What does the law say about the term or duration of a company to be in existence in Cambodia? This article will answer to the this question.
All companies, which conduct their commercial activities in the Kingdom of Cambodia, must be registered with the Ministry of Commerce regardless of their formation procedures and terms. One of the information required to be included in the declaration forms for registration and stipulated in the articles of incorporation or partnership contract is date of existence and expiration of the company. (Article 17-New, Law on Commercial Rules and Registrar)
In Cambodia, there are 2 main types of companies: partnership and limited companies. Partnership is further categorized into 2 types: general partnership and limited partnership. Limited company is also categorized into 2 main types: private limited company and public limited company. Partnerships are created by partnership agreement while limited companies are created by agreements of shareholders in form articles of incorporation.
Law on Commercial Enterprises, Article 66, provides that the term of the limited partnership contract may not be in excess of 99 years but may be extended. However, the same Law does not mention the duration (life) of general partnership, private limited company and public limited company.
Since there is no legal provision limiting duration of general partnership and the limited companies, the principle of private autonomy in the Civil Code applies; and accordingly, general partnership and all forms of limited companies may be established for any period based on the agreement of the shareholders. However, since operation of a company has involved many persons and closure of a company is not only a matter of the shareholders but also matter of third parties such as employees, customers, business partners and creditors; the duration of company should be reasonable to show long-term commitment and investment of the shareholders.
In practice, most of general partnership and the limited companies are established for duration of 99 years. One of the main reasons of such practice is to maintain consistent practice of all forms of partnerships and companies.
This text is not legal advice or opinion.