QIP Tax Implications in Cambodia (May, 2024)

As Cambodia continues to be a promising destination for investment, keeping abreast of Qualified Investment Project (“QIP”) tax laws is instrumental for both businesses and professionals. In this newsletter we will highlight the legislative benefits and procedure of QIP status, equipping you with the knowledge needed to navigate the ever-changing tax scenario effectively.

On 15 October 2021, Cambodia promulgated the Law on Investment (LOI) to establish an open, transparent, and predictable legal framework to attract and promote quality, effective, and efficient investments. Additionally, on 26 June 2023, the Royal Government of Cambodia promulgated Sub-Decree No.139 on the implementation of the LOI of the Kingdom of Cambodia.

II. INCENTIVIZED INVESTMENR SECTORS AND ACTIVITIES

An individual seeking to execute a Qualified Investment Project (“QIP”) is required to present a written application for Investment Project Registration to either the Council for Development of Cambodia (“CDC”) or the Provincial-Municipal Investment Sub-committee (“PMIS”). This is necessary to secure the associated incentives, guarantees, and protections in accordance with prevailing laws and regulations.

In cases where an individual intends to invest and engage in multiple Investment Activities, separate Investment Project Applications must be submitted for each activity. An exception is made for activities that provide support to the primary Investment Project or for an Expansion Qualified Investment Project.

Investment incentives are granted to the sectors and activities listed below, unless they are specifically included in the negative list, upon acquiring a registration certificate confirming their Qualified Investment Project status:

  • High-tech industries involving innovation or research and development.
  • Innovative or highly competitive new industries or manufacturing with high added value.
  • Industries supplying regional and global production chains.
  • Industries supporting agriculture, tourism, manufacturing, regional and global production chains, and supply chains.
  • Electrical and electronic industries.
  • Spare parts, assembly, and installation industries.
  • Mechanical and machinery industries.
  • Agriculture, agro-industry, agro-processing industry, and food processing industries serving the domestic market or export.
  • Small and medium-sized enterprises in priority sectors and small and medium-sized enterprise cluster development, industrial rks, and science, technology, and innovation parks.
  • Tourism and tourism-related activities.
  • Special Economic Zones.
  • Digital industries.
  • Digital industries.
  • Education, vocational training, and productivity promotion.
  • Health.
  • Physical infrastructure.
  • Logistics.
  • Environmental management and protection, biodiversity conservation, and the circular economy.
  • Green energy, technology contributing to climate change adaptation and mitigation.
  • Other sectors and investment activities not listed by the LOI but deemed by the Royal Government of Cambodia to have the tential for socio-economic development.
  • e Negative List comprises investment activities or categories ineligible for investment incentives, as outlined in Annex 1 of Sub-cree No.139, pertaining to the implementation of the Law on Investment of the Kingdom of Cambodia.
  • The Agricultural Sector includes 4 main investment activities or investment activity categories;
  • The Service Sector includes 43 main investment activities or investment activity categories;
  • The Industrial Sector includes 49 main investment activities or investment activity categories; and
  • The Infrastructure Sector includes 11 main investment activities or investment activity categories;
 

III. TAX EXEMPTIONS FOR QIPS IN CAMBODIA

The investment activities have been divided into three (03) Groups:

  • Group 1 includes 37 investment activity categories that are considered as high-tech and priority sectors of the Royal Government;
  • Group 2 includes 65 investment activity categories that are considered mid-tech; and
  • Group 3 includes 32 investment activity categories that are considered low-tech.

In order to qualify for fundamental tax incentives, the QIP must fulfill the criteria related to investment capital, land size, and/or other specified conditions outlined in Sub-Decree No. 139, governing the implementation of the Law on Investment. This qualification should be met within the earlier timeframe; either during the period indicated in the QIP investment plan submitted at the time of application or the year in which the QIP generates its initial revenue.

Upon registration as a Qualified Investment Project, the Investment Activity is entitled to choose one of the fundamental incentive options from the following:

  • Option 1 will receive the following incentives:
    • Income tax exemption from the time of first earning its income for activities:
      • 9 years for Group 1;
      • 6 years for Group 2;
      • 3 years for Group 3.
    • Payment of income tax at a progressive rate for 6 years after the expiration of the income tax exemption period:
      • First 2 years: 25%;
      • Next 2 years: 50%;
      • Last 2 years: 75%
    • Prepayment tax exemption for activities:
      • 9 years for Group 1;
      • 6 years for Group 2;
      • 3 years for Group 3.
    • Minimum tax exemption provided that an independent audit report has been obtained.
    • Export tax exemption, unless otherwise provided in other laws and regulations.
  • Option 2 will receive the following incentives:
    • Deduction of capital expenditure through special depreciation.
    • Eligible for deducting up to 200% of specific expenses incurred for activities:
      • 9 years for Group 1;
      • 6 years for Group 2;
      • 3 years for Group 3.
    • Specific expenses include:
      • Skill training;
      • Use of accounting system online
      • Study, research, and development, and hire foreign experts to train on new technology, IR 4.0.
    • Prepayment tax exemption for activities:
      • 9 years for Group 1;
      • 6 years for Group 2;
      • 3 years for Group 3.
    • Minimum tax exemption provided that an independent audit report has been obtained.
    • Export tax exemption, unless otherwise provided in other laws and regulations.

In addition to the incentives provided by the above options, QIPs are also entitled to the following:

  • A QIP that has the right to import construction material, construction equipment, and production equipment to serve its production line will have customs duty, special tax, and value-added tax exemption.
  • VAT exemption for the purchase of locally made production inputs for implementation of the QIP. VAT at 0% rate.
  • Deduction of 150% from the tax base for any of the following activities:
    • Research, development, and innovation;
    • Provision of vocational training
    • Construction of accommodation, canteens, nurseries, and other facilities;
    • Upgrade of machinery;
    • Provision of welfare for Cambodia workers/employees; and
    • Investment or infrastructure of waste treatment such as solid, hazardous waste, liquid waste, and smoke.

IV. BUSINESS REGISTRATION

Prior to initiating the registration process for a business in Cambodia, it is imperative to assess whether the business qualifies as a Qualified Investment Project. If eligible, the business stands to receive incentives outlined in the LOI and its associated Sub-Decree. Once eligibility as a QIP is confirmed, the investor can proceed to submit the investment project application for QIP registration to either the Council for Development of Cambodia or the Provincial-Municipal Investment Sub-committee to obtain a registration certificate, thereby gaining access to QIP incentives.

Here are the specific steps based on the capital amount:

  • For investment projects with capital exceeding US$ 5 million, the application should be directed to the Cambodia Investment Board (CIB) of the CDC.
  • For investment projects with capital of less than US$ 5 million, the application should be directed to the PMIS.
  • If the investment project application aligns with all of the QIP criteria and requirements, the investor will receive a registration certificate confirming QIP status from the CDC or PMIS within 20 working days post-submission. Subsequently, the QIP is required to register the business with the Ministry of Commerce (MoC), the General Department of Taxation (GDT), and the Ministry of Labor and Vocational Training (MoLVT). Additionally, obtaining licenses for the specific sector from the relevant authorities may be necessary.

In cases where the investment project is ineligible for QIP status, the investor must undergo the business registration process through the Ministry of Commerce (MoC), General Department of Taxation (GDT), and Ministry of Labor and Vocational Training (MoLVT). Similarly, acquiring sector-specific licenses from the relevant authorities may be a requirement for the new business.

 

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations. For more details or any question related to the QIP Tax Insights in Cambodia, please contact our professionals via [email protected].

Listing on the Cambodian Stock Exchange (Apr, 2024)

Profitable companies that seek to raise capital for expansion should consider listing shares on the Cambodian Securities Exchange (CSX). Listing on the CSX allows shares of the company to be sold to the public, allowing the issuing company to raise funds and the public to participate in the growth of the company as shareholders. The CSX offers equity listing options for profitable large companies with shareholder equity above USD $7.5 million as well as for SMEs (small and medium enterprises) with shareholder equity above USD $500,000. The CSX remains in its infancy, however as capital becomes more scarce in a high-interest rate environment, more companies may be willing to offer equity to the public in order to fulfill company requirements for capital. This newsletter articulates the requirements that a company will need to fulfill in order to list shares on the CSX.

2. Benefits of Listing

– Capital for Expansion

One of the primary reasons a company may want to sell shares to the public is to raise capital for expansion. In Cambodia, foreigners and Cambodians can purchase shares via the CSX, thereby allowing greater access to potential funds than if shares could be held by Cambodians alone. A profitable company should have a ‘formula for success’ but may require a significant amount of capital to expand this formula to address different markets. Raising capital via a share sale will allow the company to grow faster through expansion. This can enable the company to become more competitive via strategic investments, and thereby more profitable.

