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Private limited companies in Cambodia
Private limited companies are a popular choice for foreign entrepreneurs looking to establish a presence in Cambodia. Private limited companies offer numerous advantages such as limiting the liability of the shareholders and providing 100% foreign ownership.
In this article, we explore the requirements and steps that must be followed when setting up a private limited company in Cambodia.
What is a private limited company in Cambodia?
A private limited company is the most common business entity in Cambodia. Private limited companies are required to have 2 to 30 shareholders and a minimum of one director. The director can be either a local or a foreigner.
Private limited companies cannot issue shares or securities to the public and may have one or more restrictions on the transfer of each class of its shares. Furthermore, Private limited companies are separate legal entities and will not be personally liable for the company’s debts.
A private limited company that has only one shareholder is called a single-member private limited company.
What is a single-member private limited company?
A single-member private limited company is a private limited company that has one person who is the shareholder. Single-member private limited companies are also required to have a minimum of one person as the director.
A single-member private limited company can be converted into a private limited company. However, to do so they are required to obtain shareholder approval first.
Can private limited companies in Cambodia be foreign-owned?
Yes, a private limited company can be 100% foreign-owned.
What are the advantages of a private limited company?
Private limited companies in Cambodia offer the following advantages.
- Limiting the liability of a shareholder to their capital contributions
- 100% foreign-ownership
- Separate legal entity
- Uninterrupted existence
What are the disadvantages of setting up a private limited company?
While a private limited company does offer significant advantages, there are some drawbacks such as:
- Restricted from selling or transferring their shares to the public
- The number of shareholders cannot exceed 30
- Shares cannot be quoted on the stock exchange
What are the requirements for setting up a private limited company?
When considering setting up a private limited company in Cambodia, companies are required to adhere to the following requirements:
Company name
The name of a private limited company must include the words Private Limited Company or Ltd at the end of the name.
Directors
Private limited and single-member private companies are required to have a minimum of one director. The director can be either a local or a foreigner.
Shareholders
A private limited company can have between 2 to 30 shareholders (single-member private limited companies can have only one shareholder). Shareholders can be either individual or corporate entities.
Registered Agents
Private limited companies are required to have a registered agent who is a legally competent natural person. Registered Agents must be a resident of Cambodia. Registered agents have the authority to receive official papers and documents from courts on behalf of the company.
Registered office address
The company must have a registered office in Cambodia, as stated in the company’s articles of incorporation.
Registered capital
The minimum share capital required for setting up a private limited company in Cambodia is KHR 4 million (approx USD 1,000).
Articles of incorporation for a private limited company
The articles of incorporation for a private limited company are required to include the following information:
- Amount of authorized capital issued capital, and paid-up capital
- Company’s business activities
- Company period of incorporation
- Purposes and objectives of the company
- The name of the company
- The domicile of the company
- The number of shares, shares classification (if any), number of shares for each classification, rights attached to each share, and nominal value for each share
- The name and address of each shareholder
- The place and procedures for holding a general meeting of shareholders
- The procedures of appointment, replacement, and dismissal of the members of the board of directors
- The procedure for profit utilization and dividend distribution
What documents are required for setting up a private limited company?
The following documents must be provided when registering a private limited company with the Ministry of Commerce:
- Land title or lease agreement of the enterprise’s location
- Current photo of no longer than 3 months of director, shareholder (if the shareholder is a physical person), and/or representative (if the shareholder is a legal entity) with white background
- A national identification card or passport of director, shareholder (if the shareholder is a physical person), and/or representative (if the shareholder is a legal entity)
- Articles of incorporation in both English and Khmer
- Reference document (can be a letter specifying an already-existing company’s permission to use a similar company name, special licenses, and related documents)
- Authorization letter if the one who fills out the application is your representative
What is the process for setting up a private limited company in Cambodia?
Online registration with the MEF’s CamDX system
A private limited company in Cambodia must be registered via the Ministry of Economy and Finance’s (MEF) Cambodia Data Exchange (CamDX) system. To register a private limited company online, you must create a user account, which requires a name, personal information, and contact details.
After creating an account you will need to reserve a company name. The proposed name must be submitted in Khmer. After doing so the proposed name will be automatically checked. You can also have the name registered in another language, usually English.
The fee for reserving the company name is KHR 40,000. Once you have paid for the name reservation, the name will be secured, and no other company will be able to use the name.
After receiving approval for your proposed name, the name will stay reserved for two weeks from the approval date. To extend the reservation period for the name, you must make another payment to reserve the company name for another two weeks.
After the name has been approved, the next step is to register the company. Registering the company can only be made once the name has been approved and must be completed within 15 days.
Firstly, companies are required to specify the business activities of the company. The company is only allowed to conduct its stated business activities. The applicant must select a business activity based on the Standard Industrial Classification (SIC Codes).
The lease agreement of the registered office is also required to be submitted. A utility bill or land title is also acceptable should a lease not be possible. The following additional information must also be required:
- contact information,
- identity card or passport and
- the consent form of the company directors.
- for shareholders, their contact information, shareholding, proof of identity for individuals, or power of attorney for legal entities must be submitted.
After all of the above has been completed, the application will be reviewed and approved.
The registration process costs KHR 2,155,000. Payment can be made online through ABA pay or credit card/debit card payment.
Once approval has been received, a digital Certificate of Registration will be issued on the business registration online system, and the hard copy can be obtained at the Department of Registration.
What are the post-registration requirements for a private limited company?
After the private limited company has been approved, the following actions must be taken.
Opening a corporate bank account and depositing the required capital
Once the company has been registered and they have received the certificate of incorporation, it will be possible to open a corporate bank account and deposit the required capital into the bank. The capital should be a minimum of KHR 4 million (USD 1,000).
Tax registration
Private limited companies must register for tax with the General Department of Taxation (GDT). To do this, companies must submit the articles of incorporation and Certificate of Registration. Tax registration can be done at CamDX’s online registration service.
Once registered, the GDT will issue a taxpayer identification number to the company along with a taxpayer identification card, VAT certificate, and patent tax certificate.
Companies must also provide their bank account information in digital form within 15 working days after tax registration. Failure to do so would result in the certificates being revoked by the GDT.
Registration with the National Social Security Fund and Ministry of Labour and Vocational Training
Finally, the company must submit an opening declaration to the Ministry of Labour and Vocational Training.
Companies with eight or more employees must also register with the National Social Security Fund (NSSF).
How long does it take to register a private limited company?
Registering a private limited company in Cambodia usually takes between 3 and 4 weeks, however, the Ministry of Commerce aims to approve within 8 to 10 working days.
In conclusion
If you need more information about public limited companies in Cambodia, you can talk directly with one of our experts.
Please note that this article is for information purposes only and does not constitute legal advice.
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