Buy Land in Cambodia through a locally-incorporated company

May 15, 2017, 12:59 p.m.

Article 44 of the Constitution of the Kingdom of Cambodia implicitly states that foreigners aren’t allowed to own land in the country. However, there are many ways foreigners can buy land in Cambodia.

One of this ways is buying land through a locally-incorporated company, either a limited liability company or a private limited company. And, yes, it’s absolutely legal to do so, provided that a Cambodian partner owns 51% equity. lists down all the things you need to know and answers some of the questions that will help you get yourself set up to buy that land in no time!

How is buying land through a locally-incorporated company legal?

This is made possible because of the provision in the Law on the Investment of the Kingdom of Cambodia. Specifically, Article 16 of Chapter VI.

It states that the “ownership of land for the purpose of carrying on promoted investment activities shall be vested only in natural persons holding Cambodian citizenship or in legal entities in which more than 51% of the equity capital are directly owned by natural persons or legal entities holding Cambodian citizenship.”

But isn’t that going to be risky?

As for everything, there is always some risks. But since it is legal, the only risk you’ll have is with the loyalty and truthfulness of the Cambodian partner you’ve chosen. But there are safeguards to protect your investments, position, and control over the company.

For instance, the careful allocation of shares and an appropriate draft that details the rights attached to share certificates will allow foreigners to gain full control over the land. You can also secure a mortgage, a security, and a Power of Attorney document to enforce your authority over the property. Make sure to also keep possession of the registered title deed and the company license.

What are the requirements from a locally-incorporated company?

Setting up a company requires at least two shareholders, a director, and a starting capital of at least $1,000. Once the positions are filled in, you will need to get a corporate bank account, a real office space through a registered agent, and a local Khmer company name.

What’s the process of setting up a locally-incorporated company?

You’ll first need to make a deposit of $494 through an authorized bank. Make sure that the deposit slip you get will be safe and secured. Then, for $10, you will need to check for the uniqueness of the name of your company through the Ministry of Commerce. It usually takes around 5 days to get a response to the inquiry.

Step two is where you obtain a CIB 01R form or a company registration form either physically via the Cambodian Investment Board or online through their website.

Then, you need to get an official company seal through the Ministry of Commerce. This costs around $15.

The next step is for the foreigner to publish a company abstract on a reputable and recognized newspaper. The abstract should include the memorandum, the by-laws, articles of association, name of the company, form of the company, office address, summary of business objectives, total capital in cash, term of the company, details of the director or auditor, and the location of the company’s registration. This step takes around seven days in total for approval and release.

Make sure to get  2 copies of the application documents and newspaper approval as this is required when you apply for registration.

Next, you’ll need to enroll the company into the commercial register of the Ministry of Commerce 30 days before the company starts commercial operations. This requires the submission of 2 copies of the declaration of non-guilty of directors, 2 copies of ID cards or the directors’ and shareholders’ passports, 2 copies of the decision for share contribution, 2 copies of the photos of shareholders and directors, 2 copies of the memorandum and articles of association, 2 copies of the newspaper publication application, 2 copies of the statement of conformity, and copies of the registration application form.

After setting up and enrolling the company, you need to get its documents approved and stamped through the Phnom Penh Tax Department for around $26.

Then, you have to fill out the required forms and documentation from the Real Regime Tax Office to get your official tax registration.

After doing all of that, you’re now set up to operate.

Are there any other obligations after setting up the locally-incorporated company?

The LLC will need to register for VAT and file annual tax returns after incorporation. Also, 100% of real property costs will be shouldered by the foreigner. As an advantage, 100% of the whatever is made when the property is sold will also go to the foreigner.

In addition, the company must notify the Ministry of Labor when it will start operations and when it hires or fires employees.

What’s the advantage of buying land via a locally-incorporated company over leasing?

There major factor you have to consider when trying to decide between Buy Land in Cambodia and lease for the long-term. With long-term leases, there’s going to be an issue of ownership after the lease expires because there are conflicting laws on it. The Land law states that the building is owned by the landowner. The Law on Investment states that the building is owned by the lessor.

When you Buy Land in Cambodia and set up the proper security measures to protect it, there is no doubt that the land is yours even if it is through a partnership with a Cambodian citizen.

There are plenty of other ways to Buy Land in Cambodia, but buying through locally-incorporated companies presents as a great legal option. And while it may not be convenient to set up, it will be more convenient in the long run.

Check out more ways to own land in Cambodia as a foreigner on now!

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