(This text is an unofficial translation of the law. The law in Khmer is an official text.)
The Law on Commercial Enterprises promulgated by Royal Kram No. NS / Ror.Kor.Mor / 0605/019 dated 19 June 2005 has been amended as follows:
-Deleting Article 166, Article 175, Article 182, Article 183, Article 184, Article 185, Article 186, Article 187, Article 188, Article 189, Article 189, Article 190 and Article 196.
-Amending Article 1, Article 2, Article 3, Article 4, Article 5, Article 59, Article 62, Article 87, Article 101, Article 106, Article 110, Article 114, Article 115, Article 137, Article 144, Article 161, Article 174, Article 192, Article 195, Article 225, Article 234, Article 255, Article 266, Article 270 and Article 271 and amending the chapters and sections and adding Article 8- duplicate article, Article 53- duplicate article in Chapter 2 and Article 147-duplicate article in Chapter 3 as follows
Article 1 (New)
This law defines the forms of commercial enterprises doing business in the Kingdom of Cambodia, which include sole proprietorships, partnership and limited liability company. Partnership includes general partnership and limited partnership. Limited liability company includes private limited liability company and limited liability public company.
Article 2 (New)
The key terms used in this law are defined as follows:
- Person refers to a natural person or legal person.
- Trader refers to any person who performs trading activities as his or her regular business.
- Registra refers to the person who is in charge of registration and appointed in accordance with the Law on Commercial Rules and Commercial Registration.
- Business registration office refers to the office established in accordance with the Law on Commercial Rules and Commercial Registration.
- Subsidiary refers to partnership or limited liability company which has been controlled by another partnership or limited liability company, which is the “parent company”.
- 5.1. A subsidiary of a partnership is a company in which the parent company holds a majority of the benefits.
- 5.2. A subsidiary of a limited liability company is a company in which the parent company holds a majority of the voting shares.
- Company secretary refers to a natural person assigned by the limited liability company and has the right to receive and keep documents related to the affairs of the company.
Article 3 (new)
Sole proprietorship, partnership, or limited liability company must have a permanent registered office in the Kingdom of Cambodia.
Sole proprietorship, partnership, or limited liability company must provide the registrar with the specific location of the registered office which includes the actual address and contact address in the Kingdom of Cambodia if those addresses are different.
The limited liability company must provide the registrar with the name of the company secretary, and the said company secretary must be a natural person who is physically fit and competent to perform this position. The company secretary has the right to receive official letters and documents as well as summonses from the court on behalf of the limited liability company.
Sole proprietorship or partnership must notify the registrar of any change of registred office within 15 (fifteen) working days after the change. The limited liability company must provide the registrar with any change of registered office and change of company secretary within 15 (fifteen) working days after the change.
Sole proprietorship and companies created in accordance with this law must be subject to the laws of the Kingdom of Cambodia.
Article 4 (New)
Documents and information required by law to be provided to the limited liability company must be provided to the company secretary during the normal working hours of that limited liability company, except by any other means as prescribed by law.
Documents and information must be provided to the owner of the sole proprietorship or partnership during normal business hours, except by any other means as prescribed by law. Documents and information can be provided to the general partners if the company is a general partnership. Documents and information can be provided to the general partners if the company is a limited partnership. Documents and information can be provided to the director if the company is a limited liability company.
If the delivery of documents is not possible in the above ways, the documents can be provided to the registrar and the registrar must send to the company at the last address of the sole proprietorship, partnership or limited liability company, which is described in the existing business registration. The delivery of documents through the registrar by all means is considered to be a delivery to a sole proprietorship, partnership or limited liability company.
Article 5 (New)
Sole proprietorship, partnership or limited liability companies must use the name in the Khmer language. The name in Khmer must be placed in the top row and the size must be twice larger than other languages, if any. Translation of the name of the sole proprietorship, partnership or limited liability company from one language to another is prohibited. The name in Khmer and other languages must have the same phoneme.
