For investors and entrepreneurs looking to expand their business operations to Cambodia, understanding the different types of business entities in the country is one of the first things.
In this article, we will take a look at the various types of business entities in Cambodia. We will also discuss which ones are suitable for foreign investors and companies.
9 Types of Business Entities in Cambodia
Here is an overview of the most common business types of business entities in Cambodia:
| Business Entity Type | Ownership | Liability |
|---|---|---|
| Sole Proprietorship | Owned by one person | Unlimited personal liability |
| General Partnership | Two or more partners | Unlimited liability for all partners |
| Limited Partnership | One general partner with unlimited liability and limited partners | The general partner has unlimited liability; limited partners have limited liability |
| Private Limited Liability Company | One or more shareholders | Liability is limited to the amount of shares held |
| Single Member Limited Liability Company | One owner | Limited liability |
| Public Company | Can have an unlimited number of shareholders | Limited liability |
| Representative Office | Owned by the parent company | Limited liability, non-income generating |
| Branch Office | Owned by the parent company | Liabilities extend to the parent company |
| Subsidiary | Majority owned by the parent company | Limited liability |
Types of Business Entities in Cambodia for Entrepreneurs and Investors
Private Limited Liability Company
A Private Limited Liability Company (PLC) is one of the most attractive options for foreigners looking to establish a presence in Cambodia. This business structure allows you to have 100% foreign ownership and requires a minimum of 2 to 30 shareholders.
The biggest advantage of a private limited company is that your financial risks are limited to the amount of your capital contribution. Therefore, your personal assets are protected from the company's liabilities.
Single Member Limited Liability Company
In addition to an LLC, a Single Member LLC (SMLLC) is another suitable option for investors in Cambodia.
A Single Member Limited Liability Company, as the name suggests, is a company with only one shareholder and also offers 100% foreign ownership. This type of business entity is suitable for small-scale operations or sole proprietorships that want to benefit from limited liability.
Types of Business Entities for Setting Up Company Offices in Cambodia
Representative office of a Foreign Company
For foreign companies looking to explore the Cambodian market without engaging in revenue-generating activities, a Representative Office is a suitable option.
Setting up a representative office in Cambodia allows foreign companies to assess potential business opportunities before committing to a more substantial investment. However, it's important to note that a representative office must not engage in commercial activities that generate income within Cambodia.
Branch Office
A branch office is considered an extension of the parent company and is not a separate legal entity. As a result, any liabilities of a branch office extend to the parent company. Unlike a representative office, a branch office allows foreign companies to conduct revenue-generating activities within Cambodia.
This business structure is common among foreign companies operating in the banking and finance sectors or the ones that have contracts with the Cambodian government.
Subsidiary
For foreign companies looking for a more permanent and independent presence in Cambodia, establishing a subsidiary can be an attractive option. A subsidiary is a separate legal entity from the parent company, with its own management structure, assets, and liabilities. Therefore, the parent company is not liable for any liabilities of a subsidiary.
Subsidiaries are also allowed to engage in commercial activities and generate revenue within the Cambodian market.
Restrictions on Foreign Ownership in Cambodia
In Cambodia, foreign investors are allowed to own 100 percent of investment projects in most cases. However, there are a few exceptions where foreigners need a local partner or requires prior authorization from the relevant authorities.
These exceptions include sectors such as:
- Cigarette manufacturing
- Movie production
- Rice milling
- Gemstone mining and processing
In addition to that, the Constitution of the Kingdom of Cambodia also specifies restrictions on land ownership for foreigners. According to article 44 of the Cambodian Constitution, only Khmer citizens and Khmer legal entities can own land in Cambodia. Foreign individuals and companies can either lease land or any property for up to 50 years or buy condos and apartments that are not on the ground floor.
Set Up Your Business in Cambodia with Emerhub
If you are considering setting up your business in Cambodia, Emerhub offers a range of services from business registration to opening a corporate bank account and accounting. Our team of local experts understands your needs and Cambodian laws and regulations. Based on your business goals, we recommend the most suitable business entity and help you throughout the process.
Fill out the form below to discuss the details with our company registration experts.