Publicly listing could also allow founders to “cash out” by selling shares to the public. The founders will be able to realize some profit after their work in building the company, and selling shares imposes no capital expenditure paid to the providers of capital (unlike a bond or loan).

– Tax Incentives

Companies that list shares on the CSX may not only raise capital but could also increase equity value via tax incentives. Tax incentives include a 50% reduction of the annual income tax liability for the first three years, or for any period approved by the MEF, and pre-listing tax liability waivers.

Furthermore, listing shares on the CSX will make other forms of fund-raising easier and should enhance the public profile and reputation of the company amongst the Cambodian public.

Furthermore, listing shares on the CSX will make other forms of fund-raising easier and should enhance the public profile and reputation of the company amongst the Cambodian public.

3. Requirements to List

Listing requires processing and approvals from two main parties: the Securities and Exchange Regulator of Cambodia (SERC) and the CSX.

– Listing Eligibility Review from CSX

As a first step in the listing process, an applicant will need to assemble an IPO team consisting of at least an underwriter, lawyer, and accountant to prepare the complex documentation and undertake the necessary risk required to list. As an early step in the process, the team will help to prepare the application required for a listing eligibility review by the CSX. The review is to be completed no longer than one (01) month from the date of receiving the complete application. According to the Prakas on Listing Rules of the Cambodia Security Exchange (2020), the following information is required to complete the listing review:

  1. General Information
  2. Listing Applicant’s representative information;
  3. Shareholder information;
  4. Financial information of listing Applicant;
  5. Business information of listing Applicant;
  6. The plan of IPO proceeds usage; and
  7. Any other relevant information.

In addition to this initial review by the CSX, according to the Prakas on Public Offering of Equity Securities (2015), the following will be required by the SERC to further the listing process.

– Financial Statements

The company needs historical financial statements and/or consolidated historical financial statements within the latest two (02) financial years which are audited in accordance with the laws and regulations in force in the Kingdom of Cambodia prior to the date of filing the application for eligible companies to list on “the Main Board,” the group of well-established companies with listings on the CSX.

The following are the main thresholds required to list equity on the Main Board*:

Shareholders’ equity ≥ KHR30 billion ($7.5 m)
Net profit ≥ KHR 2 billion ($500,000) for the latest year; and
≥ KHR3 billion ($750,000) for the latest 2 years
Minority shareholder ≥ 200 shareholders; and
≥ 7% of the total voting shares
Audited financial report 2 years

*chart from the CSX website http://www.csx.com.kh/en/product/mainboard.jsp?MNCD=30102

– Growth Board

The vast majority of Cambodian enterprises are SMEs and many require growth capital. While we often associate a stock market listing with a very large company, in a very practical move, the CSX allows relatively small enterprises to raise capital from the public through listing on the “growth board.” The growth board has significantly lower thresholds for listing in terms of shareholder equity, net profit, minority shareholder, and audited financial reports which allow many more companies to qualify for a potential listing.

The following are the main thresholds required to list equity on the Growth Board*:

Quantitative Requirements
Shareholders’ equity ≥ KHR2 billion ($500,000)
Minority shareholder ≥ 100 shareholders; and
≥ 10% of the total voting shares
Audited financial report 1 years

*chart from the CSX website http://www.csx.com.kh/en/product/mainboard.jsp?MNCD=30102

– Corporate Governance Requirements

Major corporate governance requirements include a qualified board of directors consisting of 5-15 directors, with at least 20% of the board being independent. In addition, an audit committee must be established. A risk management committee must be established if assets exceed USD $50 million, whilst a Nomination Committee is suggested but not mandated.

For a more detailed description of corporate governance requirements, please see our BNG Legal newsletter “Corporate Governance in the Limited Liability Company” here.

– The Disclosure Document

The disclosure document is a comprehensive document prepared by the IPO team for submission to the SERC. The disclosure document presents a comprehensive picture of the company, often hundreds of pages long, allowing potential investors to assess the investment potential and risks of any potential investment. Per the Prakas on Public Offering of Equity Securities (2015), a detailed description of the following information is required in the disclosure document:

  1. General information relating to the public offering (name of the issuer, amount and type of equity securities being issued, offering price, aggregate amount, name and address of underwriter, opening and closing date of subscription, registration date of the disclosure document, liability for information submitted);
  2. Risk factors (financial risks, economic risks, operational risks, other risks);
  3. Use of proceeds;
  4. Investment project;
  5. Description of business;
  6. Operating and financial review and prospects (operating result, liquidity and funding source, research and development, trend and profit and cash flow forecast);
  7. Description of property, plant, and equipment;
  8. Asset valuation or/and revaluation;
  9. Directors, senior officers and shareholders;
  10. Involvement of directors, senior officers and shareholders in certain legal proceedings;
  11. Certain relationships related parties transaction;
  12. Director and senior officer compensation;
  13. Options granted to directors, senior officers and employees;
  14. Transaction with directors and shareholders;
  15. Net assets per share and earnings per share;
  16. Ownership of the issuer’s equity securities;
  17. Factors determining the offering price;
  18. Rights of holders of equity securities being offered;
  19. Historical financial information and/or consolidated historical financial information

In addition to the above, according to the Anukret on the Implementation of the Law on Issuance and Trading of Non-Government Securities (2009) a number of relevant documents shall be attached to the disclosure document including:

  1. All contracts used as reference in the disclosure document;
  2. Expert’s report used as reference in the disclosure document; and
  3. Other documents determined by the SERC.

4. Approval and Registration of the Disclosure Document

Following submission of the required documents, the SERC may either refuse or grant in-principle approval within 2 (two) months.

If approved in-principle, the company may then proceed to prepare a Term of Offer including the securities pricing for approval by the CSX and SERC, and finally receive approval and registration of the disclosure document of the issuer by the SERC. Shares should be listed on the CSX within 6 (six) months of the approval of the disclosure document.

5. Book Building and Subscription

After the approval and registration of the disclosure document, shares will be sold through book building and later through public subscription conducted via an underwriting firm or firms licensed by SERC. By law, 20% of the total offering is reserved for Cambodian citizens while 80% of remaining offering amount is open to investors who are Cambodian or non-Cambodians, unless the Director General of the SERC intervenes.

During the book building process the underwriter attempts to sell shares to institutional investors to help determine market pricing prior to selling shares to the public via subscription. At the end of the subscription period, in the event that some equity securities remain unsubscribed, the underwriter of the issuer shall subscribe to those remaining securities or those as stated in the underwriting agreement and pay fully the issuer in cash or with other financial instruments within 30 days of the closing date of the subscription application.

6. Official Listing

Following the subscription period, the listing will officially be public within five (05) working days after the issuer submits the following to the CSX and signs a Securities Listing Agreement with the SERC:

  1. Disclosure documents registered with SERC;
  2. Documents proving the securities subscription settlement;
  3. Copy of the contract with the Securities Transfer Agent;
  4. Copy of the contract with the Securities Paying Agent;
  5. Securities allotment report; and
  6. Letter confirming securities deposited at the Operator of Securities Depository.

In addition to this initial review by the CSX, according to the Prakas on Public Offering of Equity Securities (2015), the following will be required by the SERC to further the listing process.

7. Lock Up Period

Even though the shares are listed, certain shares of significant shareholders cannot be sold for a limited amount of time after the listing, known as the “lock up period.” For a period of 1 (one) year from the official listing date, the controlling interest shareholder shall not sell or transfer their shares for the first 6 (six) months and is able to sell or transfer its shares up to 50% for the last 6 (six) months. The shareholder(s) holding voting shares of at least 15% and any “strategic shareholder” shall not sell or transfer their shares for a period of at least 6 (six) months from the listing date.

8. Summary Timeline

About
6 months
About
1 months
About
6 months
5 days
after Submission

1

Preparation

* May submit an intent letter of public offering to SECC
* Appoint an underwriter
* Create an IPO team
* Due Diligence

2

Listing Eligibility Review

* Submit listing eligibility review application to CSX
* Approval for listing eligibility review/div>

3

Initial Public Offering

* Pricing via book building process
* Apply for confirmation of pricing to CSX
* Submit application for approval on Term of Offer to SECC
* Process of securities subscription
* Report the result of subscription to SECC

4

Official Listing on CSX

* Submit application form to CSX for official listing (7 working days after the securities have been transferred to subscribers)
* Approval from CSX for listing and trading (5 working days after the submission of application)

9. Conclusion

In the current higher-interest rate environment, investment funding is becoming more difficult to access. Listing on the CSX is a good way for profitable companies – both large and SME – to raise local funds, receive tax benefits, attract international funding, and enhance their public profile. A skilled IPO team including an underwriter, lawyer and accountant can help to navigate the complex path toward a public listing. Once listed, a company will require continuous compliance incorporating accountability and transparency into the corporate culture. As the economy of Cambodia matures and more companies list on the CSX, we can expect interest to grow and listings to accelerate.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations. For more details or any question related to the Listing on the Cambodian Stock Exchange, please contact our professionals via [email protected].

