Incorporating Your Business In

Cambodia In 2017

Cambodia is moving away from paper-based processes with the introduction of an online
system to officially register your business.

The way businesses are legally incorporated in the Kingdom has changed drastically
over the last few years. The launch of the Ministry of Commerces online company
registration system in December 2015 was one of the biggest milestones for the
country in this regard.

This and other web-based systems introduced to facilitate the incorporation of businesses
have almost as many detractors as they do advocates, but all things considered, one thing
is clear: officially registering a business in 2017 is a much different affair than it was
previously. B2B Cambodia walks you through the new process with the help of experts in
company incorporation.

The MOC

When incorporating a company in Cambodia, the new legal entity must register with
three governmental bodies: the Ministry of Commerce (MOC), the General Department
of Taxation (GDT), and the Ministry of Labor and Vocational Training (MLVT).
After registering your company with the MOC, you will receive its constitutive
documents, which include the certificate of incorporation, the Articles of Association,
and the business license.

The Ministry of Commerce is located at Lot 19-61, 113B Road (along Russian Blvd), in Teuk Thla
commune of Sen Sok district, Phnom Penh.

To register with the MOC, you will be required to visit the Ministry and present the
following documents:

Register of shareholders (including their percentage of equity)

Register of directors (if different from shareholders)
Business physical address
Original lease agreement
Copy of the property tax receipt you need to obtain this document from the
owner of the property where your business is located
Bank confirmation letter this document may be presented after you have
obtained the companys constitutive documents

With regards to the companys directors and shareholders, you will also need to present
the following information and documents:

Residential letter of chairman or country representative stamped by the local

sangkat (commune). To obtain the residency letter, the chairman or country
representative needs to go to the local sangkat with their residential lease
 agreement. If they own the property they reside in, they need to present the
corresponding property deed. Securing a residence letter from the sangkat costs
between $30-50
Copy of passport one for each director and shareholder
Photos for each director and shareholder, bring six 4cm x 6cm photos and six
3.5cm x 4.5cm photos
Other personal information you will need to supply the home address, email and
telephone number of each director and shareholder

Finally, you will also need to have the following information handy:

Name of the company do your homework before stepping into the MOC. Make
sure that you choose a name that isnt already in use by any other enterprise. If
any other company in the world is using that name, the MOC will reject it: keep
in mind that a $15 fee applies every time the MOC checks a new name. The cost
for processing the application for a name is $700. If you are using an agent, they
will ask you to send in three different names rated according to your preference
Structure of the company (single member, limited liability, partnership,
subsidiary, representative office, etc)
Startup capital (the minimum capital to form a company is $1,300)
Type of business (business activity)

Additionally, if you are forming a branch or a subsidiary using the parent company as the
shareholder (in whole or part), you will need to provide the parent companys certificate
of incorporation and Articles of Association (three copies), certified by a lawyer in the
country of the parent company. You will also need a power of attorney issued by the
chairman of the parent company or a board resolution from such company allowing the
country representative to figure in the tax patent as well as figuring as a nominee in the
companys bank accounts.

The process can now be carried out on the internet. For more on this, read our article on
the new online business registration system.
The MOC launched its online business registration system (homepage pictured) in December
2015.

The GDT

Within 15 calendar days of having registered with the MOC, the new enterprise must
register with the GDT. Registering as a taxpayer will cost you $500 and $650, for a half-
year and a full-year respectively.

At the GDT, you will obtain the tax patent and the VAT certificate of the new company.
To do so, you will need to complete an application for tax registration. In addition, the
chairman or country representative will be required to visit the tax authoritys premises to
have their picture and fingerprints taken. If all is in order, it will take the GDT between
two and four weeks to issue the tax patent and VAT certificate.

The MLVT

The MLVT registers the company under the Labour Law, provides workbooks for Khmer
employees and work permits and employment cards for foreign workers.
If the new company has more than eight employees, they must be registered under the
National Social Security Fund.

The process of registering with the MLVT have recently changed, and it can now be done
online. However, the details of how the new process works remain unclear.

Need some help?

Despite the fact that company owners can now register their companies online without
the help of a middleman, our contributors insist that resorting to an agent can save you
time and money.

The online system, as evidenced by sequential deadline extensions for the online
registration process, remains much more complex than using an agent. It has proven to be
slower and cumbersome as a whole, says Anthony Galliano, chairman of Cambodia
Investment Management.

Agents are often able to access MOC staff to expedite the process. Users of the MOCs
online system report it can take weeks to get a corporate name approved. An agent can
potentially do it within the day.

Finally, dont forget that registration with the MOC is only step one. Even if you
successfully manage to register your company through MOCs online registration system,
you still have to deal with the GDT and the MLVT, which are completely independent
processes. Remember that the GDT part cannot be done online, and while the MLVT
does offer the option to carry out the process through the internet, many users report
having a challenging experience dealing with the website.
The New Online Registration System

Cambodia currently ranks 180 out of 189 countries in the category starting a business
on the World Banks Ease of Doing Business Rank, meaning that registering your
business is more cumbersome in Cambodia than in the great majority of other countries.
In its Doing Business 2016 Report, the WB estimates that it takes an average of three to
four weeks to register a company in the Kingdom.

This might seem like awfully depressing news for any aspiring entrepreneur with eyes set
in the Kingdom, but the situation is not quite as bad as one would think judging from
Cambodias WB ranking. This ranking is based on figures collected prior to June 2015.
Fortunately, since then, Cambodia has completely overhauled its business registration
system, introducing, to much fanfare, a new online system on January 4, 2016.

