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Corporate governance positions for Cambodian companies
09/12/2022
For a company to run efficiently in Cambodia, it must fill all the necessary corporate governance positions. The chosen officers for these positions must comply with all legal requirements and fulfill their responsibilities competently.
In order for you to help you get a clear understanding of what is required for Cambodian companies, this blog post will explore all the essential governance positions in a Cambodian company along with their responsibilities and requirements.
Director
In Cambodia, a public limited company is required to have at least three directors, whereas, a private limited company must have at least one director who must be at least 18 years old. It is important to note that a director does not have to be a resident of Cambodia, and there are no restrictions on their nationality.
Directors can also be a shareholder of the company. Directors will be elected for a two-year term, and they have the ability to be re-elected. As a director of the company, they are responsible for supervising a company’s operations and affairs.
A director of a Cambodian company has the following duties:
- Appointment and dismissal of all officers and determination of the specific rights of such officers
- Establish the salaries and other forms of compensation of such officers
- Set the salary or other forms of further compensation for directors and submit them to the company shareholders for approval
- Issue notes, debentures, bonds, and other evidence of the company’s debt and establish their absolute, contingent, and relative characteristics
- Propose amendments or annulments to the articles of incorporation to the shareholders
- Propose an agreement of consolidation or merger between the company and any other party to the shareholders
- Propose the sale of all or a significant part of the company’s assets to the shareholders
- Propose a liquidation or dissolution of the company to the shareholders
- Declare dividends in accordance with accounting principles and the terms of payment of each class of shares eligible to receive dividends
- Issue shares in the company to the extent specified in the by-law’s articles of incorporation
- Borrow money
- Issue, reissue or sell the company’s securities
- Give a guarantee on behalf of the company
- Mortgage, pledge, hypothecate, or create a security interest in all or any company property to secure any obligation of the company
- Close account books of each financial year and submit the annual accounts to the shareholders’ general meeting
Chairman of the board
The board of directors will elect the chairman of the board. Candidates for the position can only be a member of the board of directors. The board’s chairman can be removed from their position by a majority vote of the directors. So that you know, this will not remove them from their position as director.
Company Secretary
A company secretary is responsible for ensuring that the company takes and maintains the minutes of every board of directors meeting. They are also responsible for providing written reports of the directors’ written communications. The company secretary will send the minutes and reports to the company directors.
It is important to note that recent legislation passed in January 2022 now means that a resident Company Secretary must be appointed in every company in Cambodia. Furthermore, Company Secretaries must be a natural person who is a resident of Cambodia (no requirement to be a Cambodian national). Companies are required to notify the Registrar of the appointment.
Auditor
Every Cambodian company (unless exempted) is required to appoint an auditor. An auditor is appointed by passing an ordinary resolution at its first annual general meeting of shareholders. An auditor will be appointed or reconfirmed at each subsequent annual general meeting. The auditor will be required to hold their position until the close of the following annual general meeting. An auditor will stay in their position until a successor is appointed.
A company will be exempted from appointing an auditor if it passes two of the three following tests:
- Assets under USD 750,000
- Annual Revenue under USD one million
- Less than 100 employees (at year-end)
If the company has issued securities (debt or equity) to the public an audit is required, no matter the size of the company.
How can Belaws help?
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Please note that this article is for information purposes only and does not constitute legal advice.
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