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How to maintain corporate compliance in Cambodia
Once a business is properly registered, there are many corporate compliance requirements, both mandatory and non-mandatory, that must be met. Compliance should be the focus of every entrepreneur, as it gives them peace of mind and allows them to focus on their performance.
In this article, we will look at the essential elements of corporate compliance that businesses in Cambodia should keep in mind.
Filing an annual declaration
All companies operating in Cambodia are required to file a document called an “annual declaration” regarding the status of their company and reporting any changes. It is important to note that this document remains mandatory whether or not changes have occurred.
Among the changes that companies are required to indicate in the annual declaration are the following:
- the name of the company
- the address of the registered office
- the share capital
- Names of shareholders and number of shares held by each
- Current address of shareholders
- Objectives of the company
- Form of the company
To who and when must these declarations be submitted?
These declarations must be submitted within three months of the company’s annual re-registration on the MOC’s online system.
What penalties apply?
Failure to report will result in financial penalties of up to USD 2500 (approximately) for each year of non-compliance. After three consecutive years of non-compliance, it is very likely that your company will be deregistered and your licence revoked.
Licence renewal
Although the ease of doing business in Cambodia is not to be discussed, it should always be borne in mind that this is a procedural and formal country where business-related licences and certificates are essential to ensure the smooth running of your business and there are many, which can sometimes be confusing. Most of these documents will need to be renewed at some point, although the time limits differ depending on the type of licence/certificate.
As a general rule, renewal should be requested from the Ministry that issued the licence/certificate in the first place. Again, failure to do so may result in fines or revocation.
For example, e-commerce licences are valid for three years and are granted by the Ministry of Commerce, which will therefore be the ministry that handles the renewal procedures.
Shareholders’ meetings and resolutions
According to the Law on Commercial Enterprises, a general meeting of shareholders must be convened by the company’s directors no later than 12 months after the company’s incorporation. A written notice must be sent to all shareholders at least 20 days before the meeting and must stipulate essential information such as the date and place of the meeting and, most importantly, the agenda.
In addition, special meetings may be held at the discretion of the directors at any time to pass resolutions on any changes in the issues that the company will encounter during its life cycle. Subsequent meetings should be held after the company’s financial accounts have been prepared.
For example, the appointment or removal of directors and the appointment of an auditor are the kind of decisions that can be dealt with at an extraordinary meeting and will only require an ordinary resolution. In contrast, mergers or changes to the article of incorporation (AOI) require a special resolution.
Maintain your business details up to date
More generally, in addition to your annual declaration, there may be many changes in your business which, if not updated, will distort the information recorded on the register with the Ministry of Commerce. These include changes to your company name, articles of association, registered office address, directors’ details or share capital.
All such structural changes to the company must be authenticated with the Ministry of Commerce. From June 2020, businesses can now update their details on the Government’s online business registration single portal.
Please note that there will be an official fee for all such changes, the vast majority of which is around USD 60.
In conclusion
Cambodia is a business-friendly country with straightforward processes when applied correctly. However, it is also easy to fall into the trap of being lax, which will ultimately have consequences. Taking preventive measures may seem tedious at first, but it can save your business considerable costs in the long run, so the investment is worthwhile.
To maintain appropriate standards, your compliance process must be ongoing and well established.
If you’re interested in setting up a corporate compliance programme or checking that yours is up to date and effective, why not book a consultation 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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