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Rajah & Tann Regional Round-Up

your snapshot of key legal developments in Asia

Issue 3 - Jul/Aug/Sep 2023



CAMBODIA

Notification on Request for Foreign Employee Quota for 2024

On 30 August 2023, the Ministry of Labour and Vocational Training ("MLVT") issued Notification No. 024/23 informing owners or directors of enterprises or establishments that are employing foreign employees for 2024 to apply for foreign employee quota approval from 1 September 2023 to 30 November 2023. Such applications can be conducted via www.fwcms.mlvt.gov.kh.


Employers intending to employ foreign employees are reminded that engaging foreign employees without MLVT's approval may result in a fine of 61 to 90 days of base daily wage or imprisonment of six days to one month in accordance with Article 369 of the Labour Law.

 

For more information, click here to read our Legal Update.



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New Regulations on FinTech Regulatory Sandbox in Non-Banking Financial Services Sector

In line with the vision of the Royal Government of Cambodia to innovate financial technology ("FinTech") in Cambodia's non-banking financial services industry, the Non-Banking Financial Services Authority ("NBFSA") issued Prakas No. 037 on FinTech Regulatory Sandbox in Non-Banking Financial Services Sector dated 4 August 2023 ("Prakas"). The Prakas aims to introduce and manage a sandbox environment for FinTech in sectors regulated under NBFSA to test out new products. Regulators currently supervised by NBFSA are required to issue guidelines setting out details in which companies can partake in testing out their FinTech products in the sandbox environment.


In line with the Prakas, on 7 August 2023, the Securities and Exchange Regulator of Cambodia issued Guideline No. 009/23 on the Regulatory Sandbox in Securities Sector ("Guideline"). The Guideline replaces the earlier Guideline No. 001/22.


Under the Prakas and the Guideline, "FinTech Regulatory Sandbox" ("FRS") refers to an environment that allows a company to experiment its new Financial Product and Services ("FPS") with actual customers within a well-defined space and under limited duration, before the official launch and circulation of the product on a larger scale.


In a nutshell, the Prakas imposes obligations on the regulators under the supervision of NBFSA to develop guidelines for an FRS. It also sets out the conditions and requirements for applicants who wish to participate in the FRS. Applicants must be companies duly registered with the Ministry of Commerce in Cambodia.


The Guideline sets out, among others, (i) the formalities and procedures in applying to participate in an FRS in the securities sector; (ii) the evaluation criteria regarding the testing of FPS in a sandbox environment; (iii) the obligations of applicants in various stages of the experiment; and (iv) the disclosure requirements.


For more information, click here to read our Legal Update.


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Prakas on the Issuance of Fund Units of Collective Investment Scheme

On 20 July 2023, the Non-Banking Financial Services Authority issued Prakas No. 035 on the Issuance of Fund Units of Collective Investment Scheme ("Prakas"). The Prakas is a long-awaited legal instrument under the purview of the Securities and Exchange Regulator of Cambodia to basically kick-off the collective investment scheme ("CIS") market in Cambodia. This development was preceded by the issuance of Prakas No. 003/18 on the Licensing and Management of Collective Investment Scheme Business on 29 May 2018, which governs the licensing of relevant CIS market players and operators.


The Prakas sets out the conditions, requirements, and procedure for the issuance of fund units of CIS, and the operation of such funds thereafter in order to ensure accountability and transparency under the applicable laws and regulations. The key features of the Prakas include the following:


  1. Procedure for the Issuance of Fund Units of CIS;
  2. Operation of CIS Funds;
  3. Termination of Funds; and
  4. Additional Requirements for Public Issuance of Fund Units of CIS.

For more information, click here to read our Legal Update.


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Singapore and Cambodia to Collaborate on Creation of Financial Transparency Corridor to Support SMEs

On 11 July 2023, the Monetary Authority of Singapore ("MAS") and the National Bank of Cambodia announced that they have signed a Memorandum of Understanding to collaborate on a Financial Transparency Corridor ("FTC") initiative.


