5 July 2023

CAMBODIAN GOVERNMENT ISSUES SUB-DECREE TO IMPLEMENT

THE 2021 INVESTMENT LAW
KEY FEATURES HIGHLIGHTED

On 26 June 2023, the Cambodian Government issued Sub-Decree No 139, which details the
procedural aspects for implementing the new Investment Law.
The Law on Investment, which was promulgated on 15 October 2021, is designed to accelerate industrial
diversification across all levels of the Cambodian economy and improve the country’s international
competitiveness in attracting both foreign and domestic investment. The new law is also a key element
of the government’s strategy to see Cambodia become an “upper-middle income” economy by 2030.
Sub Decree No. 139 sets out the procedural rules and regulations for implementing the 2021 Law on
Investment.
Highlighted features of the Sub Decree No 139 include:

• A comprehensive list of business activities categorized in a triple-tiered series for receiving basic tax
incentives, additional incentives, and special incentives provided under the Law on Investment.
Group 1 activities are eligible to receive the highest investment incentives and include industry
sectors that are earmarked as priority sectors for the Cambodian government. The detailed list of
Group 1, Group 2, and Group 3 investment activities are provided as Appendix 2 of Sub Decree No.
139.
• An exhaustive negative list that details the business activities that are not eligible for receiving any
investment incentives.
• A new administrative process for the registration of investment projects and application of
investment incentives.

• Provision of investment maintenance services by the Cambodian Development Council (CDC) and its
subordinate agency to facilitate investment project implementation and to find solutions to
investors' challenges at all stages of the implementation of investment projects.

BUN Youdy, Managing Partner, Bun & Associates, commented:

‘The issuance of the Sub Decree is an important step and supports the positive development under the 2021
Investment Law framework in strengthening investors’ confidence and making the Cambodian market more
accessible. ‘Ease of doing business’ is a primary concern in every jurisdiction, especially for foreign investors.
AN INTRODUCTORY GUIDE TO
CAMBODIA'S COMPETITION
REGIME

Part one
BUSINESS COMBINATION
NOTIFICATION REQUIREMENT
Chapters:
1. Applicable Legal Framework and Competent Authority
2. What is a Business Combination?
3. When is a Business Combination Subject to a Filing
Requirement?
4. Is there any Post-Completion Registration Requirement
for Business Combinations?
5. Penalty, Remedy and Sanctions
AUTHORS:
BUN Youdy | Managing Partner
SIN Sokanha | Of Counsel
NGORN Rothna | Senior Associate

1. Applicable Legal Framework

and Competent Authority
Applicable legal framework • Decision No. 179 on the Formalities and
Procedures for the Issuance of Advance
The primary legal instrument governing Ruling Certificates
competition-related matters in Cambodia is
the Competition Law of 2021. This law came Competent Authority
into effect on 6 October 2021 and broadly
prohibits Business Combinations that The Competition Commission of Cambodia
significantly prevent, restrict, or distort (CCC) is responsible for the administration,
competition in any Cambodian market, implementation, and enforcement of the
whether inside or outside Cambodia. Competition Law and its subordinate
regulations, including Sub-Decree No. 60. As
On 6 March 2023, the Royal Government of an independent governmental body
Cambodia issued Sub-Decree No. 60, which established under the Competition Law, the
guides the requirements and procedures for CCC has the power to investigate, examine,
Business Combinations. In particular, this Sub- and approve or prohibit Business
Decree provides for three types of filings for Combinations and other anti-competition
proposed Business Combinations: (1) Pre- practices.
Completion Notification, (2) Filing for Advance
Ruling Certificate, and (3) Post-Completion In fulfilling its functions, the CCC is assisted by
Notification. the Consumer Protection, Competition, and
Fraud Repression Directorate-General (CCF-
On 14 June 2023, the Royal Government of DG), which acts as its secretariat. The CCF-DG
Cambodia adopted three additional receives filings for Business Combinations and
regulations to detail the different types of written complaints from third parties
filings further: regarding alleged anti-competitive offenses.