In the mood for automatisation

The new system was launched by the Ministry of Commerce (MoC) last December, and
fits right in with other governmental efforts to automatise bureaucratic procedures. An
example of this drive is 2014s launch of a new online tax registration portal:

https://cambodia.tax.gov.kh/reg/
Perhaps this current mood for automatisation is best described in the words of Bretton
Sciaroni, one of Cambodias most prominent lawyers: By taking individual officials out
of the equation, by limiting personal contact with taxpayers, the system will become
more transparent and accountable, Sciaroni acknowledged during an interview with
B2B.

Experts agree the new online registration system will make the whole process more
transparent and efficient. Blaise Kilian, Advocacy Manager at the European Chamber of
Commerce in Cambodia (EuroCham) believes the new system represents a bold reform:
It should help to further formalise the economy and reduce non-transparent practices.

Former Minister of Commerce Sun Chanthol, in an interview for The Cambodia Daily,
praised the system, saying that it will make the country more attractive to investors.

It will eliminate face-to-face interactions between government officials and business

people and reduce the role of the brokers who previously guided applicants through the
complex registration process. I am confident that Cambodia would be able to
significantly improve on its WB score with its revamped registration process, which now
takes only about an hour, Chanthol said.

Despite the high expectations, however, the number of businesses that have used the
online system so far has fallen short of expectations, prompting the government to extend
the re-registration deadline in several occasions, the last one setting the deadline on June
30. A number of technical difficulties have been reported by users of the new system,
leading to delays and even deadlocks in the completion of re-registrations.

One such difficulty, as confided to B2B by users of the system, is the lack of options to
make the online payments required to register your company. As of right now, only
ACLEDA Bank account holders can carry out the payment of the service fees online.
Those who do not have an ACLEDA Bank account must go to the physical branch of one
of the three banks authorized by the MoC to process the transaction (see section on
Processing payments).

Registering your company for the first time

According to the Law on Commercial Enterprises and the Law on Commercial Rules and
Commercial Register, all Cambodian business set up after January 4, 2016 are obliged to
register using the new online registration system. To access it, visit the following
website:

www.businessregistration.moc.gov.kh

Keep in mind, that once you start your application you have 15 days to complete it; if you
dont complete it within that time frame, it will be removed from the system.

Re-registering your company

Businesses already registered prior to January 4, 2016 had to re-register using the new
online system (as stipulated in Prakas 300 on Company Re-registration through
Automation System). The deadline to carry out the re-registration was initially set for
March 31, and subsequently extended several times. The latest deadline by which
companies must begin their re-registration is June 30. The MoC has threatened penalties
for those companies that fail to begin their online re-registration by this date. Just what
these penalties might be remains unclear.

The process

Registering your business using the new online system is straightforward and relatively
simple if you have all the required documentation and information prepared beforehand.
The process can be broken down into four main steps:

1. Go to the website (www.businessregistration.moc.gov.kh) and create a user

account
2. Reserve a company name: you will need to know the name of your company in
both English and Khmer (see section Choosing a Khmer name for your company).
Also keep in mind that you will need to pay a service fee to reserve the company
name.
3. Register your company: here you will be asked to pay a second service fee
4. Print certificate of incorporation

For an easy-to-follow, step-by-step guide, see this video created by the MoC:

https://www.youtube.com/watch?v=L_rHsL2GuOg

Required information

You will need to know the following information to register your business. To speed
things up, have it ready before you begin the registration process:

1. Name of your company in both English and Khmer

2. Your companys single share value

Choosing a Khmer name for your company

In talks with B2B contributors, the issue of selecting a suitable Khmer name repeatedly
came up. Indeed, this seems to be one of the biggest roadblocks in the whole process. A
number of our contributors complaint that the Khmer name they submitted was rejected,
often multiple times. The MoC rejected the Khmer names on the grounds that they did
not have the same meaning than the English names that were submitted alongside.

To avoid lengthy delays in the registration process, the B2B team recommends those
interested in registering a business to resort to a specialised consultant with ample
experience dealing with government ministries. Keep in mind that you only have 15 days
to finish the registration once you get started, so you do not want to waste time
submitting a Khmer name for your company multiple times.

Required documents

You will be asked to upload digital copies of the following documents:

1. Proof of identification: you can use a valid passport or a Khmer ID card issued by
the government
2. Proof of company location: this can be a utility bill, a rental agreement or a land
title
3. Proof of certificate of incorporation of parent company (if your company is
owned by another company)
4. Letter declaring that you have no criminal record: this letter must be signed by a
director of the company
5. List of staff: this list must note the total number of male and female employees, as
well as the number of local and foreign staff
6. Companys memorandum and articles of association

Processing payments

Three banks are authorized by the MoC to process the payment of fees for the registration
of businesses, namely ACLEDA Bank, FTB Bank (Foreign Trade Bank of Cambodia),
and Canadia Bank. To pay the service fees involved in the registration process you need
to have an account in one of these banks. If you do not have an account in one of these
banks, you will not be able to register your business.

Only ACLEDA Bank account holders will be able to pay the fees online. The rest must
go to the physical branch of one of the banks mentioned above to complete the payment.

Registering a business costs 1,720,000 riel (about $430). For more information on
processing your payment for the online registration system, please read through Prakas
299 on Business Registration through Automation System.

Source : https://www.b2b-cambodia.com/