MOIC Clarifies Penalties for Violations of the Enterprise Law

Overview

On 13 May 2026, the Ministry of Industry and Commerce (“MOIC”) issued Decision No. 1338 (the “Decision”) to strengthen enforcement of the Enterprise Law by introducing clear fines and administrative measures for non-compliance. The Decision enters into force on 27 June 2026.

The Decision covers 17 categories of violations across:

• Enterprise registration and licensing
• Corporate governance
• Corporate record-keeping
• Ongoing compliance obligations

In addition to fines, authorities may impose disciplinary measures, including:

• Warning and educational measures
• Memorandum of compliance (with rectification deadlines)
• Suspension of the Enterprise Registration Certificate (“ERC”)

Key Compliance Risks

1. Enterprise Registration and Licensing

• Operating without enterprise registration: up to LAK 20 million (repeat violations)
• Unauthorized use of ERC: up to LAK 50 million
• Use or production of falsified ERC: LAK 20 million per violation
• Operating without sectoral license: no fine under this Decision, but escalated to relevant business sector authority

Strong enforcement against informal or nominee structures and misuse of licenses.

2. False Information & Disclosure Failures

• False or non-compliant submissions:
  • LAK 10–20 million (higher if nominee/shareholding misrepresentation)
• Failure to update ERC changes within 30 days:
  • LAK 2 million
• Public company non-compliance:
  • LAK 5 million
• Dissolution without notification:
  • LAK 1 million

Implication: Increased scrutiny on beneficial ownership transparency and timely regulatory updates.

3. Operational Compliance (Signage & ERC Use)

• Failure to display/remove company sign: up to LAK 2 million
• Use of ERC during suspension: LAK 2 million
• Potential ERC suspension for repeated non-compliance

Implication: Even minor operational breaches may escalate into license suspension risk.

4. Corporate Governance

Common penalties (LAK 1 million per violation) for:

• Failure to maintain articles of association
• Failure to hold annual general meeting
• Failure to issue share certificates
• Failure to appoint board of directors/auditor (for large companies having more than LAK 50 billion in assets)
• Failure to maintain statutory reserve
• Failure to maintain shareholder and director registers

Implication: Authorities are formalizing enforcement of basic corporate governance practices, especially for larger entities.

Enforcement Approach

The Enterprise Registration Officers of the MOIC (“ERO”) will apply a multi-channel enforcement mechanism:

• Complaint-based review:
  For serious violations (false information, falsified ERC, unauthorized use)
• Application-triggered review:
  During amendments, dissolution, or filing processes (no additional documents required)
• Inspection-based enforcement:
  For all other violations under formal inspection procedures
• Internal oversight:
  ERO may be investigated and disciplined for improper conduct

Key Recommended Actions

• Conduct enterprise compliance health check, focusing on:
  • ERC information accuracy and updates
  • Corporate governance documentation
  • Register maintenance
• Review and confirm beneficial ownership structure
• Ensure timely notification of changes (within 30 days)
• Maintain proper signage and licensing compliance
• Prepare for possible inspections and document readiness

VDB Loi regularly advises and assists clients on corporate and compliance matters in the Lao PDR, including enterprise registration, amendments to corporate records, preparation of constitutional and corporate documents, compliance reviews, and remedial actions to mitigate the risk of fines and other regulatory measures.

Should you have any questions regarding the above regulation, or require assistance in assessing your compliance status and addressing potential non-compliance issues, please contact the undersigned or your usual VDB Loi adviser.