The FTC initiative aims to establish supporting digital infrastructures to facilitate trade and cross-border related financial services between small and medium-sized enterprises ("SMEs") in Singapore and Cambodia. Under the FTC, when a Singapore financial institution ("FI") is assessing financing support for a Singapore SME buyer's cross-border business with a Cambodian SME seller, the Singapore FI can utilise the FTC to acquire trusted information from a Cambodian FI on the Cambodian SME seller. Likewise, a Cambodian FI supporting a Cambodian seller can obtain trusted information on the Singapore buyer through the FTC.


This enhanced trusted information flow will assist SMEs in Singapore and Cambodia to access broader digital trade networks. An example is the Business Sans Border Proxtera global network, which is a digital platform that aims to facilitate cross border trade connectivity among emerging market SMEs. SMEs will thereby be able to access greater trade connectivity within ASEAN and other growth regions.


For more information, click here to read our Legal Update (page 13).


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Cambodia's Law on Competition and Relevant Implementation Regulations

The Law on Competition was promulgated by virtue of the Royal Kram No. NS/RKM/1021/013 dated 5 October 2021 and came into force on 6 October 2021. Following the promulgation of the Law on Competition, the Royal Government of Cambodia issued Sub-Decree No. 37 ANKr.BK on the Organisation and Functioning of the Cambodia Competition Commission setting out the composition, duties, and functions of the Cambodia Competition Commission.


Subsequently, various regulations (collectively referred to as "Regulations") have been issued to facilitate the implementation of the Law on Competition, which touch on the areas of investigation and fines, interim measures, negotiated settlements, business combinations, and the relevant thresholds.


The Regulations are categorised as follows: 


  1. Investigations, Settlement, and Penalties

    • Prakas No. 226 on Formalities and Procedures of Examination and Investigation under the Law on Competition
    • Inter-Ministerial Prakas No. 168 on Fine for Persons Violating the Law on Competition
    • Decision No. 084 on Formalities and Procedures for the Calculation of Pecuniary Fines for Offenses under the Law on Competition
    • Inter-ministerial Prakas No. 041 on Procedure of Imposing Pecuniary Fines for Violation of the Law on Competition
    • Prakas No. 079 on Formalities and Procedures for the Issuance of Interim Measure and/or Decision of the Cambodia Competition Commission
    • Prakas No. 227 on Conditions and Procedures of Negotiated Settlement under the Law on Competition

  2. Registration and Notification of Business Combinations

    • Sub-Decree No. 60 ANKr.BK on Requirements and Procedures for Business Combination
    • Decision No. 095 on the Pre-Merger Notification Thresholds for Business Combination
    • Prakas No. 177 on the Requirements and Procedures for the Registration of Business Combinations Requiring Pre-Merger Notification
    • Prakas No. 178 on Procedures for Post-Merger Notification for Business Combinations.

  3. Others

    • Decision No. 179 on the Formalities and Procedures for the Issuance of Advance Ruling Certificate
    • Decision No. 180 on Delegation of Power of the Cambodia Competition Commission on the Implementation of the Sub-Decree on Requirements and Procedure for Business Combinations.

For more information, click here to read our Legal Update.


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Sub-Decree on the Implementation of Law on Investment

On 26 June 2023, the Royal Government of Cambodia adopted Sub-Decree No. 139 ANKr.BK on the Implementation of Law on Investment ("Sub-Decree"), which aims to implement the provisions of the Law on Investment promulgated on 15 October 2021 ("Law on Investment").


The Sub-Decree applies to all qualified investment projects ("QIPs"), expanded QIPs (EQIPs), and guaranteed investment projects (GIPs) (collectively referred to as "Investment Projects") registered with the Council for the Development of Cambodia or the Provincial-Municipal Investment Sub-Committees. The key features of the Sub-Decree include the following:


  1. Investment Projects Registration;
  2. Reporting Obligations and Certificate of Compliance;
  3. Investment Incentives;
  4. After-care services for Investment Projects;
  5. Acquisition, Sale, or Merger of Investment Projects; and
  6. Nullification of Investment Projects.

For more information, click here to read our Legal Update.


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Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.

 

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Heng Chhay
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heng.chhay@rajahtann.com

Desmond Wee
Director
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desmond.wee@rajahtann.com

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