Sole proprietorship, partnership or limited liability companies must be inscribed in Khmer language at the top of the seal, letterhead, form or other publicly used documents or at the top of the public advertisement sign which are located on the lands, waters, and airspace in the Kingdom of Cambodia. Partnership or limited liability company may use and designate names in other languages outside of the Kingdom of Cambodia.
Chapter 2 (New)
Sole proprietorship and partnership
Part 1 (New)
Sole proprietorship and partnership
A (New) Establishment of sole proprietorship and general partnership
Article 8 (Duplicate)
A sole proprietorship is an enterprise formed by one natural person and the assets of the sole proprietor are the capital of the sole proprietorship.
The sole proprietor of the enterprise is a trader.
Sole proprietorship that is classified as taxpayer under the self-declaration regime is obliged to register in the commercial registration.
The name of the sole proprietorship must include the word “sole proprietorship” or abbreviation at the end or bottom.
The obligations and responsibilities of sole proprietorship are the direct and unlimited liabilities of the personal properties of the owner of that enterprise. The sole proprietorship is not required to have articles of incorporation and internal regulations of the enterprise. A sole proprietorship does not have a separate legal personality from the owner of the enterprise.
E (New) Dissolution and liquidation of sole proprietorship and general partnership
Article 53 (Duplicate)
A sole proprietor can dissolve his or her enterprise at any time. A sole proprietorship can be dissolved for any of the following reasons:
- Free will
- Death of the enterprise owner
- Court’s decision.
The procedure for dissolution of a sole proprietorship on voluntary basis or the death of the owner of the enterprise must be determined by a Prakas of the Minister of Commerce in accordance with the legal instruments in force.
Article 59 (New)
The general partner must notify in writing to the registrar about the dissolution of the general partnership in the prescribed form and must appoint the liquidator.
The liquidator must be an accounting and/or auditing firm licensed by the Accounting and Auditing Regulator of the Non-Banking Financial Services Authority.
The general partnership must immediately publish the dissolution of the company for 4 consecutive weeks in Khmer language newspaper in the Kingdom of Cambodia, published at the place where the said company has its office, or in other advertisements as stated in the Prakas of the Minister of Commerce. The notification letter published in the press page must be determined by a Prakas of the Minister of Commerce.
Article 62 (New)
The liquidator must keep the accounting records, financial statements and other records of the general partnership which has been dissolved for up to 5 (five) years from the time of liquidation. The liquidator must keep the accounting records, financial statements and other records for a longer period of time if these documents are required as evidences.
Article 87 (New)
A public limited liability company is a form of limited liability company that is legally authorized to issue securities to the public. The issuance of securities to the public must comply with the relevant laws and regulations in force.
Article 101 (New)
The company is considered a company of Cambodian nationality if:
- The company has a place of business and a registered office in the Kingdom of Cambodia.
- 51% (fifty-one percent) of the voting shares in the company are held by natural person or legal person having Cambodian nationality as defined in the company’s articles of incorporation.
Article 106 (New)
A company or a person who guarantees an obligation of that company may not use the following points as an excuse to avoid an obligation for a third party associated with that company or a third party authorized by the company. However, these points can be avoided if the third party knows or is aware of the points because of his/her role or because of his/her relationship in the company:
- The company’s articles of incorporation and internal regulations have not been abided by.
- The person named as the director in the latest notification letter sent to the official in charge of company management of the Ministry of Commerce is not the company’s director.
- The place listed as the registered office in the latest notification letter sent to the official in charge of company management of the Ministry of Commerce is not the actual registered office of the company.
- The person who is the director, employee or company secretary is not appointed or authorized to perform duties which are customary business of the company.
- Documents issued by a director, manager or company secretary are invalid.
- Borrowing and securing or selling, renting or exchanging property is not permitted.
