Forms of commercial entities and registration of a company in Cambodia

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.

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