Company Establishment
The “Law on Commercial Enterprise” was adopted by the National Assembly on April 26, 2005, and promulgated on May 19, 2005, as the first comprehensive company law in Cambodia. This Law applies to the “Partnership,” which falls into the category of a General Partnership or a Limited Partnership; “Limited Company,” which is either a Private Limited Company or a Public Limited Company; and “Foreign Business” as well.
Limited Company
Partnership
A partnership is a contract between two or more persons (Article 8) and the contract of partnership may be verbal or in writing (Article 9).
1- General Partnership
- A general partnership shall acquire a legal personality when it registers and have the following rights (Article 12):
- to own movable and immovable property in its own name
- to carry on business in its own name
- to contract in its own name
- to sue and be sued in its own name
2- Limited Partnership
A limited partnership is a contract of partnership between one or more general partners who are the sole persons authorized to administer and bind the partnership, and one or more limited partners, who are bound to contribute to the capital of the partnership (Article 64).
Foreign business
A foreign business is a legal person formed under the laws of a foreign country where it has a place of business and doing business in Cambodia (Article 270). It may conduct business in Cambodia in the following forms (Article 271):
- Subsidiary
- Branch
- Representative Office (Liaison Office)
1- Subsidiary
A subsidiary is a company that is incorporated by a foreign company in Cambodia. A subsidiary may be incorporated in the form of a partnership or limited company (Article 285) and may carry on business the same as a local company except for any act that is prohibited for foreign natural or legal person by laws of Cambodian law (Article 286).
Private Limited Company
A private limited company is a form of limited company with characteristics as follows (Article 86):
- The company may have from 2 to 30 shareholders.
- When a private limited company is established by one person, it shall be called a “Single Member Limited Company.”
- The company may not offer its shares to the public
- The company has one or more restrictions on the transfer of each class of its shares.
- The company shall be considered as a private limited company once registered in compliance with prescribed forms determined by a Declaration of the Ministry of Commerce.
Public Limited Company:
A public limited company is a form of a limited company that is authorized by this law (Law on Commercial Enterprise) to issue securities to the public (Article 87).
Remarks:
– Be able to get the tax incentive (QIP from CDC)
– Be able to buy the immovable property (Land & House)
2- Branch
A branch may perform the same acts as a representative office and, in addition, may regularly buy and sell goods and services and engage in manufacturing, processing and construction as a local enterprise as long as it does not perform acts prohibited by law to a foreign physical or legal person (Article 278). The assets of the branch shall be the assets of the principal. The principal shall be liable for any obligation of the branch (Article 279), and a branch may be closed by a decision of its principal (Article 282).
Remarks:
– Be unable to get the tax incentive (QIP from CDC)
– Be unable to buy the Immovable Property (Land & House).
3- Representative Office (Liaison Office)
A commercial representative office or commercial relations office may perform the following acts in Cambodia (Article 274):
- Contact customers for the purpose of introducing customers to its principal
- Research commercial information and provide the information to its principal
- Conduct market research
- Market goods at trade fairs and exhibit samples and goods in its office or at trade fairs
- Buy and keep a quantity of goods for the purpose of trade fairs
- Rent an office and employ local staff
- Enter into contracts with local customers on behalf of the principal
Remark:
- Be unable to get the tax incentive (QIP from CDC)
- Be unable to buy the Immovable Property (Land & House).
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