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].
TABLE OF CONTENTS
| 1. | Introduction |
| 2. | Management of Enviromental Trusts |
| 3. | Rights and Obligations of the Parties |
| 4. | Conclusion |
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