Forming a Company in Cambodia
Forming a Company in Cambodia
Introduction
In terms of buying and selling real estate, forming a company in partnership with a Cambodian citizen is regarded as the safest method of investing in land and property within the Kingdom. It is therefore important to have a general understanding of how foreigners can register a company in Cambodia.
The governing principal of Cambodian property law is that a foreigner cannot hold a 100% share in land or property within Cambodia. This principal also applies to the share held by a foreigner in a Cambodian-registered company, including limited companies formed to manage real estate. A 49% stake in a limited company can be vested with a foreigner provided that a 51% stake is vested with a Cambodian national.
Applications and Company Documents
There are two methods of applying to form a company. One is to use a prescribed application form drafted by the Ministry of Commerce. This is accompanied by a Company Document that clearly states the business purposes and structure of the company. The following issues should be addressed in the Company Document:
• Name of the Company
• Type of Company (e.g. limited company)
• Business purposes and objectives of the Company
• Registered address of the Company
• Duration of the Company’s business activities in Cambodia
• Terms of conduct of the business
• Binding terms and conditions affecting the conduct of business and the rights of shareholders
Some potential investors consider the format of the Company Document, prescribed by the Ministry of Commerce, to be inadequate and opt to privately produce their own Company Document using an independent lawyer. The advantage of this second method [see below] is that additional safeguards and conditions can be added to the Ministry’s prescribed format.
Application Fees and Company Shares
The fee for making an application to form a limited company is currently set at R4,000,000 or US $1000. This fee is paid by the foreigner and is taken as the registered capital of the company. It also represents the total share value of the company. An example of the possible division and valuation of the shares is shown below.
Total Registered Capital of the Company: ………….R 4,000,000 or US $1,000
Total value of all company shares:……………………..R 4,000,000 or US $1,000
Total number of company shares:……………………..Usually 1000
Individual value of shares:………………………………….R 4,000 or US $1
Foreigner’s share allocation:……………………………..490 shares (Type X)
Cambodian’s share allocation:………………………….510 shares (Type Y)
There are numerous options in terms of company shares. For example, it is possible to divide the shares into two types [see above] and attach different rights to the different types of shares. In an arrangement like this the Cambodian’s rights might preclude him/her from voting on company policy or benefiting from property sales.
Licenses to Operate
Commercial licenses are generally sufficient to cover the business activities of companies dealing in real estate. Commercial licenses are granted by the Ministry of Commerce upon submission of the Company Document, presentation of the Application and the creation and distribution of company shares.
Large investments [in excess of $1,000,000] are licensed through the Cambodian Development Council. The CDC handles the concerns of multinational companies investing in capital works projects such as hospitals, roads and city drainage systems.
Licenses in Cambodia are granted for the following business purposes:
• the sale, exchange or purchase, and the import or export,
• of products and materials
• commercial storage and warehousing of products and materials
• the purchase, sale or rent of land or property
• provision of medical services
• commercial distribution businesses operating by land, sea or air
• construction and capital works services including
• infrastructure improvements
• tourism and hospitality
• investment in agriculture and animal husbandry
• investment in industry
• investment in the production of handicrafts
Government Facilitation Fees for setting up a Limited Company
Application: R 4,000,000 or US $1,000 (the registered capital and total share value)
Licenses:
• The cost of a non-company, merchant’s license used to register a small, commercial business.
US $400 (1-2 months) or US $700 (1-2 weeks)
• The cost of a license used to register a large commercial company or business enterprise [including a company used to own real estate].
US $1000 (for a fast-track license taking approximately 1-2 weeks)
source: angkorrealestate.com