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What is the cost of registering a company in Cambodia?
Company registration services are offered by a variety of service providers, such as law firms (local and international) and accounting firms whose prices can start as low as USD 1,000 and could rise to over USD 4,000.
These companies provide their own service packages that include and exclude different aspects. It is important to note that the official fees for registering a company in Cambodia range from USD 800 to USD 1,600 depending on the size of the business and the intended business activities. Not all firms include the official fees in their quotes, so please keep this in mind when engaging any services.
The process for registering a company in Cambodia seems straightforward on paper as the procedure is the same for all types of company structures, only the required documents you must provide vary.
However, it is not rare to deal with unforeseen difficulties and expenses depending on the initial structuring and the intended business activities. It is crucial that companies or individuals looking to register an entity in Cambodia do their due diligence to guarantee that their needs are met and that they cover all their bases.
What is a fair price for registering a company in Cambodia?
As is often the case, the safe spot is in the middle, so between USD 1,500 to USD 3,000 (excluding VAT and Government fees).
Firms who charge less may not offer a complete package (you may have to pay some extra or hidden fees later on in the process), or use unqualified staff with little experience (you get what you pay for). In some rare cases, the company registration service is simply bait used in order to lure you in to try and sell you other services. These additional services are where such companies can significantly increase their margins (this is often the case with accounting firms).
Firms charging more usually provide a complete package and have experienced staff, but the premium is not always justified. This is typically the case with international law firms since they keep their margins high. However, international law firms tend not to apply efficient processes.
With Belaws, our company registration services are provided by our team of experts and start from USD 2,640 for 100% foreign or Khmer owned companies. Our incorporation services are flexible and we can include other options such as a business feasibility study etc into any incorporation packages.
In this article we will consider the main points that must be taken into account when registering a company.
What should a company registration package contain?
As we mentioned above, choosing the right package for your business needs is vital. A company registration package must include the following at the very minimum:
- The preparation of the company registration forms (reservation of the company name, office lease, shareholder list etc.).
- Draft of the Articles of Association or Articles of Incorporation in Khmer and in English.
- The preparation of the certificate of shares for each shareholder in English and in Khmer
While the above duties are of great importance, they only scratch the surface of the company registration process. When looking to start a company it is essential to perform your due diligence and make sure you have identified the best possible structure for your company. Cambodia offers numerous different corporate structures, each having their own strengths and weaknesses. You should always instruct your advisor to check the following:
- A Société A Responsabilité Limité is the most popular vehicle to do business in Cambodia but a Bureau de représentation or Succursale should also be considered as they both offer unique advantages which may be beneficial. Depending on your intended business activities, a Qualified Investment Project should also be considered.
- Cambodia’s regional presence in South East Asia, also unlocks further unique opportunities for businesses. Alternative structuring options in Singapore or Hong Kong could be available as well. These additional regions could bring further benefits to your business which you may not have been aware of.
8 important things to consider before registering a company in Cambodia
Can I operate a 100% foreign owned company in Cambodia?
It is indeed possible for foreigners to own 100% of a company in Cambodia, either through a Branch Office, a Representative Office or a Subsidiary/Limited Company.
Can I keep the control of a company with a local Khmer partner?
To ensure the effective control by the foreign minority shareholder over the company, well drafted documents (preference shares structures with articles of association, shareholder agreements with reserved matters, option agreements) must be prepared. It is important to make sure your advisor has a clear understanding of how you want to control your company and can draft the documents properly to ensure you won’t come across any issues at a future date.
What is the minimum capital to register my company?
Under Cambodian law the minimum capital requirement for a Limited Company is KHR 4,000,000 (USD 1,000). There is no minimum requirement for a Branch Office or a Representative Office. As for QIPs, the minimum requirement varies from USD 100,000 to USD 800,000.
Is my company required to have Articles of Association?
An Article of Association (AOI or MOA) must be registered with the Ministry of Commerce. It is important to note that any further business or AOI content change made after the incorporation would be subject to a legal registration update/resubmission legally with the MOC.
Are the business objectives of my company broad enough to cover all the business activities that will be undertaken??
When registering a company it is necessary to agree upon and state the business activities undertaken by the company. These activities should then be included in the objectives of the company. Failure to do so may carry the personal liabilities of the director for business activities done outside of the company objectives. Amending the objective at a later stage is possible but it requires an EGM (Extraordinary General Meetings of the shareholders) or a Board Resolution.
Do I need a shareholder agreement?
Shareholder agreements are highly recommended as they further detail the rules of the company. Shareholder agreements are important as they allow companies to anticipate future events that may put the company at risk. For example, Call back and leaver clauses for when a shareholder wants to leave the project, pre-emption rights, drag along and tag along rights for when a shareholder wants to transfer his shares, consequences relating to the death of a shareholder and transfer of the shares to their heirs. Having procedures for events like those above and many more can save a lot of time and hassle in the future as there is already an agreed upon procedure in place.