IP Protection in Cambodia (Mar, 2024)

Intellectual Property (IP) is a vital asset for businesses around the world as well as in Cambodia as it plays a crucial role in fostering economic growth, and innovation, and attracting foreign investment. Strong IP protection is essential for encouraging local and international businesses to invest in research and development, knowing that their creations and innovation will be safeguarded. This protection provides an incentive for inventors, creators, and entrepreneurs to invest time, resources, and effort into developing new products, technologies, and creative works.

IP Protection in Cambodia is governed by a comprehensive legal framework aimed at safeguarding the rights of creators and innovators. Such legal framework includes but is not limited to the Law Concerning Marks, Trade Names and Acts of Unfair Competition of 2002, the Law on Patents, Utility Model Certificates, and Industrial Designs of 2003, and the Law on Copyright and Related Rights of 2003. These laws provide robust protection for trademarks, copyrights, patents, utility models, and industrial designs, fostering an environment conducive to innovation and creativity. Furthermore, the country has made significant strides in aligning its intellectual property laws with international standards, such as joining the World Intellectual Property Organization (“WIPO”) and acceding to various international treaties. At present Cambodia is a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS Agreement”), and the Madrid Protocol Concerning International Registration of Marks.

Despite ongoing legal development, Cambodia has already established relatively efficient procedures for registering and enforcing important IP rights.

II. TRADEMARKS

Trademarks are essential for businesses to protect their brand identity and prevent others from using identical, or confusingly similar marks to identify their goods and services. Indeed, registering and enforcing one’s trademarks is crucial to differentiating one’s products from those of competitors. While unregistered trade names receive a degree of protection, proper registration is vital for any successful business.

Trademarks and related rights are principally protected under the Law on Marks, Trade Names, and Acts of Unfair Competition (the “Trademark Law”), adopted on January 08, 2002. The Law sets out the requirements for registering a trademark and also provides for a range of protection for trademark owners. Under the Trademark Law, a mark cannot be registered with the Department of Intellectual Property Rights of the Ministry of Commerce of Cambodia (the “DIP”) if it aligns with one of the following:

  1. If it is incapable of distinguishing the goods or services of one enterprise from those of another enterprise;
  2. If it is contrary to public order or morality or good custom;
  3. If it is likely to mislead the public or trade circles, regarding the geographical origin of the goods or services concerned or their nature or characteristics;
  4. If it is identical with, or is an imitation of or contains as an element, an armorial bearing, flag and other emblems, a name or abbreviation or initials of the name of, or official sign or hallmark adopted by any State, Intergovernmental Organization or Organization created by an international convention unless authorized by the competent authority of that State or Organization;
  5. If it is identical with, or confusingly similar to, or constitutes a translation of, a mark or trade name that is well-known in the Kingdom of Cambodia for identical or similar goods or services of another enterprise;
  6. If it is identical with, or confusingly similar to, or constitutes a translation of a mark or trade name that is well-known and registered in the Kingdom of Cambodia for goods or services that are not identical or similar to those in respect of which registration is applied for, provided that use of the mark in relation to those goods or service would indicate a connection between those goods and service s and the owner of the well-known mark that the interests of the owner of the well-known mark are likely to be damaged by such use; or
  7. If it is identical with a mark belonging to a different proprietor and already on the Register, or with an earlier filing or priority date, in respect of the same goods or services or closely related goods or services, or if it so nearly resembles such a mark as to be likely to deceive or cause confusion.

Trademark Registration is valid for ten (10) years and renewable for successive ten-year terms. In the sixth year of the initial term, and of each renewal term, the mark owner is also required to submit an affidavit of use or non-use and pay an official fee. If the owner of the registered mark fails to file the Affidavit within the prescribed timeline, the registered mark shall be removed from the registry.

When a trademark is duly registered in Cambodia, the Trademark Owner shall be entitled to the enjoyment of their exclusive rights over their trademark. This prohibits a third party from exploiting the registered mark and/or a similar or identical mark in the commercial context. In the event of exploitation, the Trademark Owner has the right to prevent others from infringing on their mark. The three main enforcement options are:

  1. File a lawsuit in a civil court for damages and/or specific relief,
  2. Request the customs authorities suspend the clearance of imported infringing goods, and
  3. Seek criminal prosecution and/or fines.

The Trademark Law also provides the possibility to oppose, cancel, and/or invalidate the marks of third parties. This measure can be crucial to prevent others from registering marks that are either identical or confusingly similar to one’s own. By utilizing these enforcement options, trademark owners can protect their rights and deter others from unauthorized use or infringement.

Notably, under the Paris Convention, applicants who have registered a mark in another member country will receive priority in registering that mark in Cambodia. Having become the 95th member of the Madrid System in 2015, Cambodia can now be either the designated state or the state of origin when applying for a trademark in multiple countries. Since becoming a signatory to the Madrid Protocol, there has been a significant increase in trademark applications.

Furthermore, it is now possible for both local and foreign Certification Marks to be registered in Cambodia1. To ease the registration process as well as encourage applicants to register their trademarks, Cambodia has made it possible for applicants to register their trademark(s) via the online system2.

III. PATENTS & UTILITY MODELS

Patents and Utility Models protect the technical aspects of inventions, and it is governed by the Law on Patents, Utility Models, and Industrial Designs (the “Patent Law”) adopted on November 28, 2002..

Under the Patent Law, a Patent is defined as the title granted to protect an idea of an inventor that permits in practice the solution to a specific problem in the field of technology, and it may be, or may relate to, a product or a process. At the same time, a Utility Model Certificate is a certificate that is granted for the protection of a Utility Model, which is any invention that is new and industrially applicable and may be, or may relate to, a product or process.

To obtain a Grant of Patent or Utility Model, the invention must meet the criteria set out under the Patent Law. For a Patent, it needs to be new, involve an inventive step, and be industrially applicable. Whereas, for a Utility Model, there is no requirement for an inventive step. This is the key difference between the Patent and Utility Model; while a utility model can be obvious, a patentable invention must possess a non-obvious element.

Furthermore, not all inventions can be protected, the Patent Law excludes patent protection for certain types of inventions, including:

  1. discoveries, scientific theories, and mathematical methods;
  2. schemes, rules, or methods for doing business, performing purely mental acts, or playing games;
  3. methods for treatment of the human or animal body by surgery or therapy, as well as diagnostic methods practiced on the human or animal body, excluding products for use in any of those methods;
  4. plants and animals other than micro-organisms, and essentially biological processes for the production of plants or animals;
  5. plant varieties.

The Patent Law also excludes inventions that are not socially “useful”, such as illegal narcotics, as they would harm public health or morality.

Both patent and utility model applications are filed with the Department of Industrial Property of the Ministry of Industry, Science, Technology, and Innovation (the “DIP-MISTI”). In exchange for a patent or a utility model, the inventor must be required to disclose the invention to the public. This promotes the growth of public knowledge, which becomes accessible to everyone once the protection period expires. Patents last for a non-renewable 20-year term from the date of filing, while utility models have a shorter validity period of 7 years. As utility models are less inventive than patented inventions, they are deemed to merit a shorter term of exclusivity. Owners of either are required to pay an annual maintenance fee to maintain and keep the registration alive.

The Patent Owner has the right to exclude others from making, importing, stocking, offering for sale, or using infringing products. Both licensees and the patent owner have the right to bring a civil suit for monetary damages and injunctive relief. Cambodian law does not, however, provide procedures for suspending customs clearance of the infringing goods. Furthermore, Patent Owners shall be aware that their rights are subject to revocation and abridgment by MISTI. In Cambodia, MISTI has the right to exploit a patented invention itself or grant permission to a third party to do so, to promote a public interest after the expiry of the 20-year protection period (e.g. national defense, nutrition, health, and development). In case of patent infringement, the patent owner may institute court proceedings against the infringer.

