How Do Competition Rules Affect Share Transfers and M&As in Cambodia?

April 10, 2025

Overview

The law in Cambodia that addresses monopolies and business combinations is the Law on Competition (“Competition Law”) dated October 5, 2021. It was enacted to regulate anti-competitive practices and promote fair competition. It applies to all persons conducting business activities or any actions supporting business activities that significantly prevent, restrict, or distort competition in a market in Cambodia, regardless of whether the activities take place inside or outside Cambodian territory.

The law includes provisions for the review of business combinations to prevent monopolies and protect consumers’ interests. Details of the review process are regulated by Sub-Decree No. 60 on the Requirements and Procedures for Business Combinations dated March 6, 2023 (“Sub-Decree 60”). The Cambodian Competition Commission is responsible for overseeing the implementation of the law, including the anti-monopoly review of business combinations. It has the authority to investigate and take action against business practices that may lead to a monopoly or unfair competition.

Business Combination

The concept of control is central to the Competition Law’s provisions. According to Article 3(3) of the Competition Law, the term business combination refers to:

• The acquisition of the right of control or voting rights through the purchase of shares or assets by one Person from any other Persons; or
• The combination of two or more Persons to acquire joint ownership of an existing legal person or a new legal person.

Sub-Decree 60 goes further, providing a precise definition of control, emphasizing ownership of more than 50% of the shares, voting rights, or assets of a business as a key threshold for exerting influence over the company’s operations and strategic decisions. Specifically, Article 3(13) of Sub-Decree 60 further defines the right of control as one of the following:

• One person obtains ownership of more than 50% of the shares, interests, or voting rights of another person.
• One person obtains ownership of or the right to use the assets of, or one or more of the lines of business of, another person more than 50%.
• One person has one of the following rights:
  • To directly or indirectly decide the appointment, removal, or dismissal of a majority or all of the members of the board of directors or senior executives of another person.
  • To decide on the amendment of the constating documents of another person.
  • To make important decisions on the business activities of another person, including but not limited to, the selection of its legal form and organization, its lines of business operations, its geographic area of activities; raising, allocating, and use of capital; dealing with specific customers or suppliers; and other key business decisions.

Share transfers

In Cambodia, M&As are commonly carried out through share acquisitions, whereby the acquirer gains the right of control or ownership of a company through the share transfer process. Upon the acquisition of shares, all rights and liabilities attached to the shares are transferred to the new shareholder, including the right to receive dividends, attend and vote in shareholders’ meetings, and nominate board members. Likewise, the new shareholder assumes liability for the losses incurred by the company to the extent of their capital contribution.

Share transfers must be approved and registered with the Ministry of Commerce and notified to the General Department of Taxation. If the company carries out any qualified investment projects or any activity regulated by a specific regulator, share transfers must also be approved by the relevant regulator. Share transfers are subject to stamp duty of 0.1% of the value of the transferred shares.

In the context of the Competition Law and Sub-Decree 60, share transfers are an integral part of business combinations under Cambodian law. The transfer of shares can directly affect the ownership structure of a company and, consequently, the control exerted by the shareholders. If a party acquires more than 50% of the shares or voting rights, they can gain significant control over the company, which is one of the key elements of a business combination as defined by the Competition Law.

The Competition Law and Sub-Decree 60 establishes a regulatory framework that links share transfers to the broader process of business combinations. These transfers are not merely a financial transaction but a legal mechanism that could significantly alter a company’s control and competitive dynamics in the market.

Therefore, a key consideration when contemplating a share transfer is the issue of control, particularly if it will involve a party holding more than 50% of the total shares in a company, which would generally be considered a business combination. Additionally, given the lack of precedent since the Competition Law has only recently been implemented, it would be prudent for companies to review the business combination issues and possibly request an assessment by the Cambodian Competition Commission to determine if the transaction would be considered a business combination under the Competition Law.