Notes when setting up a company in Cambodia

Setting up a company in Cambodia requires investors to pay attention to a number of things First of all, choosing the right type of business for business purposes is very important. In addition, investors also need to understand the procedures for establishing a company, including registering with the Ministry of Economy and Finance, applying for an Investment Certificate (CIP) from the Cambodian Development Council (CDC), and registering for tax at the Tax Department. In particular, investors need to pay attention to the minimum charter capital requirement, which may vary depending on the business line, with some special industries requiring higher capital. Viet An Law would like to guide customers to some notes when establishing a company in Cambodia through the following article.

Notes on currency when setting up a company in Cambodia

Although the riel (KHR) is the official currency of Cambodia, the US dollar (USD) is widely used and popular in most trade, travel, and daily living transactions. This means that you can use both of these currencies in almost any situation. However, prices are usually quoted in USD, and Riel is often used for small transactions or change.

Regarding the issue of charter capital, the Cambodian Enterprise Law clearly stipulates:

• Number and par value of shares: Each company must issue a minimum of 1,000 shares. The minimum par value of each share is 4,000 KHR.
• Minimum charter capital: Therefore, the minimum charter capital required to establish a company in Cambodia is KHR 4,000,000, or approximately USD 1,000 at the current exchange rate.
• Types of shares: The company is allowed to issue various types of shares, such as common stock, preferred stock, each of which will have separate rights and obligations related to dividend distribution, voting rights at shareholder meetings, and other benefits.
• Higher capital requirements for certain industries: It is important to note that some special business lines, such as banking, finance, insurance, or those that require special licenses, will require a much higher charter capital level than the minimum of $1,000. This is to ensure the financial viability and safety of the that business.

Some requirements for minimum registered capital

According to Circular B7-016-117 issued by the National Bank of Cambodia (NBC), the following minimum registered capital requirements apply to licensed banks, specialized banks, and microfinance institutions (TCTV):

• Commercial banks established in the country or subsidiaries of foreign banks must have a minimum registered capital of USD 75,000,000.
• Branches of foreign banks that meet investment standards must have a minimum registered capital of USD 50,000,000.
• Branches of foreign banks that do not meet investment standards must have a minimum registered capital of USD 75,000,000.
• Specialized banks established in the country must have a minimum registered capital of USD 15,000,000.
• Institutions with deposit receipt licenses must have a minimum registered capital of USD 30,000,000. Institutions that do not have a deposit receipt license must have a minimum registered capital of 1,500,000 USD.

Notes on the transfer of investment capital when setting up a company in Cambodia

One of the important factors that investors and individuals are interested in when investing in establishing a company in Cambodia is the regulation on remittances. Currently, Cambodia has a fairly open policy on money transfers:

• No restrictions on remittances: Cambodia does not impose restrictions on the transfer of money into or out of the country. This facilitates personal investment, business, and trading activities.
• No restrictions on conventional foreign exchange: Foreign currency trading and exchange activities take place relatively freely through licensed financial institutions, mainly commercial banks. You can easily buy and sell popular foreign currencies such as USD, EUR, JPY… at banks in Cambodia.
• The National Bank of Cambodia (NBC) may impose temporary restrictions: In the event of an economic or financial crisis, the NBC has the power to impose temporary foreign exchange controls on banks and financial institutions. However, these are emergency measures and are not regular regulations.
• Declaration to NBC for large money transfers: For overseas money transfers with a value of USD 10,000 or more (or equivalent in other foreign currencies), the remitter needs to make a declaration to NBC in advance. The purpose of this is for NBC to monitor large cash flows and ensure the transparency of transactions.