To promote patent filings and their protection, the Ministry of Industry and Handicraft (current MISTI) on behalf of the Kingdom of Cambodia has signed various MOUs and has become a member of international instruments with other International IP Office and International Organizations, such as:

  • Memorandum of Understanding on the Co-operation in Industrial Property (“MOU”) between the Ministry of Industry and Handicraft (currently MISTI) and the Intellectual Property Office of Singapore (“IPOS”) dated January 20, 2015, and valid until January 14, 2025, after the renewal was made on January 14, 2020. This MOU allows either MISTI or IPOS to be the representative of either state to receive patent design applications. IPOS functions as the search and examination authority for patents on behalf of MISTI and MISTI recognizes patents granted through IPOS.
  • A Joint Statement of Intention on Cooperation for Facilitating Patent Grant (“CPG”)between Cambodia and Japan signed on May 4, 2016, allows applicants to expedite patent application processing in Cambodia for patents already registered in Japan. MISTI does not conduct further examination if a successful examination has been conducted by the Japan Patent Office.
  • The Patent Cooperation Treaty (“PCT”)acceded by Cambodia on September 08, 2016, and entered into force on December 08, 2016. This allows international patent applications filed on or after December 8, 2016, to designate Cambodia for patent filing within 30 months from the priority date of the international application.
  • Agreement on European Patents Validation entered into force on March 1, 2018, this agreement allows a European patent filed from March 1, 2018, to be validated in Cambodia.
  • Memorandum of Understanding (“MOU”) on the Intellectual Property Cooperation between the State Intellectual Property Office of the People’s Republic of China (“SIPO”) signed on September 21, 2017, and came into effect in April 2018. This MOU allows the Chinese patent application filed on or after January 22, 2003, granted by SIPO to be validated, registered, and take effect in Cambodia by following the Cambodia formality registration.

IV. INDUSTRIAL DESIGNS

As with Patents and Utility Models, an application for registration of an Industrial Design may be filed with the DIP-MISTI and is also governed under the Patent Law. An Industrial Design refers to any composition of lines or colors or any three-dimensional form, or any material, whether associated with lines or colors, provided that such composition, form, or material gives a special appearance to a product of industry or handicraft and can serve as a pattern for a product of industry or handicraft, and appeals to and is judged by the eye.

To qualify for protection, the industrial design must be new and not contrary to public order or morality. However, technical product features are not covered by Industrial Design protection, as they fall under the domain of patent law. Furthermore, the protection does not extend to arbitrary features of appearance.

In practice, the registration procedures for Industrial Design are similar to those of the Patent and Utility Model. Once registered, Industrial Designs are protected for five (05) years from the filing date, renewable for two further consecutive five (05) year terms. The total term of protection would be fifteen (15) years of protection. The owner of a registered Industrial Design has the right to exclude others from exploiting the design in Cambodia, by any means including making, importing, selling, offering for sale, and using the product, as well as from stocking the product for sale or use.

Under the Memorandum of Understanding (MoU) between MISTI and IPOS, the same rules also apply to the recognition of the Industrial Design registered by either MISTI or IPOS.

On February 25, 2017, Cambodia became a member of the Hague Agreement and therefore the applicant can designate Cambodia to apply for the registration of their application through this international system.

V. COPYRIGHT

In compliance with the WTO’s obligation, Cambodia enacted the Law on Copyright and Related Rights (the “Copyright Law”) to protect original works. Under the Copyright Law, Work is defined as a product in which thoughts or sentiments are expressed creatively, and which falls within the literary, scientific, artistic, or musical domain. It includes books, sculptures, architecture, computer programs, paintings, photographs, musical compositions, and many other types of work. A work must be “original”, which means that it must be the true intellectual creation of its author.

The Copyright Law protects the following subject matter:

  1. All kinds of reading books or other literary, scientific, and educational documents;
  2. Lectures, speeches, sermons, oral or written pleadings, and similar works;
  3. Dramatic works and musical dramas;
  4. Choreographic works, whether modern or adapted from traditional works, or folklores;
  5. Circus performances and pantomimes;
  6. Musical compositions, with or without words;
  7. Audio-visual works;
  8. Works of painting, engraving, sculpture, or other works of collages, or applied arts;
  9. Photographic works or those realized with the aid of techniques similar to photography;
  10. Architectural works;
  11. Maps, plans, sketches, or other works pertaining to geography, topography, or other sciences;
  12. Computer programs and the design, encyclopedia, and documentation relevant to those programs;
  13. Products of collage work in handicraft, hand-made textile products, or other clothing fashions.

Authors are granted both Economic and Moral Rights to their works. Economic rights refer to the exclusive rights to exploit the work and prevent others from making copies or derivative works. For most authors, the economic rights expire fifty years after the author’s death. However, special rules apply for anonymous, pseudonymous, posthumous, collective, and audiovisual works. Moral rights, on the other hand, allow an author to prevent the destruction or modification of their work, to insist on public attribution as the author, and to decide on the manner and timing of the work’s publication.

Copyright protection begins the moment the author creates the work. Moral Rights last forever and they extend beyond the life of the author and pass on to their heirs. However, the protection of Economic Rights starts from the date of the creation of a work, and it covers the life of the author and the whole 50 (fifty) years following their death.

Unlike Trademarks, Patents, and many other forms of IPRs, Copyright does not necessitate registration. Works are protected automatically from the time of their creation. Nevertheless, the Law provides a voluntary procedure to register works with the Ministry of Culture and Fine Art, which will enable the author to receive a registration certificate protecting his original work. Though the Law does not require such registration, it may facilitate the enforcement of an author’s rights in administrative, or judicial, proceedings.

Under the Law, a Contract of Exploitation or a Contract Transferring the economic rights of the author must be stated in writing. The transfer of rights for exploitation may be done wholly or partly. The author will receive the benefit from this transfer by the provisions of the contract.

On March 27, 2019, Cambodia acceded to the Beijing Treaty on Audiovisual Performances (the “Beijing Treaty”). The Treaty grants performers four kinds of economic rights for their performances fixed in audiovisual fixations, such as motion pictures: (i) the right of reproduction; (ii) the right of distribution; (iii) the right of rental; and (iv) the right of making available. Furthermore, Cambodia has become the latest member of the Berne Conventions for the Protection of Literary and Artistic Works through its accession back on December 9, 2021. This means that foreign copyright owner can protect their rights in Cambodia in a more effective manner.

VI. GEOGRAPHICAL INDICATIONS

The Law on Geographical Indication (GI) was promulgated on January 20, 2014 (the “GIs Law”). Under the GIs Law, a Geographical Indication is a distinctive name, symbol, and/or any other sign used on certain products that are associated with a specific location, where the quality or reputation of the goods is attributable to its geographical origin.

Foreign GI applications are eligible for registration and protection in Cambodia if they are successfully and validly registered in the applicant’s country of origin. An application for a foreign GI shall be submitted by its legal representative through a legal agent in Cambodia.

Furthermore, a GI cannot be registered if:

  • It contradicts laws and regulations, morality, religion, good custom, or public order;
  • It has the potential to mislead or confuse the public on the characteristics, the nature, the
  • quality, the place of origin, the production process of the goods and/or its use;
  • It is considered a generic term.

Unlike the previous law on GI registrations, which protected for only 10 years from the filing date, a registered GI, under the new law, is protected from the filing date, until any cancellation is affected.

Two Cambodian GIs were registered with the Ministry of Commerce on April 02, 2010, before the promulgation of the Law on GIs, one being Kampot Pepper, and the other Kampong Speu Palm Sugar.

Furthermore, Cambodia also become a member of the Geneva Act of the Lisbon Agreement on Appellations of Origin and Geographical Indications, on March 09, 2018 (the “Geneva Act of the Lisbon Agreement”). This ensures further protection for GIs owner both local and foreign.

VII. INTEGRATED CIRCUITS

Integrated circuits (popularly known as microchips) are the core components of the information technology industry. They are essential parts of any digital equipment and have been incorporated into a great variety of other industrial articles, ranging from machine tools to all kinds of household and consumer devices. To fulfill the obligations under the WTO, MISTI’s predecessor, the Ministry of Industry and Handicraft has issued a Prakas on the Registration of Layout-Design of Integrated Circuit to govern and protect integrated circuits in Cambodia. Under the Prakas, an Integrated Circuit is defined as a product, in its final form or an intermediate form, in which the elements, at least one of which is an active element, and some or all the interconnections are integrally formed in or on a piece of material, and which is intended to perform an electronic function. Whereas Layout Design refers to a three-dimensional disposition of the elements, at least one of which is an active element, and of some or all of the interconnections of an integrated circuit, or such a three-dimensional disposition prepared for an integrated circuit intended for manufacture.

