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Branch office of a foreign company
A Branch Office is an office that is opened by a company
of another foreign country for the purpose of conducting a
particular commercial activity in Cambodia. Its management
and control shall be 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 conduct regular professional services or
other operations engaged in production or construction in
the country. Liabilities with respect to losses and debts of
a branch office are a joint liability of both the both the
branch and parent company. The Branch office is subject to
commercial registration requirement, the compliance of which
shall be done at the Ministry of Commerce. The word "Branch
Office" shall be placed before or after the name of the
parent company. The Branch may be dissolved by the decision
of the parent company. Subsidiary A Subsidiary is a limited
company that is formed in Cambodia with at least 51% of its
capital being held by a foreign company. Its formation,
management, rights and other obligations shall be provided
for in the memorandum and articles of association of the
limited company. Each Subsidiary is subject to commercial
registration requirement, the compliance of which shall be
done at the Ministry of Commerce. The word "Subsidiary"
shall be placed before or after the name of the parent
company. Restrictions on Foreign-owned Enterprises The law
on Commercial Regulations and Commercial Register, as well
as the Ministry of Commerce Instruction Circular, do not
contain any special provisions for the registration of
importers or exporters. However, there are distinctions in
the scope of commercial activities allowed for local
companies and foreign-owned companies. Foreign-owned
enterprises have two limitations in the scope of their
activities. First, They are registered as eligible to engage
in import/ export activities only as required by their
investment/ production activities. Foreign-owned companies
are not authorized to engage in import/ export trading
activities-that is to import or export for the sole purpose
of reselling without transformation. Foreign representative
offices are not allowed to engage in commercial activities.
Second, these enterprises are not allowed to own, sell or
buy land or engage in real estate business outside their
stated scope of activities. For local companies, the
registration allows them to engage in import or export
activities without limitations. A company is deemed to be a
local company if (i) its stated office is located in
Cambodia; (ii) more than 51% of its stated capital is held
by a Khmer citizen or a Khmer legal entity, and (iii) more
than 51% of its financial interests in the profits and
losses are held by a Khmer citizen or a Khmer legal entity.
Registration of companies
In May of 1995, the National Assembly passed the "Law on
the Commercial Regulations and the Commerce Register". This
law governs all commerce activities undertaken by Cambodian
citizens and/or foreigners in Cambodia. Considered as
merchants are people or legal entities who conduct acts of
commerce and make this their usual profession. Acts of
commerce are defined as activities of buying and selling
merchandise of services, on a regular basis, for the dual
purposes of exchange and profit. A register for re cording
merchants and commercial companies, called the "Commerce
Register," is maintained at the Ministry of Commerce.
Merchants and commercial companies which have their
domicile, branch office, subsidiary or agency in Cambodia
are required to enroll in this Register, except those
merchants exempt from taxation on profits. The register
lists basic information on all registered business entities
including the entity's name, its capital, the location of
its registered office, the names of directors and
shareholders, the equity held by each shareholder and the
entity's authorized signatories. Patents, trademarks and
copyrights owned by the business, any mortgages or liens on
business assets and any judgments for or against the
business are also listed. Moreover, there is a requirement
of a publication of an abstract of the incorporating
documents in a legal newspaper or recognized public
newspaper.
Formality for Registration of a Company
A director or shareholder of a company must come to
complete a registration form, in person, at the Legal
Affairs division of the Ministry of Commerce. The director
or shareholder responsible for such registration must
present the registrar his/her identification card or
passport. Such director or shareholder must come to sign, in
person, in front of an official at the Legal Affairs
Division, confirming that all documents to be filed are
correct, complete, and contain no false representation. If
any ambiguity is found in any document, the director of the
Legal Affair division can invite the chairmen of the board
of directors or any director to clarify such ambiguity on a
case-by-case basis.
