Cambodia

3 Chapter Incorporation

    • Characteristics of business base

       When you establish a business to be based in Cambodia, you need to comply with Law on Commercial Enterprise and Law Bearing upon Commercial Regulations and the Commercial Register. You need to consider the investment environment, investment regulation, or preferential treatment system in making a decision in the form of business you are going to venture.

      Corporation type, structure, stock, or capital are regulated on Law on Commercial Enterprise while Law Bearing upon Commercial Regulations and the Commercial Register regulate trader, trade and more.

      Advance form

      Type

      Positioning

      Effective tax rate

      Characteristics

      Liaison office

      Foreign corporation

       

      No profitable activities. Only the following activities are possible [274]:

      ・Information provision for headquarters

      ・Market research

      ・Promotion of goods at exhibitions

      ・Rental of office and employment of employees

      ・Contract acts on behalf of the parent company

      Branch office

      Foreign corporation

      20%

      The above activities [274] and following activities are possible [278]:

      ・Regular product sales

      ・Provision of services

      ・Manufacture

      ・Processing

      ・Construction work

      Local corporation

      Domestic corporation

      20%

      Permitted except those activities prohibited for foreigners or foreign corporations[286]

       

      Local Corporation

      Corporation form as local corporation is Limited Liability Company. On LLC, all shareholders have indirect limited liability and it is classified as Private Limited Company and Public Limited Company.

      Private Limited Company is established by more than 2 and less than 30 stockholders and there is limitation for stock transfer. In case of only one stockholder, it is called Single Member Limited Company and  is treated almost the same as Private Limited Company. Generally, Private Limited Company is the form pursued by most Japanese corporations. Public Limited Company is possible to be listed.
       
      Private Limited Company
      Public Limited Company
      Number of stockholders
      1~30
      No regulation
      Public offering of stock
      Impossible
      Possible
      Limitation of business
      Loan business, banking, and insurance business are impossible
      Non
       
       

      Liaison office

      Commercial representative office, Commercial relations office and Agency composed the  Liaison office. Those offices are established only for non-profitable activities.

       Branch office

      Branch office’s assets also belongs to its parent company’s assets and parent company is also responsible for branch office’s responsibilities. Also, branch office can be liable for same liability and tax liability as local corporation.

       Partnership

      Partnership is two or more persons contracting to make a joint venture to gain profit. In Cambodia, there are two partnership type namely General Partnership and Limited Partnership.

       Sole proprietorship

      Sole proprietorship is a company owned by individual and there is no corporate status. All accounts, assets, contracts are registered under the name of the personal business operator.
       

    • Incorporation of Business Base

       Basically, procedures in establishing a company  depends on the business form.

       

      Establishment procedure of Private Limited Company

      One or more persons or corporations with legal capacity can establish a company and submit article of association to Commercial Registration Bureau. Certificate of Incorporation is issued from the registration, and at that time the company acquire its corporate state.

       

       Procedure by the Japanese side

      1.    Decision of local corporation’s information

      Khmer language is the only language that can be used as company name, in principle. Company name must end with “Ltd.” Or “plc”.

      Capital must be least at 4,000,000 Riel according to company law. You should issue at least 1,000 stocks and its nominal value should be 4,000 Riel or more per stock.

      Corporation structure is designed based on corporation law, and at least one stockholder and a director are required for the institution of private limited company. It is possible to select Japanese director.

      2.    Preparation of required documents

      Khmer is used for filling in the application form, so it is general to use agency service of consultant or law office. If you use agency service, you need to prepare the following documents: Articles of incorporation of parent company, parent company registry, passport copy and photograph of all shareholders and board members, certificate of seal of the parent company, authorized / certification power of attorney, oath and establishment letter of commitment.

      Articles of incorporation or registry should be certified by Embassy of Cambodia.

      3.    Sending documents

      After finishing those processes, you will send those documents to Cambodia. Succeeding procedures will be done in Cambodia.

       

       Procedure by the Cambodia side

      1.    Reservation of company name

      You need to prepare three names before you check at Commercial Registration Bureau.

      2.    Open a bank account and Pay capital

      According to Cambodia company law, you should complete capital payment before establishing a company. However, you cannot open an account using the name of new corporation that is not established yet, so you will open an account using your own name or agency service.

      3.    Make an application form

      Application form is constructed by three forms below.

      Form A.1 : application form for registration of a company

      Form A.2 : application form for announcement about the registration to the public

      Form A.3 : non-civil servant and non-crime certificate of remaining members of the board

      4.    Apply for company registration

      Corporation can apply for registration by submitting  following documents. Form A, form A.1, form A.2, form A.3, article of incorporation of new corporation, bank introduction to prove payment of capital, copy of articles of incorporation of parent corporation, copy of parent company registry, passport copy and photograph of all shareholders and board members and establishment letter of commitment.

      And after getting the certificate of registration you will be able to make company seal.

       

      5.    Complete the establishment and start business

      After those process was done you can start business.

       

       Procedures after establishment

      Within 15 days from establishing the company, you should get taxpayer number from Tax department of Phnom Penh. New established business base should pay stamp duty to tax department within 15 days from establishing. 119,000 Riel for corporation and 115,500 Riel for branch office and liaison office. In case you will employ at the local government, you should give notice and register at ministry of labor within 30days upon starting the business operation. If you will employ more than 8 employees, you should register them before starting the business.

       

      Procedure of establishing branch office

      You should apply for the registration of branch office to Commercial Registration Bureau with the following documents:

      Application form E, authenticated copy of parent corporation’s articles of incorporation, authenticated copy of parent corporation’s foundation certificate, appointment letter of local branch manager, photograph of manager, passport copy of manager, and 420,000 Riel as registration fee.

       

       

       

       

       Procedure of establishing liaison office

      You should apply for the registration of liaison office to Commercial Registration Bureau with following documents:

      Application form E, authenticated copy of parent corporation’s articles of incorporation, authenticated copy of parent corporation’s foundation certificate, appointment letter of liaison office manager, photograph of manager, passport copy of manager, and 420,000 Riel as registration fee.

       

       Required documents for establishing Sole proprietorship:

      Application form D, applicant’s passport copy, photograph of sole proprietorship, permission of business and 120,000 Riel as registration fee.

       

       Required documents for establishing a partnership

      Application form A, passport copy of each partner, photograph of each partners, bank introduction to prove 4,000,000 Riel as least capital, contract signed by all partners, and 420,000 Riel as registration fee.

    • Liquidation and dissolution of corporation

      Corporation can be dissolved upon receiving  approval of general shareholders meeting special resolution.

      Follow predetermined format, company should send articles of dissolution to directors. After receiving the article of dissolution, director should issue a certificate of dissolution. Corporation will be dissolved at the date stated  on certificate of dissolution.

      1.    Proposal of liquidation and dissolution

      Stockholders who have voting rights can suggest for company liquidation and dissolution.

      2.    Convocation of general meeting of stockholders

      Conditions of liquidation and dissolution should be on the convocation notice. If there are assets and liabilities involved, its management is decided by special resolution of stockholders.

      3.    Sending the articles of dissolution to director

      After resolution is done, sending the articles of dissolution to directors will follow. When the director received the articles, director should issue certificate of intent to dissolve and all the activities of the corporation will stop except to those activities needed to liquidate corporation.

      4.    Notice to creditor

      Intention to dissolve notice is needed to be sent to creditors  within 2 weeks.

      5.    Payment of liabilities

      6.    Distribution of assets

      7.    Issue certificate of dissolution

      8.    Approval from ministry of commerce

      9.    Complete liquidation