Closing Down a Business In Cambodia


There’s more involved to closing down a business than many people think.

“It’s probably the same amount of work to wind a business down as it is to start,” says Jim Swander of AmCham, the American chamber of commerce in Cambodia. “A lot of people just walk away.”

While it might be tempting to flee into the night, especially if you’re facing a mountain of debt, it’s not a good idea. The Council for the Development of Cambodia has warned companies they must close down according to the law. If they don’t declare bankruptcy or formally dissolve, they leave behind a legal entity, a “ghost company” that can be sued even though there might not be any remaining assets. Directors and shareholders can be personally liable for unpaid taxes, not to mention fines.

The process starts by notifying the Commerce Ministry and the company’s creditors about the intent to dissolve, including publishing newspaper notices. A company can face court supervision of the liquidation if it does not properly satisfy all its obligations. Those include paying employee salaries, outstanding debts and due taxes. The legal entity continues to exist until the date shown on a certificate of dissolution, issued by the Commerce Ministry. In addition, an official audit by the Department of Taxation is often necessary and can be costly.

A proper shutdown process will give creditors and customers clear notice of a business closure, an important step toward limiting the amount of time owners may be subjected to lawsuits. The order in which you notify people of your intention to quit can affect your ability to make the most of the last weeks or months and depends on whether it’s necessary to sell inventory, keep employees on, continue buying supplies, and so on. For example, if a restaurant needs goods from its supplier until the end, the owner should wait until the last week to break the closure news.

While it all may sound daunting, “it’s easier in Cambodia than in other countries in the region,” says Sheila Scopis from EuroCham Cambodia.

Alain Dupuis, who has a long entrepreneurial track record in Cambodia and abroad, agrees. When a hotel project in Siem Reap failed, he wound it up by paying his creditors, paying an indemnity, cancelling the lease, and walking away. He didn’t face tax obligations since it was a money-losing venture.

“The government has a strong desire to make it easy for investors,” he says—even those who stumble.


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