• Prakas No. 177 on the Requirements and Upon the CCC’s decision to open an
Procedures for the Registration of investigation, the CCF-DG is also responsible
Completion of Business Combinations for appointing investigating officers to look
Subject to Pre-Completion Notification into suspected anti-competitive offenses—per
the established investigation procedures
• Prakas No. 178 on the Procedures for Post- under the Competition Law.
Completion Notification for Business
Combinations
2. What is a Business
Combination?
According to the Competition Law, mergers
and acquisitions are referred to as "Business
Combinations." This term covers the following
transactions:

• Acquisition of right of control or voting right

through the purchase of shares or assets by
one person from another person or
• The combination of two or more persons to
jointly own an existing legal entity or create
a new one.

While not explicitly stated above, business

combinations may also cover joint ventures
and other similar arrangements.
3. When is a Business
Combination is Subject to a
Filing Requirement?
Sub-Decree No. 60 outlines three types of filings for proposed Business Combinations: (1) Pre-
Completion Notification, (2) Filing for Advance Ruling Certificate, and (3) Post-Completion
Notification.

Pre-Completion Notification Filing

Parties to a Business Combination must submit a Pre-Completion Notification to the CCC if they
meet any of the thresholds listed in the table below.

Industry Sectors Assets Sales Input Purchase Transaction Value

Threshold Threshold Threshold
Threshold
General Business USD 85 million USD 67.5 million USD 30 million USD 10.25 million

Banking or
USD 1.125
Financial USD 105 million USD 950 million USD 30 million
billion
Institutions

Insurance or
Securities USD 250 million USD 70 million USD 205 million USD 15.25 million
Business

The asset, sales, and input purchase thresholds apply to any party and its affiliates for the preceding
financial year.
Filing for Advance Ruling Certificate Post-Completion Notification

Suppose the threshold for Pre-Completion If none of the thresholds for Pre-Completion
Notification is met. Parties involved in a Notification are met, the parties involved in a
proposed Business Combination may apply for Business Combination still need to notify the
an Advance Ruling Certificate (ARC) from the CCC after completing the transaction if at least
CCC rather than filing a Pre-Completion 50% of any of the listed thresholds for Pre-
Notification. Completion Notification is met. It is important
Upon issuance of the ARC, the parties to the to note that these filing requirements, as
Business Combination will have the added stipulated in Sub-Decree No. 60, apply to all
advantage of completing the transaction Business Combinations, regardless of whether
without any challenges or rejections from the they occur in Cambodia or offshore. This is
CCC for up to one year from the certificate's particularly relevant if such Business
issuance date. Combinations will likely affect competition in
the Cambodian market.
Even if the threshold of Pre-Completion
Notification is not met, parties to a proposed
Combination Business may still apply for an
ARC. Similarly, the issuance of the ARC also
allows the Business Combination to be
completed without any challenges from the
CCC for up to a year.
4. Is there any
Post-Completion
Registration
Requirement for
Business
Combinations?
Parties to a Business Combination meeting the
Pre-Completion Notification threshold must
register with CCC within 30 working days of
substantive completion.

5. Penalty,
Remedy and
Sanctions
Suppose a Business Combination and the
parties involved do not comply with the
provisions of Sub-Decree No. 60. In that case,
they will be subject to penalties under the
Competition Law and other applicable
regulations. These penalties may include a
written warning and fines ranging from 3% to
10% of the parties' total turnover during the
violation period, which cannot exceed three
years. Additionally, the CCC has the authority
to impose further penalties for repeated
offenses in Cambodia, such as revocation,
suspension, or withdrawal of business
registration certificates or operating licenses.
 CAMBODIA’S COMPETITION AND MERGER
CONTROL REGIME (II)
AN INTRODUCTORY GUIDE ON THE INVESTIGATION OF ANTI-
COMPETITIVE AGREEMENTS AND CONDUCTS

________________________________________
Chapters:

I. Applicable Legal Framework and Competent

II. How an Investigation of Anti-competitive Practice is Initiated?
III. Investigation Process Flow Chart
IV. Anti-Competitive Practice Investigations: What Businesses Should Know?
V. Key Remarks
_____________________________________________________________________________________

I. Applicable Legal Framework and Competent Authorities

1. Applicable legal framework

The 2021 Law on Competition (“Competition Law”) provides for investigations into anti-competitive
agreements and conducts in Cambodia. It also broadly specifies the powers and obligations of the
competent authorities for conducting such investigations.

