Streamlined Process for Business Mergers Introduced in Cambodia’s New Sub-decreeMay 3, 2023
On 6 March 2023, the Royal Government of the Kingdom of Cambodia issued a Sub-Decree on the Requirements and Procedures for Business Combinations (the “Sub-Decree”), which will be enforced in six months. Its enactment is part of the government’s efforts to improve and strengthen the enforcement of the Competition Law. The aim of the Sub-Decree is to ensure stability and fair competition in the Cambodian market. It applies to all business combinations, whether they take place in or outside of Cambodia.
The Sub-Decree outlines the requirements and procedures for mergers and acquisitions, which include a pre- and post-merger notification process and the potential for the issuance of an Advance Ruling Certificate (“ARC”). More details will be determined by the Cambodia Competition Commission (“CCC”) at a later date.
The thresholds for business combinations that will be subject to the requirements under the Sub-Decree are as specified in Prakas 095 on the Thresholds for Pre-Notification Requirements in Regard to Business Mergers dated 14 March 2023, as shown in the table below.
|Type of merger||Parties’ total assets for the previous financial year||parties’ total revenue for the previous financial year||Total value of the parties’ purchase orders for the previous financial year||Business merger transaction value|
|Business merger with a financial institution as a party||US$1,125M||US$105M||US$950M||US$30M|
|Business merger with an insurance or securities institution as a party||US$250M||US$70M||US$205M||US$15.25M|
The pre-merger process specifies that upon receiving notification of the planned merger from the parties, the CCC will have seven working days to verify it and 30 working days from the notification submission date to conduct a preliminary review. If there are no comments from the CCC after the 30 working days, the parties can assume that there will be no second review, and go forward with the transaction.
However, if the transaction is subject to a second review, the CCC will provide a notice with details and a timeline for the submission. The CCC will have 60 working days from the second submission to review the application, with two possible extensions of 30 working days each if necessary. If the CCC requests additional information, it can suspend the review until such request is satisfied.
Some transactions, such as intra-group transactions and those approved by the Royal Government, may be eligible for simplified notifications. Other classes of transactions to be determined by the CCC may also be eligible for simplified notifications.
Lastly, parties to a transaction subject to pre-merger notification are required to register their status within 30 days after substantive completion.
Article 12 of the Competition Law provides additional guidance on the granting of potential exemptions in relation to business combinations. The Sub-Decree clarifies the nature of efficiencies and benefits that will be considered in granting such exemptions.
Per the Sub-Decree, details on the post-closing merger notification process will be determined by a future Prakas and details on ARCs will be specified in a decision by the CCC, which at the time of writing, had not yet been issued. However, the Sub-Decree does clarify that the issuance of an ARC will satisfy the applicable notification obligations and provide immunity from the transaction being challenged under Article 11 of the Competition Law within one year of the ARC’s issuance based on the same information and documents under which the certificate was issued.