The Ministry of Commerce steps up fines for failing to file corporate changes and for unlicensed e-commerce activities

On 12 May 2021, the Ministry of Commerce (“MOC”) and the Ministry of Economy and Finance (“MEF”) issued joint Prakas No. 316 on Monetary Fines under the MOC’s Jurisdiction (“Joint Prakas 316”), introducing hefty fines for not registering corporate changes, the annual declaration of commercial enterprise (“ADCE”), financial statements, or trademark renewals, and for conducting unlicensed e-commerce activities.

The Joint Prakas 316 already went into effect on 26 May 2021 and abrogates provisions of other laws that are contrary to it. It clearly specifies the monetary fines applicable to certain issues of non-compliance with the Law on Commercial Rules and Registrar, the Law on Marks, Tradenames, and Acts of Unfair Competition, the Law on Commercial Enterprises (“LCE”), and the Law on E-Commerce, as well as other legal regulations in force that are under the jurisdiction of the MOC.

The list of infractions and monetary fines is as below.

No.	Description of infraction	Monetary fine (KHR)
1	Failure to register corporate changes with the MOC	1 million (approx. US$250)
2	Failure to file an ADCE	2 million (approx. US$500)
3	Provision of inaccurate information and forged documents for any type of registration	1 million (approx. US$250)
4	Conducting e-commerce activities without a license	10 million (approx. US$2,500)
5	Provision of inaccurate information in reports, minutes, or other company documents that are required to be filed with the MOC	2 million (approx. S$500)
6	Failure to file financial statements with the MOC for its records	2 million (approx. US$500)
7	Applying for trademark renewal more than six months after the deadline	200,000 (approx. US$50)

All of the filings above can be done through the MOC’s online system except for item 4.

For e-commerce business licenses, which is a new requirement, we understand that the relevant legal framework, including the types, formalities, procedures, documents required, and timeline for issuance of the license are in place. However, the online system for license applications has not yet been finalized, and it is not possible to apply in person. Thus, there are still some points that are unclear: Is there any grace period for companies to obtain the license while the MOC does not have a system in place to grant the license? How will the MOC detect whether a company has a license and impose penalties for non-compliance? Will it conduct periodic checks of all companies?

With respect to the filing of financial statements, it is not clear what types of companies are subject to this requirement. Based on a strict application of Article 228 of the LCE, only public limited companies that issue securities or bonds to the public are required to file a copy of their financial statements with the MOC. However, per our informal inquiry with the MOC, all public limited companies, including non-listed companies, that are operating in the insurance, finance, and securities sectors must comply with this requirement. Joint Prakas 316 does not expressly indicate the details of the filing process, requirements, cost, or timeline to complete this filing. However, our informal discussion with the MOC suggests that the filing can be done at the same time on the same platform as the filing of the ADCE. When filing financial statements via the online system, companies must declare and represent that all of the information and documents submitted are true and accurate, and that they understand that the submission of any misleading information could result in the MOC de-registering the company from its registrar.

Please note that all companies registered with the MOC online system will receive an email notice to file their ADCE on annual basis and that would be the time to file their financial statements as well.  

If you have any questions regarding this update, or would like us to assist with your company’s compliance to avoid any possible penalties, please contact your usual VDB Loi adviser.

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