How to start a business in Cambodia

For entrepreneurs looking to start a business in Cambodia, there are several reasons why it can be an excellent place to start a small business. With a growing economy, Cambodia offers an exciting opportunity for entrepreneurs to turn their ideas into reality.

Cambodia's low labour cost and rapid economic growth have made it very attractive for entrepreneurs looking to set up their businesses quickly. This has been further facilitated by the ease of registering a company in the country. However, to ensure a smooth business operation, it's essential to have a good understanding of the local laws and regulations governing businesses in Cambodia. This includes the necessary licences, permits, and tax obligations, which may vary depending on the nature of your business. By having a clear understanding of the legal requirements, entrepreneurs can avoid potential legal issues and financial penalties and focus on growing their business in Cambodia's promising market.

How to start a business in Cambodia:

Before registering your company with the relevant authorities, several requirements need to be completed. These include choosing a suitable business entity, appointing company officers, renting an office space, and drafting the articles of incorporation for the company. While this may sound daunting, fret not, as we’re here to guide you through. 

1. Select a suitable business entity

When setting up a business, whether big or small in Cambodia, the initial crucial step is to determine the appropriate business entity to register. There are several options to choose from, including:

• Sole proprietorship
• Partnership
• Limited liability company 
• Private limited company
• Public limited company
• Single-member private limited company
• Representative office
• Foreign branch office
• Subsidiary

When establishing a company in Cambodia, it is important to keep in mind the requirements for directors and shareholders. For instance, a private limited company must have at least one director, while a public limited company must have at least three directors. Regardless of their nationality, any individual can become a company director. Additionally, a private limited company in Cambodia must have a minimum of two to a maximum of 30 shareholders, and for entrepreneurs looking to set up a single-member company, a single-member private limited company is a viable option.

2. Appoint a registered agent 

To comply with Cambodian regulations, a company must appoint a registered agent who is both legally competent and a resident of Cambodia. This individual will act as the official point of contact for the company and will be authorised to receive all legal documents and papers from courts on the company's behalf. 

3. Have a registered business office

When starting a business, it's important to remember that registering your business address with the local municipal office is a crucial step that helps ensure compliance with regulations. For instance, if you plan to establish your business in Phnom Penh, you will need to register your company's address with the Phnom Penh Municipal Office. Similarly, if you intend to operate in Siem Reap, you must register your business address with the Siem Reap Municipal Office. This requirement is commonly enforced by the local government and non-compliance can result in potential fines or penalties. By taking the time to understand the process for registering your business address and why this requirement is in place, you can avoid potential pitfalls and set your business up for success. 

You will need to submit the following documents:

• Application form to the state in which your business is operating in
• Copy of your company's articles of incorporation (if a limited company)
• Copy of registration certificate
• Copy of business licence from the Ministry of Commerce
• Copy of identity card or passport of the person who signed the application
• Photo of the front entrance of the office
• Land title or lease agreement

4. Consolidate your Articles of Incorporation

In addition to appointing a registered agent, the incorporation of a company necessitates the creation of Articles of Incorporation. These articles govern the company's operations and establish procedures. During the company's statutory meeting, the content of the Articles of Association is determined and can be revised at Shareholders' meetings in the future. 

It's essential to ensure compliance with Cambodia’s Ministry of Commerce’s regulations when creating the Articles of Association to avoid legal issues.

Examples of what should typically be included in the Articles of Incorporation when starting a business include: 

• The company's authorised capital issued capital, and paid-up capital
• The business activities of the company
• The period of incorporation
• The company's purposes and objectives
• The company name and registered address
• The number of shares, classification (if any), rights attached to each share, and nominal value for each share
• The names and number of members of the Board of Directors and Board of Commissioners
• The place and procedures for holding a general meeting of shareholders
• The guidelines for appointment, replacement, and dismissal of members of the Board of Directors and Board of Commissioners
• The process for profit utilisation and dividend distribution.

It is important to note that these requirements may vary depending on the type of business entity being formed. It is advisable to consult with a local expert or legal professional to ensure compliance with all relevant laws and regulations.

5. Incorporate your company with the Business Registration Department

Once the above steps have been completed, you can register your business with the respective government authorities.

To establish a company in Cambodia, you must register it through the Online Registration Services available on the Cambodia Data Exchange (CamDX) system under the Ministry of Economy and Finance (MEF). You will need to create a user account to initiate the registration process, which will require your name, personal details, and contact information. 

Once you have selected the type of company you wish to establish, you must reserve a company name by proposing a Khmer name, which will undergo an automated verification process. You may also register the name in English or another language. Afterwards, you must select the type of business you want to set up.

A reservation fee is charged for reserving the company name. Once you have paid the fee, your proposed name will be reserved, and no other company will be allowed to use it. After the registration has been approved by the Ministry Of Commerce (MOC), your company will be issued a Certificate of Registration. This document can be obtained online or at the Department of Registration.

6. Post-registration

After completing the registration process, the company must fulfil further requirements, such as obtaining company seals, registering with the National Social Security Fund, and opening a corporate bank account. As part of this process, the company must approach a seal maker to ensure the seal's format adheres to the MOC's guidelines. 

Once the seals are ready, the MOC will register them. Certain documents, such as the articles of incorporation and certificate of incorporation, must be stamped and approved by the Department of Administration and General Affairs.

It is also necessary for the company to establish a bank account and deposit the initial capital into it within 15 days of receiving the certificate of incorporation. The company must provide a bank statement during the online registration process to prove this deposit.

Launch your company successfully