No formal restrictions are placed
on the level of foreign participation in Cambodian companies. As
a result a greater proportion of investors choose to establish
100% foreign-owned limited companies in Cambodia than in many
other developing nations. There are various options for setting
up a commercial entity through the Ministry of Commerce. The
types of commercial entities allowed are:
S.A. is a company in which all of the stockholders,
unknown to the public, commit only their stake, and which is
identified in principle only by the object of its business
with the declaration of the amount of its business capital,
capital which constitutes the only guarantee to the
company's creditors. The S.A. may not be formed with less
than seven shareholders. The minimum issued capital is 100
million riels at a par value per share of at least 10,000
Riels. For capital contributions in cash, the par value of
the shares must be at least 25% paid-in upon incorporation
with the shares been fully paid-up within a period of three
years. The Board of Directors must be comprised of at least
three directors who must be chosen from among the
shareholders of the company.
Limited Liability Company (S.A.R.L.)
A Limited Liability Company (S.A.R.L.) is a company of
persons and of capital in which the shareholders (associés)
are not liable beyond their contributions and are not
considered merchants. Whatever its purpose, the S.A.R.L. is
a commercial entity and subject to commercial laws and
practices. Businesses employing large funds, such as
financial institutions and insurance companies may not
incorporate as an S.A.R.L. The maximum number of
shareholders is 30 and the minimum is 2. Either shareholders
or outsiders can be appointed as directors. The minimum
issued and paid up capital is 20 million riels at a par
value per share of at least 20,000 riels. The shares must be
completely paid up in full and distributed. Issued capital
must be fully paid in cash or with non-cash items before the
company can be incorporated. The transfer of shares in a
limited liability company to third parties must have the
prior written consent of a majority of the shareholders
representing at least three-quarters of the capital of the
company.
Sole Proprietorship Limited Company
A Sole Proprietorship Limited Company has only one
shareholder. It 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 must be
performed by the shareholder or by an individual appointed
by the shareholder. 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. Similarly, 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 local company is entitled to own land.
The Chairman of the Board of Directors of a local company
must be a Cambodian national. Other directors can be
foreigners.
Commercial Partnerships (Société En Nom Collectif (SNC))
A Commercial Partnership (sometimes called a General
Partnership) is an agreement of association, which joins two
or more partners with a view to carrying on commercial
operations under the same trade name. Each of the partners
is deemed a merchant and is held personally jointly and
severally liable for the debts of the partnership. The
partnership shares are not transferable or assignable
without the consent of all partners. Only the names of one
or more shareholders form part of the trade name, followed
by "SNC" or "et Compagnie S.N.C.", which must also reflect
the unlimited liability status of the entity.
Representative Offices
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. International trading businesses
interested in gaining entry into the Cambodian marketplace
find the RO best suited for their purpose. It is not
considered a separate legal entity from its parent company.
An RO is regarded as a cost center and accordingly should
derive no income from its activities and thus is not subject
to Cambodian tax laws. The RO-Agent is under the management
of one or more directors who may be appointed and removed by
the principal enterprise. It may lease a premise for its
office, employ local staff, advertise its products, and
organize trade fairs 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 a contract with a local enterprise in
Cambodia if the principal enterprise so authorized. However,
it may not purchase, sell, or conduct any services as its
usual business nor can it conduct any production or
construction activities within the country. The RO-Agent is
subject to commercial registration requirement, the
compliance of which shall be done at the Ministry of
Commerce. The words "Representative Office Agent" shall be
placed before or after the name of the principal enterprise.