In late 2022, the Ministry of Commerce (“MOC”) adopted Prakas No. 226 on the Formalities and Procedures
of Inspection and Investigation under the Law on Competition (“Prakas No. 226”), which covers the
procedure for investigations into anticompetitive practices and also specifies the roles and responsibilities
of the competition authorities in detail.

2. Competent Authorities

Competition Commission of Cambodia and its powers

The Competition Commission of Cambodia (“CCC”) is the competition regulator of Cambodia, and it is
vested with broad powers under Prakas No. 226 to both investigate and adjudicate any suspected anti-
competitive practices.

CCC is empowered to review anti-competitive practice complaints and decide whether or not to commence
a preliminary examination. Based on the review of the preliminary examination report, the gathered
evidence and a quasi-judicial hearing by the Competition Case Committee (see below), the CCC decides
whether or not to conduct a full-fledged investigation.

CCC is empowered to issue interim measures to suspend any suspected anti-competitive agreement or
conduct if CCC deems such suspension is necessary:

o to prevent serious and irreparable damage to the economy or any person in Cambodia; or
o to protect the public interest at large.
Based on the investigation report, the gathered evidence and a quasi-judicial hearing by the Competition
Case Committee, CCC decides whether or not a suspected anti-competitive practice exists and whether to
impose administrative penalties, including written warnings and pecuniary fines as set forth under the
Competition Law and the relevant Prakas and ministerial decision.

Competition Case Committee

For adjudication purposes, CCC is empowered to appoint an ad hoc committee consisting of at least three
(3) and a maximum of five (5) members, namely the “Competition Case Committee”. The said committee
must have at least one independent member as specified in Sub Decree No. 37 on the Organization and
Functioning of the Cambodia Competition Commission.

The Competition Case Committee is in charge of reviewing and analyzing both the preliminary examination
report and the full-fledged investigation report, and the relevant evidence gathered by the investigating
officers and conducting the hearings at both stages by summoning the persons under investigation and their
statement of defence. The said committee then provides its analysis and opinion to CCC for consideration.

The Competition Case Committee is also responsible for appointing investigating officers for a full-fledged
investigation if the CCC decides to commence the investigation.

The Consumer Protection, Competition and Fraud Repression Directorate-General

The Consumer Protection, Competition and Fraud Repression Directorate-General (“CCF-DG”) is an

organization under the MOC. CCG-DG acts as the secretariat to the CCC and is responsible for all
administrative tasks, including receiving antitrust complaints from third parties for CCCʼs review.

The CCF-DG can make a complaint by itself to CCC for a suspected anti-competitive offence.

The CCF-DG is responsible for appointing investigating officers for a preliminary examination if the CCC
approves the commencement of such examination after reviewing an antitrust complaint.

Investigating officers

The preliminary examination or the full-fledged investigation, as the case may be, of a suspected anti-
competitive practice is conducted by investigating officers, who are officers of CCF-DG.

The officers are tasked with on-site investigations into suspected anti-competitive practices. As part of their
responsibilities, investigating officers are in charge of gathering evidence, interrogating relevant individuals,
and determining whether the suspected practice is likely to prevent, restrict, or distort competition in
Cambodia by taking into consideration the specific criteria outlined in Prakas No. 226.

Upon the completion of a preliminary examination or a full-fledged investigation, as the case may be, the
investigating officers in charge are to submit reports detailing their findings to the Competition Case
Committee for review and analysis.

II. How an Investigation of Anti-competitive Practice is Initiated?

Investigation into a suspected anti-competitive practice can be initiated through any one of the three ways:

o A written complaint by any person, irrespective of whether or not such person has any interest in or from
a suspected anti-competitive agreement or conduct.
o A written complaint by any Cambodian governmental authority.
o Suo motu, at the initiative of the CCC or through the written complaint of the CCF-DG.
Upon receipt of the complaint from third parties or the CCF-DG, CCC will then review and decide whether or
not to initiate a preliminary examination of a suspected anti-competitive practice.

