At present there are many forms of permissible business entities in Cambodia. They are a limited liability company, a branch office, a representative office, a partnership and a sole proprietorship. Within the limited liability company (LLC) classification there are three different options, a single member private limited company, a private limited company, and a public limited company.
To help ease the confusion with regard to the different possible business entities, here are some brief descriptions of each from of business and some of the pros and cons for each of them.
LLCs are companies in which the liability of share-holders is limited to capital contribution; this includes single member private limited company, a private limited company, and a public limited company. The most positive points of starting an LLC in Cambodia are the fact this is a widely accepted business form, it takes minimum capital to set up ($1000USD), and it is accepted by the Council for the Development of Cambodia for approved investment projects. Last but not least in terms of pros for an LLC in Cambodia is the fact they can be created in flexible forms.
The cons of creating an LLC in Cambodia are, activities in Cambodia are taxable, there is a higher reporting and administration burden, plus the fact that there are often approvals required for amendments to the company.
Branch offices are representations or divisions of offshore parent companies in Cambodia. The benefit of a branch office in Cambodia is the fact it offers a simplified internal, legal, and accounting structure. Cons of a branch office are the fact all activities are taxable, branch offices are not eligible for CDC investment projects, the parent company is exposed to the liabilities of the branch, and there is no separate legal personality from the parent company.
For a representative office, we can best describe this entity is a local representative of the parent company in Cambodia. The pros of creating a representative office are, firstly there is rapid approval with minimum legal documentation and also no taxable activities in Cambodia. Cons include the fact that the office will not be accepted for CDC investment projects, the scope of permissible activities is limited, they cannot engage in business activities in Cambodia in their own capacity and there is no separate legal personality from
To register a private or public limited liability company, a branch office or representative office, is very similar.
It is also a necessity to do business legally in Cambodia.
To setup a limited company in Cambodia requires a number of administrative steps:
- Registering with the Ministry of Commerce
- Opening a Bank Account
- Tax Registration
- Declaration of Opening with the Ministry of Labour
- Register with the Ministry of Commerce to Setup a Company in Cambodia
Businesses are registered with the Department of Registration within the Ministry of Commerce.
Under current practice, the process must now be completed through the ministry’s online platform.
Once the application for business registration has been started, clients will have fifteen days to complete it. If this is not done, the application will be removed from the system.
Before starting the process, the incorporators will need to prepare the Memorandum and Articles of Association.
According to the law, the Articles must contain at a minimum:
- Name of the company
- Registered office address in Cambodia
- Objectives of the company, including any restrictions (see below for more information)
- Authorized capital in Cambodian Riel
- Share classes and any maximum number of shares, including the par value (see below for more information). If there are more than one class of shares, and potentially also share series, the Articles must specify the rights, privileges, restrictions and conditions attached to each.
- A description of any restrictions on share issue, transfer, or ownership, if applicable.
- Name and address of each initial shareholder, all of whom must sign the Articles.
- The specific number of directors, or a minimum and maximum range of directors.
Clients will need to become a registered user of the website to complete the process.
Step two of creating a company in Cambodia involves registration at the Ministry of Commerce. This step can only be performed after the name has been approved and must be completed within fifteen days from the start of the application.
Next the client will need to decide exactly what business activity or activities best apply to the business, a share par value must be established, the default is to price at KHR 4,000 or US$1, and this may be modified in the articles.
An important and often overlooked step is to ensure the company has a registered office address. For legal business operations, proof of address must be submitted. For information regarding how LocaWize can provide this crucial service, please click here.
Finally, all information relating to the initial shareholders must be submitted, including, contact information, shareholding, proof of identity, as well as specifying the nationality of the majority of shareholders.
The collected information can then be presented for final review and approval.
After a company has been established and the appropriate documents and certificates have been obtained, the company must use its registered office to prepare and maintain the articles and bylaws and all amendments, the minutes of meetings and shareholder’s resolutions, copies of notices to be sent or filed in accordance with the Law on Commercial Enterprises (LCE), and a securities register and accounting records.
These requirements are in addition to a business’s tax obligations which will vary depending on the type of business entity that has been established. A digital certificate of incorporation is available online, and a hard copy can be obtained through the Business Registration Department, this certificate is required to register with the tax authorities. All of your business legal requirements, LocaWize has you covered from start to finish, for information on how we can help our clients maintain their legality, please click through here.
We can ensure that all employees are in complete accordance with the local Cambodian legal system. With our fully transparent visa and work permit system, LocaWize can complete these processes easily and quickly. For more information on how to access our services in the visa and work permit area, please click here.
These processes can be extremely complex conceptually and in actuality. By utilising the extensive and complete services and solutions that LocaWize provides for our clients, we can create a stress free process and give our clients peace of mind and a level of assurance that leaves nothing to do but concentrate on the day to day operations that our clients’ business rely upon them for.