The New Online Registration System

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160627 - b2b - article - The New Online Registration System

Cambodia currently ranks 180 out of 189 countries in the category “starting a business” on the World Bank’s Ease of Doing Business Rank, meaning that registering your business is more cumbersome in Cambodia than in the great majority of other countries. In its Doing Business 2016 Report, the WB estimates that it takes an average of three to four weeks to register a company in the Kingdom.

This might seem like awfully depressing news for any aspiring entrepreneur with eyes set in the Kingdom, but the situation is not quite as bad as one would think judging from Cambodia’s WB ranking. This ranking is based on figures collected prior to June 2015. Fortunately, since then, Cambodia has completely overhauled its business registration system, introducing, to much fanfare, a new online system on January 4, 2016.

In the mood for automatisation

The new system was launched by the Ministry of Commerce (MoC) last December, and fits right in with other governmental efforts to automatise bureaucratic procedures. An example of this drive is 2014’s launch of a new online tax registration portal:

https://cambodia.tax.gov.kh/reg/

Perhaps this current mood for automatisation is best described in the words of Bretton Sciaroni, one of Cambodia’s most prominent lawyers: “By taking individual officials out of the equation, by limiting personal contact with taxpayers, the system will become more transparent and accountable,” Sciaroni acknowledged during an interview with B2B.

Experts agree the new online registration system will make the whole process more transparent and efficient. Blaise Kilian, Advocacy Manager at the European Chamber of Commerce in Cambodia (EuroCham) believes the new system represents a bold reform: “It should help to further formalise the economy and reduce non-transparent practices.”

Former Minister of Commerce Sun Chanthol, in an interview for The Cambodia Daily, praised the system, saying that it will make the country more attractive to investors.

“It will eliminate face-to-face interactions between government officials and business people and reduce the role of the brokers who previously guided applicants through the complex registration process. I am confident that Cambodia would be able to significantly improve on its WB score with its revamped registration process, which now takes only about an hour,” Chanthol said.

Despite the high expectations, however, the number of businesses that have used the online system so far has fallen short of expectations, prompting the government to extend the re-registration deadline in several occasions, the last one setting the deadline on June 30. A number of technical difficulties have been reported by users of the new system, leading to delays and even deadlocks in the completion of re-registrations.

One such difficulty, as confided to B2B by users of the system, is the lack of options to make the online payments required to register your company. As of right now, only ACLEDA Bank account holders can carry out the payment of the service fees online. Those who do not have an ACLEDA Bank account must go to the physical branch of one of the three banks authorized by the MoC to process the transaction (see section on Processing payments).

Registering your company for the first time

According to the Law on Commercial Enterprises and the Law on Commercial Rules and Commercial Register, all Cambodian business set up after January 4, 2016 are obliged to register using the new online registration system. To access it, visit the following website:

www.businessregistration.moc.gov.kh

Keep in mind, that once you start your application you have 15 days to complete it; if you don’t complete it within that time frame, it will be removed from the system.

Re-registering your company

Businesses already registered prior to January 4, 2016 had to re-register using the new online system (as stipulated in Prakas 300 on Company Re-registration through Automation System). The deadline to carry out the re-registration was initially set for March 31, and subsequently extended several times. The latest deadline by which companies must begin their re-registration is June 30. The MoC has threatened penalties for those companies that fail to begin their online re-registration by this date. Just what these penalties might be remains unclear.

The process

Registering your business using the new online system is straightforward and relatively simple if you have all the required documentation and information prepared beforehand. The process can be broken down into four main steps:

  1. Go to the website (www.businessregistration.moc.gov.kh) and create a user account
  2. Reserve a company name: you will need to know the name of your company in both English and Khmer (see section Choosing a Khmer name for your company). Also keep in mind that you will need to pay a service fee to reserve the company name.
  3. Register your company: here you will be asked to pay a second service fee
  4. Print certificate of incorporation

For an easy-to-follow, step-by-step guide, see this video created by the MoC:

https://www.youtube.com/watch?v=L_rHsL2GuOg

Required information

You will need to know the following information to register your business. To speed things up, have it ready before you begin the registration process:

  1. Name of your company in both English and Khmer
  2. Your company’s single share value

Choosing a Khmer name for your company

In talks with B2B contributors, the issue of selecting a suitable Khmer name repeatedly came up. Indeed, this seems to be one of the biggest roadblocks in the whole process. A number of our contributors complaint that the Khmer name they submitted was rejected, often multiple times. The MoC rejected the Khmer names on the grounds that they did not have the same meaning than the English names that were submitted alongside.

To avoid lengthy delays in the registration process, the B2B team recommends those interested in registering a business to resort to a specialised consultant with ample experience dealing with government ministries. Keep in mind that you only have 15 days to finish the registration once you get started, so you do not want to waste time submitting a Khmer name for your company multiple times.

Required documents

You will be asked to upload digital copies of the following documents:

  1. Proof of identification: you can use a valid passport or a Khmer ID card issued by the government
  2. Proof of company location: this can be a utility bill, a rental agreement or a land title
  3. Proof of certificate of incorporation of parent company (if your company is owned by another company)
  4. Letter declaring that you have no criminal record: this letter must be signed by a director of the company
  5. List of staff: this list must note the total number of male and female employees, as well as the number of local and foreign staff
  6. Company’s memorandum and articles of association

Processing payments

Three banks are authorized by the MoC to process the payment of fees for the registration of businesses, namely ACLEDA Bank, FTB Bank (Foreign Trade Bank of Cambodia), and Canadia Bank. To pay the service fees involved in the registration process you need to have an account in one of these banks. If you do not have an account in one of these banks, you will not be able to register your business.

Only ACLEDA Bank account holders will be able to pay the fees online. The rest must go to the physical branch of one of the banks mentioned above to complete the payment.

Registering a business costs 1,720,000 riel (about $430). For more information on processing your payment for the online registration system, please read through Prakas 299 on Business Registration through Automation System.

 

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