Law of Attraction. Law of firms and business. Before you open business you have to read law. There are many laws in Cambodia . If you have done any wrong from the laws, you will be fine or punish by the level of you against the laws. Laws is laws. However, you have to obey the laws. As human, we live in society in order to help each other to obey the law. Laws is created by human. Human have to follow what it say in it. Communication is about Laws too. PUC have one subject called Laws. Laws can learn in every school in Cambodia. Because it is Laws.

1. Private Limited Company
and
Corporation
Sun Samnang, LL.M
January, 2014

2. Limited Liability Company
• What is Limited Liability Company?
• How it is different from partnership? What
about corporation?
• In Cambodian law, the classifications are
as of Private Limited Liability and Public
Limited Liability

3. • What would be the reasons to forming this
kind of company as compared to
partnership and corporation?
• Is that because shareholders want just to
invest with some amount, which is the only
obligation/liability?

4. What is requirement?
“The company may have 2 to 30
shareholders. However, one person may
form a company called single member
private limited company. The requirements
of a single member private limited
company are the same manner as a
private limited company except the
relationship of shareholder to one another”
Art. 86

5. “The company may not offer its shares or
other securities to the public generally, but
may offer them to shareholders, family
members and managers
And the company may have one or more
restrictions on the transfer of each class of
its shares.” 86

6. “A private limited company shall have one
or more directors”. Article 118

7. • What about Public Limited Liability?
“A “Public Limited Company” is a form of a
limited company that is authorized by this
Law to issue securities to the public” 87.
What is “Securities”?

8. “Security" means
(a) a share of any class or series of shares
of a company,
(b) a bond,
(c) includes a certificate evidencing a
security.

9. What is share?
Each share shall be in registered form. Each
share has a par value and the company
shall not issue any share at a price, which is
less than the par value. The rights, privileges,
restrictions and conditions attaching to the
shares of each class shall be set out in the
articles.

10. If the articles fail to provide the number and
price attached to the shares, the company
shall issue a minimum of one thousand
(1,000) shares with a par value of not less
than four thousand (4,000) Riels per share.

11. • Generally there are two kinds of stock:
Common stock and Preferred stock
The common stock holders usually have
Voting Right, that means holders can
influence the corporation through their vote.
They also have Preemptive-right

12. What is Preferred stock?
Preferred stock holder does not have voting
right but carries priority in dividend and
liquidation and the stock is convertible

13. What about Bond?
Bond is like a loan: the issuer is the
borrower (debtor), the holder is the lender.
Bond and stock are both securities, but the
major difference is stockholders have a
equity stake (they are owners), whereas
bondholders have a creditor stake (they are
lenders)

14. How do you acquire shares?
1) Subscription (buying)
2) Transfer (shares are transferable with
restriction that share is usually
transferred to other shareholder first).

15. About Corporation
• Corporation is an artificial being, created
by the law, that is corporation exists as a
person, separate and distinct from the
persons who own the corporation
What does it mean?
Corporation continues even death of its
owners

16. • Property owned by the corporation is not
owned by the persons who owns shares in
the corporation, but by corporation
• Debt of corporation are debts of this
artificial person, not of the persons running
it or owning shares in it.
• Separate taxpayers

17. • Corporation can sue or be sued in its own
name with respect to corporate rights and
liabilities, but the shareholders cannot sue
on behalf of corporation unless the
corporation refuses to sue.
Can shareholders be sued as to corporate
liabilities? Or personally liable for
corporation debt?

18. Disregarding the corporate entity
• One of the basic advantages of the
corporate form of business organization is
the limitation of shareholder liability.
• Corporations are formed for the express
purpose of limiting one’s risk to the
amount of his investment in the stock.

19. How is it formed?
Article 91: Creation of Limited Company
One or more competent natural persons or
legal persons may create a limited company
by filing articles of incorporation with the
Director of Companies.

20. Actors in Corporation
• Shareholders
• Boards of Directors
• Officers

21. Shareholders
Board of Directors
Officers

22. Who is Shareholder?
• Why people choose to invest in
corporation, rather than just having his
own business or forming partnership?
• Do you see any advantage or
disadvantage of investing in corporation?
Or any other kinds of business form?

23. • Shareholder or stockholder is an individual
or institution that legally owns one more
shares of stock in a corporation.
Shareholders own the stock but not in the
corporation itself.
• What rights do they have?

24. • Rights to sell their share, provided there
is buyer
• Right to vote on directors
• Right to purchase new shares
• Right to what assets remains after a
liquidation

25. Board of Directors?
• Who are they? What do they do?
• Directors are elected by shareholders.
They attend meeting, exercise judgment,
vote and direct management, and jointly
oversee the activities of the corporation.

26. Who can be directors?
• Anyone who is at least 18 years old
• Do you have to be a shareholder to be a
member of board of directors?
• The law requires to have at least 3
members with 2 year mandate

27. Officers?
• They generally are people responsible for
management of business and daily
activities of corporation. Their titles vary
depending on corporation. Examples are
President, Chief Executing Officer (CEO).
Chief Accounting or Administrative Officer.

28. Article 101: Nationality
• A company shall be deemed to be of Khmer
nationality only if:
(a) The company has a place of business and a
registered office located in the Kingdom of
Cambodia;
(b) More than 51% of the voting shares of the
company are held by natural or legal persons of
Khmer nationality.

29. What is Bylaw?
• A rule of governing and managing the
affairs of the corporation. Bylaw contains
provisions establishing the corporate seal
and the form of stock certificate, the
number of officers, and directors, the
method of electing them and removing
them from the office.

30. • Bylaws specify the time and place of the
meetings of the directors and
shareholders.

31. Article of Incorporation?
a) The name of the company.
(b) The company's Registered Office in the
Kingdom of Cambodia.
(c) The objectives of the company and any
restrictions on the business that the company
may carry on.
(d) Company objectives may include one or more
types of businesses not contrary to any provision of
law.