III. Investigation Process Flow Chart

The flow chart outlines the procedure for the investigation of an anti-competitive practice:

Closure of
Preliminary
Prepare Legal
Examination
Proceeding to
Prosecutor
4.1
4.2
Issuance of
Receipt of
“Report on
Written Start of Appointment of
Preliminary Request CCC for
Complaint or at 1 Preliminary 2 Investigating 3 4.3
Examination” by Interim Measure
the Initiative of Examination Officer
the Investigating
the CCC
Officers
4.4
Establishment of the
Competition Case
Issuance of “Report on
Start of Committee to Deliberate Open
Investigation” by the 7 6 5
Investigation on the “Report on Investigation
Investigation Officers
Preliminary Examination”
and to Conduct Hearing
8

The Competition Case

The Competition Case
Committee Provides its
Committee Deliberates on the
9 Analysis and Opinion to
“Report on Investigation” and
the CCC for Approval and
to Conduct Hearings
Final Ruling

IV. Anti-Competitive Practice Investigations: What Businesses Should Know?

Regarding anti-competitive practice investigations, businesses must be aware of their rights and obligations
and those of the investigating officers.

1. Rights and Obligations of a Person Under Investigation

At the time of an investigation of a suspected anti-competitive practice, the person under investigation has
the right to submit a statement of defence and also to attend the hearing proceedings to challenge any
findings of the investigating officers, reported in the preliminary examination report or the full-fledged
investigation report, as may be the case.

If a person under investigation is aggrieved by an interim measure or decision of CCC, such person is entitled
to file a review petition to CCC within fifteen (15) days from receiving the notice of the interim measure or
decision of CCC, and if CCC refuses to accept the review petition, the aggrieved person can file an appeal
before a competent court of law within thirty (30) days of receiving the refusal notice from CCC.

Moreover, in the above case, instead of filing a review petition to CCC, the aggrieved person can directly file
an appeal before a competent court of law within thirty (30) days of receiving the notice of an interim
measure or decision of CCC.

A person under investigation must cooperate with the investigating officers at all times and must promptly
disclose all relevant information and documents to the investigating officers upon request. Such a person
must not destroy or conceal any relevant documents, information or evidence. If summoned by the investing
officers or the Competition Case Committee, as the case may be, a person under investigation must appear
before the summoning authority. A failure to cooperate with the investigating authorities is a criminal
offence under the Criminal Code of Cambodia.

2. Rights and Powers of the Investigating Officers

The investigative officers are vested with specific powers and rights under Prakas No. 226:

Right to Request for Information and Document

At the time of investigation, the investigating officers can request, either from a person under investigation
or others as relevant, all information and documents that they consider necessary for the purpose of
investigating a suspected anti-competitive practice.

Right to Summon

Investigating officers can summon a person under investigation or any other person as relevant for
interrogation by serving a fifteen-day advance notice to such person. During the interview, the officers may
record the responses of the interviewee. In the end, the concerned officer must read out the record loud and
clear for the understanding of the interviewee.

Right to Enter Premises for Conducting a Search

Investigating officers can enter into a workplace, registered office or domestic residence of a person under
investigation if the premise is suspected of being used for any anti-competitive practice provided that (i)
prior written consent is obtained from the occupant and (ii) the investigating officers are accompanied by at
least two (2) independent witnesses, who are not judicial officers, military police officers, or CCC or CCF-DG
staff.

Notwithstanding the above, however, investigating powers may still enter into the premises without prior
consent if they obtained a warrant from the Court of First Instance having territorial jurisdiction over the
case.

Regardless of whether the search is being conducted with the consent of the occupant or through a search
warrant, investigating officers can conduct the searches only between 6:00 and 18:00 hours.

Further, upon the completion of the search of a premise with the occupantʼs prior consent, the Investigating
Officers must provide a written record of searches.
Right to Seal Exhibits

During a search operation, the investigative officers can seize and take possession of all items or exhibits
that such officers deem necessary for the investigation. The seized items and exhibits must be shown to the
person under investigation, the owner or occupant of the premise, and the witnesses; and must also be
listed in the record of confiscation signed by and/or affixed with the thumbprints of (i) the person under
investigation; and (ii) the owner or occupant of the premise or the witnesses.

3. The Obligations of Investigating Officers

Despite the abovementioned powers vested with the investigating officers, they must adhere to the
following obligations:

Obligation to Present Information

Investigating officers must reveal certain information or documents to the person under investigation and
other relevant persons to carry out their responsibilities, including their identity, the authorization letter for
investigation and the purpose of the investigation.