What office address to use?
When registering a company, it is mandatory to specify the registered address. Virtual offices are not accepted in Cambodia.
Can I close a company easily?
In order to close a company in Cambodia, a File Notice of Intention to Liquidate/Dissolve must be submitted through the MoC. Following the approval, the MoC will issue a certificate of dissolution for the company.
All these questions should be answered with satisfactory consideration and applicability to your needs. Each company is different and will have their own requirements which must be taken into account. Furthermore, there should also be an option available for drafting the Articles of Association and Shareholder Agreements, should they be required.
Can I start my business activities immediately after registering the company?
Once the company registration process has been completed, it is natural for the owners to want to start operating immediately. However, this is not always possible and there are a few very important things that must be considered first.
Are any licenses needed?
Depending on your business activities, one or several licenses may be required. There are 16 ministries in Cambodia, which regulate each industry sector. For example, a company operating in the tourism industry will need to get a license through the Ministry of Tourism.
Your advisor should check and see whether your company needs to obtain any licenses before operating. If any licences are required, your advisor should always assist you with obtaining them as well.
The price to obtain a licence varies considerably, ranging from about USD 150 to USD 600. Licenses are mandatory. Failure to obtain or renew the correct license(s) is subject to penalties or business foreclosure.
Opening a bank account
Opening a corporate bank account in Cambodia is a post company registration requirement as the capital requirement must be deposited in that account.
Proof of the existence of the bank account must be provided to the GDT within 15 business days following the date the company is registered.
The following documents are required to set up a corporate bank account:
- Certificate of incorporation
- Constitution of Memorandum & Articles of Association
- Tax registration (VAT) and Tax Patent registration
- ID or Passport and Visa of the shareholders or signatories
The process to open a corporate bank account is quite convenient as long as a director is present to sign all the documents. If not, the process is a bit more complex but still possible. An authorized representative must be appointed to sign the documents on behalf of the director.
Our experts can assist you in opening a corporate bank account in Cambodia for a service fee of USD 500.
VAT Registration
Once the company has been successfully registered with the MOC, the system will automatically move to the tax registration on a self-declaration basis for the GDT to review. Companies must obtain a patent tax certificate, VAT Certificate, and acknowledgment of the declaration.
It is important to note that some types of business activities may enjoy exceptional tax incentives, for example, companies with a QIP status. Your advisor should be aware of such things and inform you if your company is eligible for any exemptions.
Hiring employees
When hiring new employees, companies must first register them with the National Social Security Fund (NSSF). An employment card is necessary for Cambodian employees and a work permit is required for foreign staff. It is also important to note that companies must maintain a payroll ledger. Additionally, a declaration of Employee Movement must be provided when a new employee joins the company or when another one departs.
To learn more about the process for hiring employees in Cambodia, please visit our PEO page.
Accounting & Tax filings
Every new company needs to set up an accounting and invoicing system. The bookkeeping should be done monthly as tax filings (VAT, if the company is VAT registered) and Withholding Tax (on service transactions between companies) must be filed and paid on a monthly basis. Newly established companies should not underestimate the importance of proper accounting. Cambodia is becoming more structured so it is crucial to be compliant from day one.
It is essential that your advisor spends time learning about your business flow in order to get a proper understanding of how best to satisfy your accounting needs. Gaining a proper understanding of a company is so important because some expenses incurred by the company can be capitalised (Intellectual property for instance), amortized (machinery) and tax optimised. Failure to identify if such practices are possible could lead to a company losing out on these perks and enduring unnecessary expenses.
Belaws’ accounting package is provided by our team of expert accountants and starts from USD 100. The package includes a monthly management report and a 1 hour advisory meeting per month regarding the accounting and tax needs of your company. Our accounting and tax experts ensure our service meets the specific requirements of each client, ensuring your full compliance with the Cambodian regulatory framework.
Document Drafting
When first beginning their operations, new companies usually require several legal documents to start their businesses. Such documents include NDAs, purchase agreements, terms and conditions, employment contracts, service agreements etc. Again, it is vital that these documents are drafted by expert lawyers with a good understanding of your business in order to protect the company’s interests. Poorly drafted documents could result in disputes arising at a later date.
Belaws expert lawyers offer fixed prices in advance for drafting, reviewing and revising contracts.
In conclusion
Company registration may seem like a straightforward process that shouldn’t cost a lot, but in reality, there are many areas which must be addressed and considered. When undertaking this process, it is essential that your advisor carefully considers your needs and what the company plans to do to ensure the smoothest registration process. Failure to do so could result in costly restructuring later on.
Find out how our experts can help you by visiting this link.
Please note that this article is for information purposes only and does not constitute legal advice.
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