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Cambodia Investment Update for July 2016 

Published: August, 2016

Submission: August, 2016

 



Implementation of Prakas on minimum registered capital of banking and financial institutions,Circular № B7-016-117 C.L, dated 16 June 2016


This Circular, issued on 16 June 2016, aims at implementing Prakas B7-016-117 on Minimum Registered Capital of Banking and Financial Institutions (“BFIs”), dated 22 March 2016 (“Prakas B7-016-117”), in relation to procedures for increasing the minimum registered capital requirements of BFIs.


According to this Circular, BFIs must increase their capital by half of the difference between their current registered capital and new minimum registered capital, at the latest by end of March 2017 and in full by 22 March 2018. In order to do so, BFIs are required to submit a number of documents to the National Bank of Cambodia (“NBC”) no later than six (6) months after the signing date of this Circular.


Any BFIs unable to meet these new requirements must select one of the following procedures:


  • Finding new potential investors;
  • Merger or acquisition;
  • Change of its legal status; or
  • Voluntary liquidation.

In terms of procedures for increase of minimum registered capital of BFIs set forth in the Circular, the NBC has taken into consideration the investment grade of the parent company for the injection of capital by BFIs as follows:


  • Commercial bank incorporated as foreign branch, whose parent bank is rated “investment grade” shall have a minimum registered capital of KHR 200,000 million (equivalent to USD 50 million), and KHR 300,000 million (equivalent to USD 75 million) if its parent bank is not rated investment grade.
  • Commercial bank incorporated as foreign subsidiary shall have a minimum registered capital of KHR 300,000 million (equivalent to USD 75 million) regardless of investment grade of parent bank and/or their parent bank owns 100% of the shares of the commercial bank.
  • Commercial bank and specialized bank locally incorporated, micro finance-deposit taking institution, and micro finance institution shall have a minimum registered capital as determined in the Prakas No. B7-016-117, regardless of investment grade.

The investment grade of the parent bank is to be as determined by at least one of the following international independent rating agencies: Moody’s Investor Services, Standard & Poor’s, Fitch or other international independent rating agencies recognized by the NBC. Ratings submitted to the NBC must not be older than one (1) year. Circular No. B7-010-001 CL, dated 7 July 2010, on Investment grade, is repealed after the effective date of this Circular.


Visas


  • The formalities on permission for non-immigrant foreigners to enter, exit and stay in Cambodia,Sub-Decree № 123, dated 10 June 2016

To strengthen the management of non-immigrant foreigners, the Royal Government of Cambodia has issued Sub-Decree 123 concerning permission for non-immigrant foreigners to enter, exit and stay in Cambodia. Non-immigrant foreigners who wish to enter Cambodia must apply for a visa at a Cambodian Embassy or Consulate, international border or online (for tourist visa).


This Sub-Decree introduces significant changes regarding visa types. While under the previous regulation, there were only 7 visa types including Diplomatic Visa (A), Official Visa (B), Courtesy Visa (C), Tourist Visa (T), Passing-through Visa (D), Ordinary Visa (E) and Special Visa (K), Sub-Decree 123 extends the visa types to long-term Ordinary Visa (E1, E2 and E3), ACMECS Visa (KHM) and long-term Tourist Visa (T1, T2 and T3).


Previously, when a Visa E was extended for long-term stay, the Visa E holder would obtain a general Visa E. However, under Sub Decree 123, when being extended, an Ordinary Visa (E) is specifically classified into various types according to the purpose of the stay. For instance, the relevant visa extension types for business related purposes are Visa EB(for employees/labourers or merchants), Visa EG(for general non-immigration foreigners), Visa EP(for non-immigrant foreigners who wish to study business), Visa ER(for non-immigrant foreigners who are retired), Visa ET(for technical personnel) and Visa E1EX,E2EXand E3EX(for merchants who obtain Visa E1, E2 and E3 in accordance with the government’s policy). This Sub-Decree also specifies clearer requirements for the documents required to be submitted for each type of visa.


The penalty for non-immigrant foreigners who overstay their visa for up to 30 days increases from USD 5 to 10 USD per day. Those who overstay in Cambodia by more than 30 days will be required to leave Cambodia within 7 days. Those who use a visa for a purpose not permitted under such visa will be fined USD 100 and ordered to leave Cambodian within 7 days. In serious cases, those who do not comply with the above are required to pay double penalty and be deported from Cambodia.


Labour law enforcement


  • Joint Prakas № 659, dated 06 June 2016, on monetary fines for those who violate the labour law

The Ministry of Labour and Vocational Training (“MLVT“) and the Ministry of Economy and Finance issued joint Prakas № 659 on 6 June 2016 that lists 105 labour law offences with accompanying monetary fines.


The monetary fines are categorized into two (2) types of jurisdiction: (i) monetary fines under the MLVT’s jurisdiction; and (ii) monetary fines under the court’s jurisdiction. In the table below, we highlight certain offences related to labour registration obligations:




Description


Daily Wage


(Khmer Riels)


Fine by MLVT



Fine by Court Decision


Number of days for fine


Amount of fine


(Khmer Riel)


Number of days for fine


Amount of fine


(Khmer Riel)


1


2


1 x 2


4


1 x 4


Failure to declare opening and closing of enterprise


40,000


63


2,520,000


61 – 90


2,440,000 – 3,600,000


Failure to register enterprise establishment book


40,000


21


840,000


10 – 30


400,000 – 1,200,000


Absence of payroll leger


40,000


63


2,520,000


61 – 90


2,440,000 – 3,600,000


Failure to declare staff movement (in) and (out)


40,000


42


1,680,000


31 – 60


1,240,000 – 2,400,000


Failure to apply for visa-in or visa-out in work book for entry or departure of Cambodian employees


40,000


21


840,000


10 – 30


400,000 – 1,200,000


Failure to conduct election of staff representative(s) (shop steward) or comply with election procedure of staff representative(s)


40,000


63


2,520,000


61-90


2,440,000-3,600,000


Failure elect staff representative(s) and their deputy (ies) for next mandate


40,000


63


2520,000


61-90


2,440,000-3,600,000


Absence of internal regulations


40,000


21


840,000


10 – 30


400,000 – 1,200,000


Failure to obtain approval of quota for employing foreign employees


40,000


63


2,520,000


61 – 90


2,440,000 – 3,600,000


Hiring foreign employees without valid work permits


40,000


63


2,520,000


61 – 90


2,440,000 – 3,600,000


DFDL contact:
Alex Larkin
Senior Consultant
[email protected]


*The information provided 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.


 


 

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