Confidentiality Obligation

Investigating officers have a statutory obligation to keep the information and documents collected or
acquired during the investigation proceeding confidential. In particular, the following sensitive information
must be protected:

Sensitive Business Information Information Relating to an Informant in an Investigation

The name, address, place of birth and social network

Technical or financial information
accounts of the informant
The name, address, place of birth and social network
Method of assessing costs accounts of the informantʼs spouse, father, mother,
children or siblings
Secrets of production processes The image or voice of the informant
Supply sources
Quantities produced and sold
Market Shares
The image or voice of the informantʼs spouse, father,
Customers and distributor list mother, children or siblings
Marketing plans
Other information relating to cost, price or
sales strategies

However, the investigating officers may disclose any of the abovementioned confidential information and
documents where:

o Disclosure is necessary for carrying out any investigation, examination and other proceedings
concerning a suspected anti-competitive practice;
o It is permitted by law;
o It will enable another government agency or foreign agency to carry out its governmental function by
obtaining prior permission from the head of the CCC; or
o It is necessary to use the evidence for self-defence.

Obligation to Maintain and Return Seized Exhibits

Upon seizing any items or exhibits, investigating officers must make sure to keep them in immediate
custody, and they must undertake all measures to ensure that the seized items and exhibits are in
safekeeping. And, after the completion of the investigation, the investigating officers must return all seized
items and exhibits to their rightful owners provided such seized items and exhibits are no longer required
for any anti-competitive investigation or adjudication proceedings.

V. Key Remarks

The recent adoption of Prakas No. 226 demonstrates and reaffirms Cambodiaʼs commitment to protecting
its ʻfree-marketʼ system and fostering competition. By specifying the procedural matters, Prakas No. 226 also
represents a big leap for the enforcement and implementation of the Competition Law.

In light of this new development, businesses should begin taking steps from now onwards to ensure
compliance with the Competition Law and applicable regulations. Businesses should start planning and
conducting audits and internal investigations to assess whether their business model and practices are fully
compliant with the competition laws and regulations of Cambodia.

With regards to Prakas No. 226 specifically, businesses should begin training their staff and employees on
how to conduct themselves in the event CCC initiate or conduct an on-site investigation of their premises.

Further, MOC has also issued the Prakas On Formalities and Procedures of Negotiated Settlement under the
Law on Competition No. 227 P.N.A.KBB.PRK on November 2022, which we will be analyzing in our next guide
under the Competition and Merger Control Regime Short Guide series.

If you have any questions or need advice concerning competition laws and regulations, you may reach out
to the below advisors.

BUN Youdy NGORN Rothna

Managing Partner Of Counsel (IP and Competition)
M +855 (0) 12 817 817 M +855 (0) 95 555 795
E [email protected] E [email protected]
W www.bun-associates.com W www.bun-associates.com

Disclaimer. This article is for your information only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal
advice. You must seek specific advice tailored to your circumstances. Bun & Associates owns the copyright of this article. If you seek to reproduce or otherwise
use this article or any part of it in any way, it is your responsibility to obtain approval for such use.
 15 August,2023
CAMBODIA COMPETITION COMMISSION ANNOUNCES
ENFORCEMENT OF MERGER AND ACQUISITION FILING REGULATIONS

Recently, the Cambodia Competition Commission (CCC) announced that Sub-Decree No. 60 on the
Requirements and Procedures for Business Combinations will enter into force on 6 September 2023.
Sub-Decree No. 60 above specifies the requirements and procedures for the pre-completion filing of certain
business combinations (i.e. mergers and acquisitions) meeting the threshold criteria set out in Decision No. 095 on
Pre-Notification Thresholds for Business Combinations.
Sub-Decree No. 60 also states the requirements for (i) post-completion notification and (ii) registration of business
combinations with CCC.

Pre-Completion Notification Requirements Overview

Parties to a business combination must file a notification with CCC if any of the below thresholds are met:
Industry Sectors Assets Threshold Sales Threshold Input Purchase Threshold Transaction Value
Threshold
General Business USD 85 million USD 67.5 million USD 30 million USD 10.25 million
Banking or Financial
USD 1.125 billion USD 105 million USD 950 million USD 30 million
Institutions
Insurance or
USD 250 million USD 70 million USD 205 million USD 15.25 million
Securities Business
The assets, sales and input purchase turnover thresholds are for the financial year immediately preceding the year of notification and apply to
each party to a business combination and its affiliates.
Parties to a business combination can alternatively apply for an “Advance Ruling Certificate” (ARC) which, if issued
by CCC, will allow them to complete the business combination within one year without any challenge from CCC.

