Understanding the New Company Secretary Regulations in Cambodia

What Businesses Need to Know

The Ministry of Commerce in Cambodia is set to enforce new regulations around the role of company secretaries, a significant step towards improving corporate governance. These changes align Cambodia more closely with international standards, ensuring greater accountability and transparency in businesses operating within the country. However, with these new rules come questions about how businesses should prepare, especially since the role of a company secretary may be unfamiliar to many local companies.

This article provides a comprehensive overview of the new regulations, what they mean for businesses, which types of companies are affected, and practical advice for compliance.

I'll also share insights on how engaging an independent director, such as myself, can help businesses navigate these changes effectively.

The New Legal Requirements: Understanding the Amendment

On 29 January 2022, Cambodia introduced amendments to the Law on Commercial Enterprises. Under this amendment, all registered companies are now required to appoint a company secretary. The key provisions include:

• The company secretary must be a natural person with a permanent residential address in Cambodia.
• The individual does not need to be a Cambodian national but must reside in the country.
• The company secretary is responsible for maintaining statutory records, ensuring compliance with legal requirements, and providing governance advice.

The intent behind these changes is to raise the standards of corporate governance, aligning Cambodia’s practices with those in more developed markets. By doing so, Cambodia aims to attract foreign investment and enhance the credibility of its business environment.

Key Responsibilities of a Company Secretary

The role of a company secretary is crucial for ensuring a company’s compliance with statutory requirements. The primary responsibilities include:

1. Ensuring Statutory Compliance: This involves filing annual returns, updating changes in the company’s structure, and ensuring all necessary documents are submitted to the Ministry of Commerce on time.
2. Board Meeting Administration: Preparing agendas, circulating meeting notices, and accurately recording minutes are vital functions of the company secretary.
3. Maintaining Corporate Records: The secretary must keep accurate registers of members, directors, and shareholders, ensuring that all records are up to date.
4. Advisory Role on Governance: Providing guidance to the board on matters related to governance, ethics, and compliance.

Which Companies Are Affected?

The requirement to appoint a company secretary applies to all limited liability companies registered in Cambodia. This includes:

• Large Corporations: Public companies and substantial private firms are expected to comply immediately.
• Medium-Sized Enterprises: Companies with significant foreign ownership or those involved in international operations are also required to appoint a company secretary.
• Foreign-Owned Companies: Businesses with foreign investments will be scrutinised to ensure they meet these new governance standards.

Implementation Timeline

While the Ministry of Commerce has not specified an exact enforcement date, it is expected that companies will need to comply within the next 12 to 18 months. Early compliance is advisable, as companies that proactively adapt to these requirements will gain a competitive edge.

Advice for Businesses: Preparing for Compliance

Here’s how companies can start preparing to comply with the new regulations:

1. Assess Your Current Governance Structure Conduct a thorough review of your existing governance policies to identify any gaps in compliance, particularly regarding documentation and record-keeping.
2. Appoint a Company Secretary It is essential to appoint someone who has experience and expertise in corporate governance. This individual can be an internal employee or an external consultant with relevant expertise.
3. Leverage External Expertise For companies that may not have the capacity to hire a full-time company secretary, engaging an independent consultant can be a cost-effective solution. Outsourcing this role ensures compliance without the overhead of a permanent hire.
4. Develop a Compliance Checklist Create a checklist to monitor statutory obligations such as document filings, board meeting protocols, and record maintenance.
5. Utilise Technology for Efficiency Governance software can automate compliance processes, making it easier to manage statutory requirements and reduce the risk of human error.

Potential Liability Issues for Company Secretaries

The role of a company secretary carries significant responsibilities, and failing to fulfil these can result in legal and financial liabilities. Below are key liability issues to consider:

1. Breach of Statutory Duties: Failure to file documents on time or maintain statutory records can lead to fines and penalties. The company secretary may be personally liable if proven negligent.
2. Inaccurate Board Meeting Records: Incorrect or incomplete documentation of board meetings can result in disputes or regulatory challenges, potentially exposing the company secretary to legal action.
3. Failure to Maintain Corporate Records: If statutory registers are not kept up to date, the company may face penalties, and the company secretary could be held accountable.
4. Breach of Confidentiality: Company secretaries handle sensitive information. Any unauthorised disclosure can lead to legal consequences, including claims for damages.
5. Negligence in Advising the Board: If a company secretary fails to provide accurate advice on governance matters, they could be liable for any resulting financial losses.
6. Conflicts of Interest: Company secretaries must act in the company’s best interest. Failure to disclose conflicts of interest can lead to legal actions and financial penalties.
7. Personal Liability for Non-Compliance: In cases where non-compliance is due to deliberate negligence, the company secretary may face personal fines or even criminal prosecution.

Supporting Businesses as an Independent Director

Navigating these new regulations can be challenging, especially for companies that are not familiar with the company secretary’s role. With my experience in governance, I can support businesses in navigating compliance more effectively.

How I Can Assist:

1. Interim Company Secretary Services If your company is not ready to hire a full-time company secretary, I can serve as an interim secretary to manage board meetings, maintain records, and ensure compliance.
2. Governance Advisory Services Drawing on my experience, I provide tailored governance advice, helping companies prepare and put in place effective compliance frameworks. This includes creating governance policies, protocols, and board procedures.
3. Board Support as an Independent Director I can serve as an independent director, offering guidance on strategic governance, risk management, and compliance to ensure your board functions effectively and adheres to the highest standards.

Conclusion

The introduction of company secretary regulations marks a new chapter in Cambodia’s corporate governance landscape. For businesses, this presents both challenges and opportunities to strengthen governance practices, increase transparency, and build trust with stakeholders.

By taking proactive steps to comply, companies can not only avoid potential penalties but also position themselves as leaders in governance excellence. Engaging an experienced independent director can be a strategic way to navigate these changes and ensure compliance.

Next steps

Let’s work together to ensure your business stays ahead of these regulatory changes.

If your company needs support in understanding and implementing these new company secretary requirements, download my complimentary Governance Guide or connect with me here on LinkedIn.

My name is Trevor Sworn from Enduring Leadership.

With 25 years of experience in governance and leadership in Cambodia, I offer tailored solutions to help your business comply with Cambodia's latest regulations.

Whether you need interim company secretary services, governance advisory, or board support, I’m here to guide you every step of the way.