The layout design of an integrated circuit can be registered with MISTI along with other IPs including patents, utility models, and industrial design. To be eligible for registration, the design must not have been commercially exploited before or have been subject to commercial exploitation anywhere in the world for a period of not exceeding two years. In addition, it must be an original creation, reflecting the intellectual effort of its creator and not commonly found among other designers and manufacturers of integrated circuits at the time of its creation.

Once registered, the protection for integrated circuit layout designs is granted for ten years. However, to maintain the validity of the registration, annual payment is required.

VIII. TRADE SECRETS AND UNDISCLOSED INFORMATION

Trade secrets and undisclosed information are typically defined as any valuable commercial information that is not publicly known or readily ascertainable and is subject to reasonable efforts to maintain its confidentiality.

In Cambodia, whilst there is currently no specific law related to trade secrets and undisclosed information, a draft law is currently under consideration. Nevertheless, provisions of several existing laws impose duties of confidentiality and penalties for the divulgence of commercial secrets.

Non-disclosure agreements are often used to maintain the confidentiality of information that needs to be shared with, for example, an employee or a contractor. Such agreements function as legally binding contracts that can be enforced under the Civil Code (2011).

The Law on Commercial Enterprises adopted on April 26, 2005, prohibits the unauthorized publication of a firm’s financial statements. It also requires the Ministry of Commerce to maintain the confidentiality of most company documents in its records. The Law on Audit (2000) imposes a duty of confidentiality on government auditors.

The Law Concerning Marks, Trade Names and Acts of Unfair Competition (2002) indicates the implied meaning of contrary acts to honest practices in commercial matters for stealing a trade secret, considered as an act of unfair competition. In particular, the Article 23 of the Law constitutes an act of unfair competition:

  • all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial, commercial, or service activities of a competitor;

  • false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial, commercial, or service activities of a competitor;

  • c) indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity of the goods.

– Article 23 of The Law concerning Marks, Trade Names, and Acts of Unfair Competition

– Article 221 of the Law on Negotiable Instruments and Payment Transactions

– Article 47 of the Law on Banking and Financial Institutions

– Articles 10 to 15 of the Law on Civil Code

– Article 308 of the Criminal Code

– Article 58 of the Law on the Bar

IX. RIGHT OF PUBLICITY

The Right of Publicity allows an individual to control the use of his identity for commercial purposes, thereby prohibiting actions like featuring a photograph of someone on product packaging, without their permission. There is no specific law in Cambodia addressing the right of publicity and there are no current drafts under consideration.

X. SUMMARY OF IP PROTECTION IN CAMBODIA

Name Trust Fund Size Administrative Fee Certificate Fee
Trademark Any visible sign capable of distinguishing the goods or services of an enterprise 10 years, renewable indefinitely Mandatory 
Mandatory 
Ministry of Commerce
Patent Inventions that are new, industrially applicable, and involve an inventive step 20 years with an annual fee Mandatory 
Ministry of Industry. Science, Technology & Innovation
Utility Model Inventions that are new and industrially applicable 7 years with an annual fee Mandatory 
Ministry of Industry, Science, Technology & Innovation
Industrial Design Any composition of lines or colors, or any three-dimensional forms, or any material, so long as it gives a special appearance to a product 5 years, renewable twice Mandatory 
Ministry of Industry, Science, Technology & Innovation
Copyright Original works of authorship Life of the author + 50 years, with certain exceptions Mandatory 
Ministry of Culture & Fine Arts
Geographical
Indications
A name or sign used on a product that corresponds to a specific location, where the quality or reputation of the goods is essentially attributable to its place of origin. Permanent unless cancellation or
invalidation
Mandatory 
Ministry of Commerce
Integrated Circuit
Layout Design
A product, in its final form or an intermediate form, in which the elements, at least one of which is an active element, and some or all of the interconnections are integrally formed in or on a piece of material, and which is intended to perform an electronic function 10 years, nonrenewable invalidation Mandatory 
Ministry of Industry, Science, Technology & Innovation

Reference:

1 Prakas No. 293 on the Procedure for Registration and Protection of Certification Marks issued by the Ministry of Commerce on August 30, 2016.

2 Prakas No. 125 on the procedure for TM E-filing both local and foreign marks issued by the Ministry of Commerce on May 4, 2017

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations. For more details or any question related to the IP Protection in Cambodia , please contact our professionals via [email protected].

Types of Trusts, Trust Registration, and Trust Licenses under the Cambodian Trust Law 2019 (Mar, 2024)

1. INTRODUCTION

The Law on Trusts was promulgated in 2019 (“Trust Law”) to manage trusts which are established in Cambodia. The trust law determines not only the rules and procedure for the establishment, registration, management and control of financial trusts, but also of all types of trusts established in Cambodia. Previously, financial trusts were managed by Sub Decree No. 476 ANKr.BK (“Sub Decree No. 476”) dated 26 August 2013. The Trust Law does not invalidate those trust registrations under this Sub-Decree, but brings those registrations under the Trust Law (Art. 55 of the Trust Law).

2. TYPES OF TRUSTS

  1. Commercial trusts are created to make a profit for the benefit of the trust contributor(s). The beneficiary can be, for instance, a pension or an education foundation.
  2. Public trusts are created for the benefit of the Cambodian people. They pertain to the development of the banking and microfinance sectors in Cambodia and other public benefits. The financial trusts defined under Sub Decree 476, which is still in force, fall within the category of public trusts.
  3. Social trusts are created through a donation or a will to a special fund for the cultural, educational, humanitarian, religious or scientific benefit of the general public. These trusts cannot seek profit or conduct any commercial activity.
  4. Private trusts are created for the benefit of the grantor by natural persons who can be either alive or have made a will.
  5. Financial Trust: Funds received from foreign donors that have entered into an agreement with the Royal Government of Cambodia to provide funds for the development of the banking and finance sector in Cambodia.

3. TRUST PARTIES

A. Trust Settlor/Contributor to Trust

The trust settlor or Contributor to the Trust may be one or more natural person(s) or legal entity(ies). They may request to establish one or many trusts of either the same or different types of trusts. In the event that there are many trust settlors or contributors to a trust, they shall create a joint agreement to establish the trust and then request approval from the trust regulator (Art. 5 of Prakas No. 003).

After the live birth registration, the competent civil registrar shall issue an original copy of the birth certificate to the informant free of charge (Art. 27 of LCRVSI).

B. Beneficiary

The trust settlor or contributor to the trust with the assistance of the trustee shall determine the actual beneficiary in the trust instrument and shall submit to the Trust Regulator the information and the determination of the beneficiary identity with truth, clarity and without fraud nor with any involvement in money laundering, terrorist financing and proliferation financing Art. 6 of Prakas No.003).

C. Trustee

Who can be a trustee?

  1. Natural person or group of natural persons
  2. Legal entity or group of entities
  3. Mixed group of natural persons and legal entities. (Art. 20 of the Trust law)

Nobody can be appointed or conduct activities as a trustee or a trust representative in Cambodia without receiving the necessary license/permit/registration from the Director General of the Trust Regulator.

* Requirements for the Trust License of a Legal Entity/Legal Person

  1. As a company incorporated and registered in the Kingdom of Cambodia.
  2. Having tax registration in accordance with the taxation law and regulations.
  3. Shall have minimum capital depending on the types of trust, as follows:
    • Public Trust: 6,000,000,000 Riels (Approx. US$ 1,500,000)
    • Commercial Trust: 4,000,000,000 Riels (Approx. US$ 1,000,000)
    • Social Trust: 2,000,000,000 Riles (Approx. US$ 500,000)
    • Individual Trust: 600,000,000 Riels (Approx. US$ 150,000)

    an applicant shall keep a security bond in the amount of 15% of the minimum capital of the company in the account of TR at National Bank of Cambodia (NBC).

  4. Fulfil Human Resource Requirements (Director, CEO, Operation Manager, Compliance Officer and accountant are the approved persons recognized by the TR and trustee as a natural person received a license from Director General of TR).
  5. Having a director and senior staff who are not working as a director and senior staff of other trust companies, having not previously been a director of a company whose license was rescinded, and having not been involved in money laundering, terrorist financing and proliferation financing.
  6. Having the building and compound appropriately located and separated from other business.
  7. Having the required IT system, tools and physical materials for providing service as trust company.
  8. Having Operational Rules.
  9. Having a three-year business plan commencing date of application.
  10. Having appropriate Policy for Risk Management and Internal Inspection.
  11. Having Knowing Customer Principle.
  12. Having Code of Conduct.
  13. Having implementation and monitoring principle on actions against money laundering, terrorist financing and proliferation financing.

