles of association of the limited company. Each Subsidiary is subject to commercial regis-tration requirement, which is handled by the Ministry of Commerce.

and control is under one or more directors who may be appointed and removed by the parent company. It can conduct the same activities as the RO-Agent. In addition, it may purchase, sell or con-duct regular professional services or other opera-tions engaged in produc-tion or construction in the

A Branch Office is an office that is opened by a company of another foreign country for the purpose of conducting a particular commercial ac-tivity in Cambodia. The Branch Office is the same entity as the parent com-pany and therefore has the same name as the parent company. Its management

country. The branch and parent company have joint liability with respect to losses and debts of a branch office and the Branch Office must also meet local taxation obliga-tions. The Branch Office is subject to a commercial registration requirement, which is handled by the Ministry of Commerce.

Foreign Business in Cambodia: Subsidiary

Foreign Business in Cambodia: Branch Office

Foreign Business in Cambodia: Representative Office

Page 3

A Representative Office (RO) may be established by an eligible foreign investor to facilitate the sourcing of local goods and services and to collect information for its parent company.

They also serve as a channel for promoting and marketing the home company’s products and services in the host country. An RO is regarded as a cost center and accordingly should derive no income from

its activities and thus is not generally subject to Cambodian tax laws.

However, the representa-tive office is subject to tax requirements with regard to the withholding tax on salaries paid to employees in Cambodia, a patent tax and an annual business operation tax.

The RO-Agent is under the management of one or more directors who may be appointed and

removed by the principle enterprise. The Representative Office may lease premises for its office, employ local staff, advertise its products, and organize trade fair to introduce their commercial products. It can also undertake commercial relations for the purpose of introducing itself to prospective clientele.

The RO-Agent can enter into contracts with local enterprises in Cambodia if the principal enterprise so

usual business nor can it conduct any production or construction activities within the country. The RO-Agent is subject to a commercial registration requirement, which is handled by the Ministry of Commerce. The words “Representative Office Agent” must be placed before or after the name of the principal enterprise.

In order to setup a limited liability company, the founding members (future shareholders) or a representative/director of the Company must complete information to file a request to setup the Company with the Ministry of Commerce. The MOC, in response, prepares the relevant Official Application Forms in accordance with the

provided information. The application must be signed by all relevant shareholders and directors of the Company before the MOC, Cambodian lawyer, or Notary Public (if the shareholders and directors sign the Official Application Forms outside Cambodia, which are to be delivered by courier).

The Memorandum and

Articles of Association (“MAA”) must be signed by the relevant shareholders and directors. Any substantial modification on the MOC standard MAA may be rejected when the draft MAA is submitted to the MOC.

After being signed, the Official Application Forms and the MAA shall be submitted to the MOC for review and approval.

local company is entitled to own land. The chairman of the Board of Direc-tors of a local company must be a Cambodian national. Other directors can be foreigners.

A general partnership has a legal per-sonality separate from that of each of its partners. The general partnership acquires legal personality when it registers in accordance with the Law on Commercial Rules and Register, and has the rights to own movable and immovable property, to carry on business, to contract and to sue

A company is considered to have Cambodian nationality if it has a registered office in Cambodia, and at least 51% of its shares are owned by Cambodian nationals.

Only companies with Cambodian nationality shall be permitted to register corporate names that imply such nationality. A limited liability company with Cambodian nationality is referred to as a “local company”. Under the Constitution of the Kingdom of Cambodia, only a

and be sued in its own name.

A general partnership that has acquired legal personality is deemed to be of Khmer national-ity only if the general partnership has a place of business and a registered office located in the Kingdom of Cambodia and more than 51% of the record ownership interest in such general partnership is held by natural or legal persons of Khmer nationality.

Registration of Corporate Companies

Company Obligations: National and Legal Personality

Time Frame for Company Incorporation

Page 4

It takes at least 14 work-ing days to process a new company registration at the MOC counting from when the completed ap-plication documents are submitted ton the MOC.

The Memorandum and Articles of Association M&AA must be accept-able to the MOC first before counting the starting date. VAT and Patent, which are issued

by the Tax Authority, take another 14 working days after the company registration is completed at the MOC.

From the date of receiv-ing the application, it usually takes the Ministry one to two weeks to issue its ap-proval and registration of the Branch or Represen-tative Office.

“It takes at least 14 working days to process a new company registration at the Ministry of Commerce.”

No. 84 Monireth Blvd Phnom Penh Cambodia P.O. Box No. 172

Phone: (855-23) 217 510 Fax: (855-23) 212 840 E-mail: info@bngkh.net Webpage: www.bngkh.com

With some of the brightest legal minds in the country, BNG offers a truly multidisciplined approach to conducting business within the Kingdom of Cambodia. BNG offers a range of services suited to the investor in Cambodia including Property Consultancy, Intellectual Property matters, Construction, Telecom-munications and Energy. BNG’s strength lies in our superior knowledge of local protocol, local procedure and local people. BNG helps you do business in Cambodia!

A partnership or company must display its name in the Khmer language on all seals, signs letterhead, and forms and documents used for public purpose, and on all public advertisements within the Kingdom of Cambodia and this must be placed above and be larger than the name in another language. The Khmer name must also sound phonetically the same as the name in the other language. The partnership or company may however use and be designated by a name in another language outside of the Kingdom of Cambodia.

Company Obligations: Use of a Khmer Name

Company Obligations: Labor Filing , Annual Declaration

Upon opening a business, employers must make a declaration to the Ministry of La-bor. This declaration, called the Declaration of the Opening of a Business, must be made in writing and be delivered to the Ministry of Labor before the actual opening of the business. Employers must also make a declaration to the Labor Inspector each time that the business hires or dismisses a worker. This declaration must be made in writing within seven calendar days after the date of hiring or dismissal.

Each partnership or company must file an annual declaration with the Ministry of Commerce concerning the status of the partnership or company.