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:

      Nº 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:

      Nº 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:

      Nº 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].

TABLE OF CONTENTS

1. INTRODUCTION
2. TYPES OF TRUSTS
3. TRUST PARTIES
4. TRUST INSTRUMENTS
5. TRUST REGULATOR AND TRUST
REGISTRATIONS
6. CONCLUSIONS

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