Post-Completion Notification Requirements Overview

A notification to CCC is required after the substantive completion of a business combination if any party to the
business combination (or any of its affiliates) meets at least 50% of any threshold mentioned in the table above.
Overview of Business Combination Registration Requirements
Parties to a business combination that has either filed a pre-completion notice with (or has obtained an ARC from)
CCC need to register the transaction with CCC within thirty (30) working days after its substantive completion.
As enforcement of filing regulations will be effective from 6 September 2023, parties to any contemplated or
ongoing M&A transaction concerning the Cambodian market should seek legal advice from a qualified attorney to
check if the above filing and registration requirements apply to them.
If you have any questions or need advice, you may contact the joint authors of this “Client Alert”.

BUN Youdy SIN Sokanha NGORN Rothna

Managing Partner Of Counsel Senior Associate
M +855 (0) 12 817 817 M +855 (0) 95 555 812 M +855 (0) 95 555 795
E [email protected] E [email protected] E [email protected]
W www.bun-associates.com W www.bun-associates.com W www.bun-associates.com

Disclaimer. This article is for your information only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal advice.
You must seek specific advice tailored to your circumstances. Bun & Associates owns the copyright of this article. If you seek to reproduce or otherwise use this
article or any part of it in any way, it is your responsibility to obtain approval for such use.
Over the past couple of years, the government has focused on creating and promoting a positive environment for
both local and offshore investment. Together with the new Law on Investment, in 2022, we saw amendments to
the Law on Commercial Enterprises and the Law on Commercial Rules and Registration. Another major step
forward was the promulgation of the new Law on Taxation, which came into effect on 16 May 2023’.
Please direct any questions to the joint authors of this ‘Client Alert.’

BUN Youdy SIN Sokanha

Managing Partner Of Counsel

M +855 (0) 12 817 817 M +855 (0) 95 555 812

E [email protected] E [email protected]
W www.bun-associates.com W www.bun-associates.com

Disclaimer: This article is for your information only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal
advice. You must seek specific advice tailored to your circumstances. Bun & Associates owns the copyright of this article. If you seek to reproduce or
otherwise use this article or any part of it in any way, it is your responsibility to obtain approval for such use.
 BUN & ASSOCIATES ALERT

04 February 2022

We are pleased to send you our BUN & ASSOCIATES ALERT for February 2022. We hope it will assist you in complying
with new amendment of Law on Commercial Enterprise in Cambodia and ensure your preparedness for new challenges
brought on by current developments.

Amendment to the Law on Commercial Enterprises

The Law on Commercial Enterprises of Cambodia (LCE) has been recently amended and promulgated on 29 January
2022. Some provisions of the LCE have been nullified while some others have been amended and added to include,
among others, company secretary, entire chapters governing the sole proprietorship, local branch, and nominee of a
shareholder.

With this amendment, it provides investors a clearer idea on certain forms of commercial enterprise, i.e. the sole
proprietorship, and the local branch in terms of their formations, legal personalities and existence. Note that these
provisions are not stipulated in the LCE promulgated in 2005.

In addition, the amendment introduces a new requirement of a company secretary and an option to appoint a nominee
of a shareholder. A company secretary is required by the law to keep and maintain company records as well as
equipped with duty to examine annual financial reports of the company. Therefore, this amendment may be a factor
leading to promotion of good corporate governance of a company. As far as confidentiality may be a concern for some
investors, the amendment to the LCE enables a shareholder to nominate a person, who can be a natural or legal entity,
to hold shares on its behalf. Note, however, that a contract governing this nomination relationship and identity of said
shareholder are still required to be deposited with the Ministry of Commerce of Cambodia.

Last but not least, while Cambodia is being hit by the pandemic to certain level, some businesses may initiate the
dissolution or liquidation process. To this end, the amendment to the LCE gives detail as to whom qualifies to be a
liquidator during the dissolution or liquidation process. The liquidator must be an accounting/auditing firm licensed in
Cambodia and appointed by shareholders’ decision.

The above amendments are not exhaustive, but rather informative for investors operating in Cambodia. For additional
information or inquiry about this alert and other amendments relevant to the LCE, our professional team below is here
to assist you.