=> Official Fees for the Trust License of Legal Entities/Legal Person

  1. Application fee for license/permit/registration 20,000 Riels (US$ 5) per copy
  2. Document study fee for license request 4,000,000 Riels (US$ 100)
  3. Document study fee for permit request 2,000,000 Riels (US$ 500)

=> License Fee:

  1. For a public trust: 40,000,000 Riels (Approx. US$ 10,000) for the first 2 years and 60,000,000 Riels (Approx. US$ 15,000) for renewal of 3 years
  2. For a commercial trust: 30,000,000 Riels (Approx. US$ 7,500) for the first 2 years and 45,000,000 Riels (US$ 11,250) for renewal of 3 years
  3. For a social trust: 20,000,000 Riels (Approx. US$ 5,000) for the first 2 years and 30,000,000 Riels (Approx. US$ 7,500) for renewal of 3 years
  4. For an individual trust: 20,000,000 Riels (Approx. US$ 5,000) for the first 2 years and 30,000,000 Riels (Approx. US$ 7,500) for renewal of 3 years

=> Permit Fee

  1. For a public trust: 16,000,000 Riels (Approx. US$ 4,000) for the first 2 years and 24,000,000 Riels (Approx. US$ 6,000) for renewal of 3 years
  2. For a commercial trust: 12,000,000 Riels (Approx. US$ 3,000) for the first 2 years and 18,000,000 Riels (Approx. US$ 4,500) for renewal of 3 years
  3. For a social trust: 8,000,000 Riels (US$ 2,000) for the first 2 years and 12,000,000 Riels (Approx. US$ 3,000) for renewal of 3 years
  4. For an individual trust: 8,000,000 Riels (Approx. US$ 2,000) for the first 2 years and 12,000,000 (Approx. US$ 3,000) Riels for renewal of 3 years.

=> Registration fee for trust executor/trust safety protector 4,000,000 Riels (Approx. US$ 1,000) for 1 years.

  • Requirement for the Trust License of a Trustee as a Natural Person

    A Trustee as a natural person may receive the license as either:

    • A trustee as an independent natural person of an individual trust or other trusts; or
    • A trustee as a natural person of a trust company.

    A Trustee as an independent natural person may be the trustee of trust property, the value of which does not exceed 10,000,000,000 Riels (Approx. US$ 2,500,000). The trustee as an independent natural person may request to operate the trust with the registered trust property having the value over 10,000,000,000 Riels (Approx. US$ 2,500,000) to be approved by the Director General of TR. (Art. 23 of Prakas No. 003).

=> Requirement for the License of a Trustee as a Natural Person (of a trust company)

  1. Good qualification and behavior
  2. A person of full capacity and having residence in Cambodia
  3. Fulfil the conditions to be a trustee of a trust company
  4. Letter of agreement with the applicant to be a trustee as a natural person of the company from the trust company
  5. Fulfil the qualification as stated in point 5 of paragraph 1 of Article 17 of Prakas 003
  6. Other requirements (Art. 26 of Prakas 003)

C. Trustee

Who can be a trustee?

  1. Natural person or group of natural persons
  2. Legal entity or group of entities
  3. Mixed group of natural persons and legal entities. (Art. 20 of the Trust law)

Nobody can be appointed or conduct activities as a trustee or a trust representative in Cambodia without receiving the necessary license/permit/registration from the Director General of the Trust Regulator.

4. TRUST INSTRUMENT

According to Article 6 of Sub-Decree No. 114 ANKr.BK on Trust Registration dated 02 August 2019 (“Sub-Decree No. 114”), the trust shall be established by a written letter complying with the following form and content:

  • Name and address of the trustee, beneficiary, and trust settlor and/or nominee settlor and / or trust contributor
  • Purposes of trust
  • Legal document certifying the trust property such as:
  • The certification of origin of trust property
  • Total amount and / or balance of trust fund
  • Trust Period
  • Rights and Obligations of the trustee, beneficiary, and trust settlor and / or nominee settlor and / or trust contributor
  • Conditions of trust termination
  • The disposition of the trust upon trust is terminated
  • Condition of trust amendment
  • Purpose of investment and / or use of trust property
  • List of the trust property as the subject to trust
  • Other components depending on the purposes of the trust settlor and/or nominee settlor and / or trust contributor
  • Remuneration of a trustee which is determined based on qualification and working experience.

For the form of the Trust Instrument, please refer to Annex 1 of Sub-Decree No. 114.

5. TRUST REGULATOR AND TRUST REGISTRATION

  • Trust Regulator (https://www.trustregulator.gov.kh)

    Whilst Sub-Decree No. 476 and the Trust Law have clearly expressed the jurisdiction of the Ministry of Economy and Finance (“MEF”) as the regulator in the trust sector, Cambodia adopted the law on Organization and Functioning of Non-Banking Financial Services Authority (“LOFNBFSA”) in 2021 establishing the Trust Regulator (“TR”). The TR shall execute the Ministry of Economy and Finance’s jurisdiction as stated in the Trust Law and other relevant regulations in the trust sector (Art. 20 of LOFNBFSA).

    The main duties and responsibilities of the TR are clearly stated in Article 24 of Sub-Decree No. 113 ANKr.BK dated 14 July 2021 and Prakas 006 A.S.H.PrK dated 01 October 2021 on Organization and Functioning of Departments and Institutions under the TR.

  • Trust Registration, Official Fee and Penalty

    Whilst Sub-Decree No. 476 and the Trust Law have clearly expressed the jurisdiction of the Ministry of Economy and Finance (“MEF”) as the regulator in the trust sector, Cambodia adopted the law on Organization and Functioning of Non-Banking Financial Services Authority (“LOFNBFSA”) in 2021 establishing the Trust Regulator (“TR”). The TR shall execute the Ministry of Economy and Finance’s jurisdiction as stated in the Trust Law and other relevant regulations in the trust sector (Art. 20 of LOFNBFSA).

    The main duties and responsibilities of the TR are clearly stated in Article 24 of Sub-Decree No. 113 ANKr.BK dated 14 July 2021 and Prakas 006 A.S.H.PrK dated 01 October 2021 on Organization and Functioning of Departments and Institutions under the TR.

    • Registration

      According to Article 7 of Sub-Decree 114 on Trust Registration, the trust shall be registered at the Trust Regulator and it is the obligation of the trustee to register the trust. The validity of the certificate of trust registration depends on the term set in the trust instrument or can be set out by the regulator. The validity can be extended through the request of the trustee 60 days before the expiration of the trust registration certificate (Art. 14 of Sub-Decree No. 114). For the application form of trust registration, please refer to Annex 2 of Sub-Decree No. 114 and the registration checklist can be requested from the TR.
      The trust shall be valid only if it is registered within three months after the date of establishment of the trust (Art. 28 of the Trust Law).

    • Official Fee

      According to Prakas No. 010 A.S.H.PrK dated 18 February 2022 on the Service Fee of Trust Registration issued by the Non-Banking Financial Services Authority, the applicant shall pay for the application form for the establishment or registration of the trust in amount of 20,000 Riels (Approx. US$5). The applicant shall then pay for annual administrative fee and certificate fee as follows:

      – For a Commercial Trust , annual administrative and certificate fees based on trust fund balance size are as follows:

      Trust Fund Size Administrative Fee Certificate Fee
      1 Under 400,000,000 Riels
      (Approx. <US$ 100,000)
      40,000 Riels
      (Approx. US$ 10)
      300,000 Riels
      (US$ 75)
      2 From 400,000,000 Riels to 2,000,000,000 Riels
      (Approx. US$ 100,000 to US$ 500,000)
      200,000 Riels
      (Approx. US$ 50)
      500,000 Riels
      (Approx. US$ 125)
      3 More than 2,000,000,000 Riels to 4,000,000,000 Riels
      (Approx. >US$ 500,000 to US$ 1,000,000)
      400,000 Riels
      (Approx. US$ 100)
      600,000 Riels
      (Approx. US$ 150)
      4 More than 4,000,000,000 Riels to 20,000,000,000 Riels
      (Approx. >US$ 1,000,000 to US$ 5,000,000)
      400,000 Riels
      (Approx. US$ 100)
      800,000 Riels
      (Approx. US$ 200)
      5 More than 20,000,000,000 Riels to 40,000,000,000 Riels
      (Approx. >US$ 5,000,000 to US$ 10,000,000)
      2,000,000 Riels
      (Approx. US$ 500)
      800,000 Riels
      (Approx. US$ 200)
      6 More than 40,000,000,000 Riels to 80,000,000,000 Riels
      (Approx. >US$ 10,000,000 to US$ 20,000,000)
      4,000,000 Riels
      (Approx. US$ 1,000)
      2,400,000 Riels
      (Approx. US$ 600)
      7 More than 80,000,000,000 Riels
      (Approx. >US$ 20,000,000)
      8,000,000 Riels
      (Approx. US$ 2,000)
      3,000,000 Riels
      (Approx. US$ 750)