Article 110 (New)
The shareholders and creditors of the company, the company secretary and its legal representatives, as well as the official in charge of company management of the Ministry of Commerce can review all the documents as stated during the normal business hours of the company and can get the abstract for free of charge.
If the company is a public limited liability company, any individual can request an abstract on all of those documents for a reasonable fee.
Article 114 (New)
The company and the company secretary must maintain the accounting records, financial statements and records of the company carefully, regularly and properly.
Article 115 (New)
A letter or contract made on behalf of the company by a director or a manager or a company secretary is valid even if no company seal is attached to the documents.
Article 137 (New)
The director involved in the interests is not allowed to vote in making any decision to approve a contract, unless that contract is:
- facilitation through the guarantee for the money to be given to the borrower or any obligations guaranteed by the director for the benefit of the company or to a branch of the company.
- A contract relating primarily to his or her remuneration for the position as the director, manager, staff or company secretary of the company or any branch of the company.
- A contract made as an indemnity or as a guarantee.
- A contract made with any branch.
Article 144 (New)
In the event that the company’s articles of incorporation do not specify the type of shares, the company must have only one type of share, and the rights of the shareholders are equal and include the rights:
- To vote at every general meeting of the shareholders of the company.
- To receive all dividends declared by the company.
- To acquire the remaining assets of the company at the time of liquidation.
Article 147 (Duplicate)
Shareholders in the limited liability company who do not wish to be identified in the company’s articles of incorporation may appoint a representative to represent them. The appointment of a representative is made through a contract between the shareholder and the representative who is a natural person or legal person, called a shareholder representative contract.
Information on the identity of the shareholders and the shareholder representative contract must be kept in the Ministry of Commerce. The conditions and procedures for keeping information and contracts of shareholders’ representatives must be determined by sub-decree.
Article 161 (New)
The key terms used in this second section is defined as follows:
- Goodwill buyer refers to a buyer who pays a fair price and unaware of any claim and who makes a transfer of securities in the form of a holder or a transferee according to the registration form issued.
- Broker refers to a person who is fully or partially obligated of his time in securities trading and acting as an intermediary or buying securities from clients or selling securities to clients in the related business.
- Deliver refers to voluntary assignment of possession.
- Pure refers to real, not fake or fake.
- Securities holder refers to a person who holds securities in a company’s articles of incorporation issued by the limited liability company.
- Additional issuance refers to the issuance of securities in excess of the maximum amounts of securities that the issuer has been authorized under its articles of incorporation or in a clear contract to issue securities.
- Subscriber refers to a person who makes a profit from securities by selling, mortgages, hypothecation, issuing, re-issuing bonds, donating securities, or voluntarily making a profit from any other business venture.
- Securities refer to a letter issued by a company that:
a. In registry format.
b. A card template which is publicly traded on the stock exchange or on a securities market, or recognized in any sector where securities are issued or sold as currency for investment purposes.
c. A type or series of securities divided into categories or series of letters.
d. Proof of stock, proof of contribution or proof of various benefits in the obligations of the company.
9. Transfer refers to a transfer that includes a legal transfer.
10. No right to sign refers to a person acting without actual rights and including fraud.
Article 174 (New)
In lawsuit related to securities:
- All signatures on the securities, if necessary, are accepted, unless there is specific objection.
- Signatures on securities are deemed valid and authorized. However, if the effectiveness of the signature is alleged, the burden of finding evidence rests with the complaining party.
- If the signature is recognized as valid or has already been made, the presentation of securities may entitle the holder to take control of the securities, unless the defendant presents evidence of contradiction or there is lack of validity of the securities.
- If the defendant gives evidence of contradiction or incompleteness of the securities, the plaintiff must present the opposite evidence or incompleteness of the evidence.
Article 192 (New)
If securities are improperly transferred from any person for any reason, including the inability of that person, that person may make a claim to any relevant party, except to the goodwill buyer to:
- Claim the ownership of the securities.