Best regards,

Sovath PHIN, Partner Youdy BUN, Managing Partner Sokanha SIN, Senior Legal Manager
H/P: 855 95 555 817 H/P: 855 12 817 817 H/P: 855 95 555 812
Email: [email protected] Email: [email protected] Email: [email protected]

Disclaimer: This article is for your information only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal advice.
You must seek specific advice tailored to your circumstances. Bun & Associates owns the copyright of this article. If you seek to reproduce or otherwise use this
article or any part of it in any way, it is your responsibility to obtain approval for such use.

#29, Street 294

Sangkat Tonle Bassac, Khan Chamkarmon
Phnom Penh, Cambodia
Bun & Associates Commercial Contract and Business Licensing
Alert
01 September, 2022

Ministry of Commerce Prakas on Unfair Contract Terms

The latest Prakas issued by the Ministry of Commerce continues government initiatives to
strengthen consumer rights while promoting fair competition

Summary
On 1 March, the Ministry of Commerce issued Prakas No. 0067 on Unfair Contract Terms. The Prakas details what must
be included in a ‘Standard Form of Contract’ (‘SFoC’) together with penalties for non-compliance.

SFoC is defined under the Law on Consumer Protection as any contract to provide goods and/or services to a consumer,
where that consumer is unable to negotiate or revise any of the contractual terms or conditions. Of particular note is
the fact that the Prakas also applies to any SFoC used in e-commerce transactions.

The Prakas only covers situations where goods or services were purchased for personal, domestic or household
consumption. It does not apply if those goods or services were intended for commercial purposes or re-sale.

What must a SFoC include?

The Prakas requires all SFoC to:

• be written in Khmer using ‘clear and precise’ wording

• contain information required under the Law on Consumer Protection. This includes the type, method of use,
price, packaging, safety rating, origin, usage, maintenance, components, design, installation and
production/expiration dates of the goods or services.

The Prakas allows for translation to other languages if requested by a consumer.

What does this mean for business operators?

Business operators should pay particular attention to the following provisions of the Prakas:

• any SFoC found to include an ‘unfair contract terms’ can be rescinded

• an ‘unfair contract term’ is one that either creates ‘excessive benefits’ for a business operator or places a
consumer at an ‘excessive disadvantage’
• the term ‘unfair’ is not defined. Rather the Prakas outlines some of the factors to be considered when reviewing
a clause, such as ‘economic or social dominance’ or ‘ignorance’
• examples of what would be deemed unfair contract terms include:
o limiting or excluding liability under the Cambodian Civil Code;
o permitting a business operator to unilaterally interpret or terminate a contract; or
o changing key terms of SFoC, specification of the goods or service without the consumer’s prior consent.
Consumer rights
In keeping with the legislative intent, the Prakas grants consumers a number of specific rights. They include:

• information on the goods or services;

• clarification and explanations of specific clauses when requested by a consumer; and
• the right to ratify or rescind any clauses deemed to be unfair or that create excessive benefits for the business
operator.

Reviewing a SFoC
The Prakas makes provision for business operators to request a review of their SFoC by the National Commission for
Consumer Protection (NCCP) or, in the case of regulated sectors, by that particular regulator.

Complaints and penalties

Individual consumers or consumer associations may lodge complaints with the NCCP or a sector regulator. The NCCP
is also authorized under the Prakas to launch an investigation following receipt of a complaint.

Non-compliance with the Prakas is a ‘dishonest act’ or ‘dishonest practice’ under the Law on Consumer Protection.
Where a business operator is found to have committed a dishonest act or practice, they can be subject to transitional
fines capped at KHR 20,000,000 ( c. USD 5,000) for a dishonest act and KHR 50,000,000 ( c. USD 12,500) for dishonest
practices.

Conclusion
The Prakas is set to become effective within six months from issued date, thus, 01 September 2022.

We anticipate follow-on regulations to be issued by sector regulators, including:

• details of minimum requirements that business operators must satisfy when explaining the SFoC and execution
procedures to consumers; and
• detailed measures and conditions imposed on the unfair contract terms.

Please contact us if you have any questions or would like further information.

Best regards,

Sophealeak Ing Socheat Yin

PARTNER OF COUNSEL

M +855 (0) 12 884 656 M +855 (0) 95 555 184

E [email protected] E [email protected]

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