      – For a Public Trust or Social Trust, annual administrative and certificate fees based on trust fund balance size are as follows:

      Trust Fund Size Administrative Fee Certificate Fee
      1 Under 400,000,000 Riels
      (Approx. <US$ 100,000)
      40,000 Riels
      (Approx. US$ 10)
      200,000 Riels
      (Approx. US$ 50)
      2 From 400,000,000 Riels to 2,000,000,000 Riels
      (Approx. US$ 100,000 to US$ 500,000)
      120,000 Riels
      (Approx. US$ 30)
      300,000 Riels
      (Approx. US$ 75)
      3 More than 2,000,000,000 Riels to 4,000,000,000 Riels
      (Approx. >US$ 500,000 to US$ 1,000,000)
      200,000 Riels
      (Approx. US$ 50)
      400,000 Riels
      (Approx. US$ 100)
      4 More than 4,000,000,000 Riels to 20,000,000,000 Riels
      (Approx. >US$ 1,000,000 to US$ 5,000,000)
      600,000 Riels
      (Approx. US$ 150)
      600,000 Riels
      (Approx. US$ 150)
      5 More than 20,000,000,000 Riels to 40,000,000,000 Riels
      (Approx. >US$ 5,000,000 to US$ 10,000,000)
      1,000,000 Riels
      (Approx. US$ 250)
      1,000,000 Riels
      (Approx. US$ 250)
      6 More than 40,000,000,000 Riels to 80,000,000,000 Riels
      (Approx. >US$ 10,000,000 to US$ 20,000,000)
      1,500,000 Riels
      (Approx. US$ 375)
      2,000,000 Riels
      (Approx. US$ 500)
      7 More than 80,000,000,000 Riels
      (Approx. >US$ 20,000,000)
      2,000,000 Riels
      (Approx.US$ 500)
      3,000,000 Riels
      (Approx. US$ 750)

      – For a Private/Individual Trust, annual administrative and certificate fees based on trust fund balance size are as follows:

      Trust Fund Size Administrative Fee Certificate Fee
      1 Under 400,000,000 Riels
      (Approx. <US$ 100,000)
      40,000 Riels
      (Approx. US$ 10)
      200,000 Riels
      (Approx. US$ 50)
      2 From 400,000,000 Riels to 2,000,000,000 Riels
      (Approx. US$ 100,000 to US$ 500,000)
      120,000 Riels
      (Approx. US$ 30)
      300,000 Riels
      (Approx. US$ 75)
      3 More than 2,000,000,000 Riels to 4,000,000,000 Riels
      (Approx. >US$ 500,000 to US$ 1,000,000)
      200,000 Riels
      (Approx. US$ 50)
      400,000 Riels
      (Approx. US$ 100)
      4 More than 4,000,000,000 Riels to 20,000,000,000 Riels
      (Approx. >US$ 1,000,000 to US$ 5,000,000)
      400,000 Riels
      (Approx. US$ 100)
      600,000 Riels
      (Approx. US$ 150)
      5 More than 20,000,000,000 Riels to 40,000,000,000 Riels
      (Approx. >US$ 5,000,000 to US$ 10,000,000)
      1,000,000 Riels
      (Approx. US$ 250)
      1,200,000 Riels
      (Approx. US$ 300)
      6 More than 40,000,000,000 Riels to 80,000,000,000 Riels
      (Approx. >US$ 10,000,000 to US$ 20,000,000)
      1,600,000 Riels
      (Approx. US$ 400)
      1,600,000 Riels
      (Approx. US$ 400)
      7 More than 80,000,000,000 Riels
      (Approx. >US$ 20,000,000)
      2,000,000 Riels
      (Approx. US$ 500)
      2,000,000 Riels
      (Approx. US$ 500)
    • Penalty

      A trustee who operates the trust without trust registration shall be fined by the trust inspectors as follows:
      Fine from 20,000,000 Riels (Approx. US$ 5,000) to 50,000,000 Riels (Approx. US$ 12,500) and the trustee must immediately stop any trust activities, and requires the trustee to register the trust at TR.
      In case of any subsequent offense, the fine shall be from 50,000,000 Riels (Approx. US$ 12,500) to 100,000,000 Riels (Approx. US$ 25,000) and/or imprison from 01 month to 01 year (Art. 43 of Trust Law).

6. CONCLUSION

  • The trust sector is now regulated and governed by the Trust Regulator under the provisions of the Trust Law, the Law on Organization and Functioning of Non-Banking Financial Service Authority and other related regulations.
  • There are five main types of trust governed by the trust regulators: public trust, commercial trust, social trust, individual trust, and financial trust.
  • The trust parties consists of the trust settlor or contributor to trust, the trustee and the beneficiary. The trustee may be a natural person or a legal entity who has received a license/permit/registration from the Trust Regulator. The trustee shall apply for the license/permit/registration from the TR. Any failure of a trustee to comply with the provisions on license/permit/registration shall result in financial penalty and/or imprisonment (Implementation of Imprisonment in Lieu of Payment).
  • The trust shall be registered by the trustee at the Trust Regulator. Any failure of a trustee to register the trust at the Trust Regulator will result in financial penalty and/or imprisonment.
  • For the real estate sector, the trust mechanism as a fully and legally recognized method of foreign ownership of land may come to replace the nominee mechanism as the traditional practice in real estate purchasing and management.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations. For more details or any question related to the Types of Trusts, Trust Registration, and Trust Licenses under
the Cambodian Trust Law 2019
, please contact our professionals via [email protected].

Civil Registration in Cambodia (Feb, 2024)

1. INTRODUCTION

On 29 December 2000, the Royal Government of Cambodia issued Sub-Decree No. 103 to define the formality and the procedure for Civil Registration affairs in the Kingdom of Cambodia. The Sub-Decree has, until recently, been the primary legislation for civil status registration and the main source for registrars to use for civil registration in the Kingdom.
Responding to the population growth and the need for population management, the Law on Civil Registration, Vital Statistics and Identification (“LCRVSI”) was promulgated on 01 July 2023. This law sets out the rules and procedures relating to civil registration, residence registration, vital statistics, personal identification registration and population registry management, and this law applies to all persons living in territories of the Kingdom of Cambodia in addition to Cambodians living abroad. Whilst this law provides the framework, it is anticipated that many other regulations related to formality and procedure will be issued by the competent ministries and institution for effective implementation.

2. TYPES OF CIVIL REGISTRATION

The three (03) vital events that need to be registered are live birth, death and marriage (Art. 4 of LCRVSI).

* Birth Registration and Certificate

Every live birth must be informed to and registered at the commune/sangkat. An informant shall submit an application for live birth registration within 30 days from the birth date of the child (Art. 17, 28 and 19 of LCRVSI).

After the live birth registration, the competent civil registrar shall issue an original copy of the birth certificate to the informant free of charge (Art. 27 of LCRVSI).

Live Birth registration for the child of foreign parents living in Cambodia shall be done in the same manner as mentioned above (Art. 37 of LCRVSI).

* Death Registration and Certificate

Every death must be informed to and registered at the commune/sangkat. An informant shall submit an application for death registration within 15 days from the date of death (Art. 41, 42 and 43 of LCRVSI).

After the death registration, the civil registrar shall issue an original copy of the death certificate to the informer free of charge (Art. 55 of LCRVSI).

For the death of foreigner in Cambodia, the death registration process is the same as mentioned​ above, however the civil registrar shall issue the death certificate as soon as possible for enable cross-border transportation of the dead body and cremation or burial (Art. 59 of LCRVSI).

* Marriage Registration and Certificate

Marriage between Cambodians in Cambodia

A marriage is legal only if the man and woman register their marriage in front of a civil registrar at the commune/sangkat where the marriage application was received (Art. 70 of LCRVSI).

After the marriage registration, the competent civil registrar shall issue an original copy of the marriage certificate to the spouses free of charge (Art. 71 of LCRVSI).