- Hold ownership on the new securities and confirms all or part of the same rights.
- Claim for all damages.
The right to reclaim ownership of securities must be exercised explicitly, as the transfer of ownership is prevented and the securities are revoked and held pending an appeal.
Article 195 (New)
Whenever securities in the registration form are subject to transfer of ownership, the issuer must register the transfer of ownership in the following cases:
- Tax laws and regulations apply.
- The transfer of ownership is legal or transferred to the actual subscriber.
When the issuer is responsible for registering the transfer of ownership of the securities, the issuer must be liable to the person who presented the securities for the registration of losses arising from the unreasonable delay in listing or from the failure or denial of registration on the transfer.
Article 225 (New)
The shareholders, the company secretary and its legal representatives can review the annual financial statements in the normal business hours of the company and can get the abstract for free of charge.
Article 234 (New)
The auditor must examine what is deemed necessary to report to the shareholders on the financial statements required by this law.
At the request of the auditor of a company, the previous or current directors, the company managers, the staff or company secretary must provide information, explanation and accounting records, financial statements and any records that the auditor considers necessary for the performance of his/her duties.
The company’s auditors are entitled to receive the notice of the general meeting of shareholders and to attend to know the subject matter related to their duties as the auditors at the expense of the company.
If a director or shareholder, even if the shareholder does not have the right to vote in the meeting, informs the current or previous auditor in writing at least 10 (ten) days before the general meeting, the current auditor or the previous auditor must attend the meeting, which is funded by the company, will answer questions related to its duties as an auditor.
Article 255 – New
After the issuance of the certificate confirming the intention to dissolve the company, the company must:
– Gather the properties
– Keep assets which are indivisible to shareholders
– Fulfill all obligations
– Perform other activities required for liquidation
– Appoint the liquidator.
The liquidator must be appointed by the decision of the shareholders. The liquidator must be an accounting and/or auditing firm licensed by the Accounting and Auditing Regulator of the Non-Banking Financial Services Authority.
After receiving notice of liquidation and adequate repayment or cessation of all activities of the company, the company must distribute the remaining assets, either in cash or in kind, to the eligible shareholders.
The liquidator must keep the accounting records, financial statements and other records of the dissolved company for at least 5 (five) years from the date of liquidation.
Article 262 (New)
The official in charge of company management of the Ministry of Commerce may require the company to send documents confirming the accuracy or facts stated in the documents in accordance with this law.
If necessary, the official in charge of company management of the Ministry of Commerce may require the company to update the information registered or annually declared in all circumstances. The official in charge of company management has the right to inspect and verify the updated information or documents at the company’s offices and requires the company to provide additional information or documents to ensure the accuracy of the information and documents.
Procedures for requiring companies to update registered information or make annual updates and to verify information or documents must be determined by a Prakas of the Minister of Commerce.
Chapter 4 (New)
Branches of local companies and foreign trading companies
Article 270 (New)
A partnership or limited liability company established under this law may establish one or more local subsidiaries. The company that creates the branch is called the “original company”.
The local subsidiary is an agent of the original company and has no separate legal personality from the original company.
Local subsidiaries are managed by one or more managers appointed and removed by the original company.
The name of the local company branch is the name of the original company. Above or in front of the name of the local company branch, it must be written in the word “local company branch”.
Local subsidiaries can be dissolved by the decision of the original company and the original company must apply to the Ministry of Commerce for deregistration.
Article 271 (New)
Foreign trading companies are those established under the laws of other countries and have business locations in the Kingdom of Cambodia.
Foreign trading companies can do business in the Kingdom of Cambodia in the following ways:
- Commercial representative office or office of trade liaison.
- Branches of commercial companies.
The commercial representative office and its affiliates are agents of the parent company and have no separate legal personality from the parent company.
This law was declared urgent.
29 January 2022
(Please note that nothing in this text represents or warrants that the above translation is correct or conforms to the original text in Khmer language.)