Legal and Tax Updates

Issue: No. 004P/2021-15-January

The Ministry of Economy and Finance “MEF” issued Notification No. 3836 on further reminder on trust registration dated December, 31^st 2020.

At the MEF, the General Department of Financial Industry “GDFI” has observed that some trust operators have not performed its obligation to register trust.

This notification is aimed at alerting all trust operators who are conducting trust business activities to regulate its obligation with responsible manner in compliance with the applicable laws and regulations in Cambodia. The key highlight of this new notification states that “A failure to timely register trust or the failure to comply with the regulatory requirements may lead to confiscation of the trust, and possibly criminal and civil penalties in accordance with the provisional laws”.

To be reminded that, Trusts are subjects to apply for registration and regulation in Cambodia. As of now, the applicable laws and regulations in relation to the trust registration include the following:

1)   The Law on Trust, was promulgated on 02 January 2019, which composes of 8 Chapters and 57 Articles. This new law has introduced new concept in Cambodia’s legal system for the establishment of trusts, registration, management and control of such trusts.

For establishing the trust, the trustor shall transfer property or fund to the trustee through a trust instrument, that mentions the purpose of the trust and/or the identity of the beneficiary.

In order to be valid, trusts must be registered with the MEF within three months of their establishment. Prior to registration, the trust operator must receive prior approval from the MEF and obtain a license from the relevant regulators. The detailed requirements and procedures shall be determined in a Sub-Decree​ (pursuant to Art. 28-29 on Law on Trust).

2) The Sub-Decree No. 144 dated 02 August 2019 on the Trust Registration provides for the implementation of the rules and procedures of the registration process that shall be administered by the MEF.

3) The Prakas No. 854 dated 30 September 2019 set out different fee charge by MEF for the registration of trusts in Cambodia and its annual fee. This Prakas provides the service fees applicable to four types of trust: commercial, public, social, and individual trusts. The Certificate of Trust Registration is valid for the duration determined in the trust instrument but shall not be more than 5 (five) years. If the period mentioned in trust instrument is more than 5 (five) years, the maximum validity of the certification shall be limited to only 5 (five) years, renewable.

We hope that the above legal update alert is helpful for your investment and help you to invest more confidently.

If you have any question or need any assistance with regard to the above matters, please feel free to contact us at contact@sithisak-lawoffice.com or (+855) 23 6373 168.

Disclaimer: The article is merely for general information purposes. It does not constitute a legal advice on the subject ma

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