* Marriage between Cambodians outside Cambodia

A marriage between a Cambodian man and a Cambodian woman living abroad which has been done in accordance with the form set out by the law where the marriage takes place shall be recognized and registered in Cambodia if that marriage is not contrary to legal provisions of Cambodia. This marriage can be registered in front of the competent consular official of Cambodia abroad where the marriage takes place (i.e. the Cambodian embassy of that nation) or can be registered at commune/sangkat of the spouses by presenting a marriage certificate from the foreign country and other necessary information determined by the Prakas issued by the Minister of Interior.

After the marriage registration, the civil registrar to the consular official of Cambodia or a competent civil registrar shall issue an original copy of the marriage certificate to the spouses (Art. 75 of LCRVSI).

* Marriage between a Cambodian and a Foreigner outside Cambodia

Recognition and registration of marriage between a Cambodian and a foreigner outside Cambodia is conducted in the same manner as a marriage between a Cambodian man and a Cambodian woman as mentioned above.

In present practice, if the couple have a marriage certificate from abroard and would like to register their marriage in Cambodia, they should prepare their application together with marriage certificate and other supporting documents including, but not limited to; a criminal record check, passport copy of the foreigner etc. and submit them to the General Department of Identification. The national civil registrar under the General Department of Identification will issue a decision that the couple can take in order to register their marriage in front of the Commune/Sangkat civil registrar of the residence of the Cambodian party.

* Marriage between Foreigners in Cambodia

A marriage between a Cambodian and a foreigner living in Cambodia shall be done in accordance with Cambodian laws. Form, formality and procedure for marriage between Cambodian and foreigner shall be determined by a Sub-Decree (Art. 76 of LCRVSI).

As of today, the formulation of a Sub-Decree as mentioned in Art. 76 of LCSCCSI has not yet finalized the procedure of marriage between a Cambodian and a Foreigner, thus the provisions stated in the Sub-Decree 183 dated on 03 November 2008 should still be followed.

* Marriage between Foreigners in Cambodia

A foreigner legally living in Cambodia may marry another foreigner legally living in Cambodia in accordance with Cambodian laws. This marriage can be registered in Khmer language accompanied by Latin letters (Art. 77 of LCRVSI).

3. RESIDENCE AND IDENTIFICATION

The Chief of the Commune Administrative Police Post is a residence registrar (Art. 107 of LCRVSI). Residence registration can be done at the Commune Administrative Police Post where the residence of the person in question is located in, or other places as determined by legal documents issued by the Ministry of Interior (Art. 112).

The persons responsible for and are able to request residence registration are as follows: each representative of the residence, the landlord, the tenant or a representative in the case that the house is subject to a lease, the director of the institution or the manager or representative in the case of concentrated residence, an actual resident and other persons or the director of institution or the manager or representative authorized by this law or other laws.

After residence registration, the residence registrar shall issue an original copy of residence certificate to a person who has requested the residence registration (Art. 114).
Identification Registration and Card.

The Cambodian Identification Card is an official document for certifying the identity of each person who is a Cambodian national, and it shall not be allowed to be transferred from person to person nor used create any security right (Art. 129 of LCRVSI).

To implement this article especially on the form, identity, information, validity and determination of age to provide Cambodian Identification Card, the law refers to a Sub-Decree. Therefore, while current practice allows a person to request a Cambodian Identification Card at the age of fifteen (15) years old, the new Sub-Decree will clarify the age requirements upon its issuance.

According to Art. 131 of LCRVSI, a person with Cambodian nationality whose age complies with above Sub-Decree can request for Cambodian Identification Card registration. A person with Cambodian nationality can request for Cambodian Identification Card registration only once. The card can be renewed in case of damage, loss, or expiry or if the recorded information must be corrected (Art. 131).

After the registration of Cambodian Identification Card, the registrar shall provide a Cambodian Identification Card to the person in question (Art. 132).

For those who have received Cambodian nationality, but the civil registration has not yet been completed, they may request to correct their identity data on the Cambodian Identification Card in accordance with the Royal Decree on Naturalization (Art. 133).

4. CONCLUSION

1) Law on Civil Registration, Vital Statistics and Identification was promulgated on 01 July 2023 and provides very comprehensive conditions and universal registration for civil registration and identification in Cambodia that comply with the United Nation Recommendations on Civil Registration and Vital Statistics. The law will be implemented one year after the promulgation, other than Art. 179, 180 and 180 which shall be implemented in accordance with the future Sub-Decrees.

2) There are several points of law and formality which are not yet clear, as the law refers to not-yet-issued Sub-Decrees and Prakas of the Ministry of Interior. Therefore, to effectively implement this law, the issuances of Sub-Decrees and Prakas or Inter-Ministerial Prakas clarifying the requirements, public service fee, form, formality and procedure are required.

3) The law does, however, undoubtedly improve the civil registration and identification process and should result in greater clarity, quality of service, lower payments, and ease of access.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations. For more details or any question related to the Civil Registration and Identification, please contact our professionals via [email protected].

Environmental trusts under the Code of ENR (Jan, 2024)

1. INTRODUCTION

The Trust law (“TL”) of the Kingdom of Cambodia, promulgated on 02 January 2019, provided for four types of trusts: a commercial trust, a public trust, a social trust and an individual trust. Additionally, the financial trust was introduced by Sub-Decree No. 476 dated 26 August 2013.

An Environmental Trust (“ET”) was introduced by the Code of Environment and Natural Resources (“CENR”) or “the Code” promulgated on 29 June 2023. The purpose of an ET is to encourage environmental protection, sustainability, and conservation. According to Article 865 of the Code, the CENR will come into force one (01) year on from the promulgation of the Code. Therefore, the implementation of ETs shall commence from the beginning of July 2024.

2. MANAGEMENT OF ENVIRONMENTAL TRUSTS

a) Types of ETs

An Environmental Trust may include trust properties for environmental protection, biodiversity conservation, proper and the sustainable use of natural resources and sustainable living and other forms of social and economic benefit distributions in the Kingdom of Cambodia.

ETs shall be managed by the trustee through the transfer of the property or funds as the trust properties from the settlor to the trustee, to manage for the benefit of the beneficiary as determined by the settlor. (Art. 782 of the Code)

b) Competent Authority

According to Article 20 of Law on the Organization and Functioning of the Non-Bank Financial Services Authority, the Trust Regulator shall execute the Ministry of Economy and Finance’s jurisdiction, as stated in the Trust Law which was promulgated through Royal Decree NS/RMK/1119/002 dated 02 January 2019, and other relevant regulations in trust sector.

The Ministry of Economy and Finance shall collaborate with the Ministry of Environment and Natural Resource to prepare the relevant legal documents to clarify the rules and procedures for the establishment, management and control of environmental trusts and fund accounts (Art. 781 of the Code).

c) ET Registration

An Environmental Trust is valid only if registered at the Ministry of Economy and Finance within three (03) months after the start date of the Environmental Trust. The Ministry of Economy and Finance shall decide on the registration application within ninety (90) working days from receiving the request and the complete conditions for the registration. Formality and procedure on Environmental Trust registration shall be determined by the Ministry in of Economy and Finance (Art. 782 of the Code).

d) Termination of an ET

An Environmental Trust shall be terminated in the following circumstances:

  • Reaching of the deadline set out in the trust instrument
  • The goal of the trust is reached
  • Decision with discretion or consensus of the settlors
  • Decision of the competent court
  • Other reasons as stipulated in the trust instrument (Art. 787 of the Code)

3. RIGHTS AND OBLIGATIONS OF THE PARTIES

3.1. Rights and Obligations of Settlor

A) Rights of the Settlor

  • Receive information related to trust management including financial report, auditing report and other related documents
  • Appoint and terminate the trustee in accordance with the conditions set out in the trust instrument. (Art. 773 of the Code)

B) Obligations of the Settlor

  • Transfer trust property or fund to the trustee to manage and allocate for the benefit of beneficiary
  • Join to facilitate in the process of transferring the trust property to trustee for managing and allocating
  • Notify in writing to the Ministry/Institution in charge of economy and finance for change of settlor or trust contributor or modification of a condition of the trust instrument
  • Follow the conditions set out in the trust instrument and existing provisions. (Art. 774 of the Code)

4. CONCLUSION

An Environmental Trust is a new type of trust created by the Code of Environment and Natural Resource which was promulgated on 29 June 2023, and this code shall be implemented one (01) year from the promulgation.

An Environmental Trust is valid only if it is registered at the Ministry of Economy and, as executed by the Trust Regulator, in the same manner as other types of trusts under the Trust Law, 2019.

Environmental Trusts are very important for those who wish to manage and allocate funds for protecting the environment and natural resources through a trust mechanism once the Code of Environment and Natural Resource is implemented.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations. For more details or any question related to the Environmental Trusts, please contact our professionals via [email protected].