Dissolution & Liquidation

A company cannot be dissolved without government intervention. The dissolution of a company in Cambodia is governed by new laws and guidelines from the Ministry of Commerce. A company ceases to exist on the date shown in a certificate of dissolution issued by the Ministry. The courts can supervise the liquidation process if the Ministry or another party requests. Companies engaging in banking and insurance business are subject to separate procedures.

  1. What are the tax consequences of dissolving a company?

Dissolving a company requires obtaining a certificate of tax clearance from the General Department of Taxation of the Ministry of Economy and Finance. Before issuing the certificate, the General Department of Taxation will audit the company’s tax records to determine whether taxes are owed.

  1. What procedures and costs are involved in dissolution? How long does it take?

In the first instance, an application is submitted to close the company at the General Department of Taxation with a view to obtaining a “Tax Clearance Certificate” (which can thereafter be submitted to the Ministry of Commerce for the purposes of the dissolution application). A preliminary audit will be conducted by the appointed auditor notwithstanding whether the company has complied with all tax filing requirements. In rare cases a comprehensive audit will also be required. Note that this can be a lengthy process, and it can take six months or more before a Tax Clearance Certificate is issued.

Once a Tax Clearance Certificate has been obtained, an application for dissolving the company in the commercial register must be filed at the Ministry of Commerce. Once this application has been processed, the Ministry of Commerce will issue a “Certificate of Closing”. Typically, it takes one to two months from the submission of the application to the Ministry of Commerce to when the Certificate of Closing is issued.

  1. What is the legal ground for opening insolvency proceedings against a person or business entity?

A petition to open insolvency proceedings can be filed if the debtor fails to pay debts of 5 million Cambodian Riel (approximately US $1,250 at the current exchange rate). In general, a petition to open insolvency proceedings can be filed by a debtor, one or more creditors, the Ministry of Commerce or the public prosecutor.

  1. Are there provisions governing order of priority in the payments of debts in case of liquidation? Is reorganization of a business allowed under Cambodian law?

Companies seeking to liquidate must pay debts according to the following priority:

  1. employee wages, administrator’s remuneration and fees, administrative courts fees;
  2. secured claims up to a certain value;
  • state taxes whose notice is not filed; and
  1. all other admissible unsecured claims.

Reorganizing a debtor’s business is subject to the judgment of the court and the company’s creditors.

  1. Is it routine to carry out a bankruptcy search of an individual or a company?

The Law on Insolvency has been enacted but there is not yet an operational mechanism to perform a bankruptcy search in Cambodia and it is not currently possible to undertake a reliable and expeditious bankruptcy search through the Cambodian courts.


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