Ease of Starting a Business in ASEAN – World Rankings

ASEAN
Focused on the big picture while never losing sight of the details
Incorporation of Companies
april 2014
Common Forms of
Business Entities
Equity Restrictions on
Foreign Corporate Ownership
Ease of Starting a Business in
ASEAN – World Rankings
A ustralia | C ambodia | I ndonesia | L aos | M alaysia | M yanmar | S in g apore | T hailand | V ietnam
THE CORPORATE
STRUCTURE
A simple idea – an artificial entity with limited legal liability – is today the mainstay of commerce
throughout the world. The limited liability company has become so commonplace that we hardly
give it a thought. Yet modern economic activity would come to a grinding halt but for the ability of
limited liability companies to command capital and put it to productive use. Countries that simplify the
process of incorporating companies and encourage their rapid formation, have a distinct economic
advantage over countries that put barriers in the path of incorporation. The economic struggles for the
modern world are, as a matter of fact, corporate struggles in competing for market share.
ASEAN is no different. To keep up with the burgeoning economies to its west and north, ASEAN
nations have, over the last few years, introduced corporate reforms to enhance incorporation and
encourage foreign investment through corporate vehicles. The World Bank, in conjunction with the
International Financial Corporation runs the Doing Business project to measure the level of business
regulation that faces investors seeking to participate in local economies. The corporate reforms being
undertaken by ASEAN countries have enhanced their attractiveness as shown in the 2014 edition of
the Doing Business project.
In this issue we bring to you a comparative study with respect to the setting up of companies in several
countries in the ASEAN region. As can be seen, no two jurisdictions carry identical requirements. This
will be a live consideration when deciding which country in ASEAN would be the preferred location for
a business’ particular needs when ASEAN becomes the ASEAN Economic Community on 31 December
2015. We trust it will prove useful.
Next
Issue
Real Property
• What are the laws governing real property?
• How do you protect your real property interest?
• Are there any restrictions on foreign ownership?
• What are the taxes and duties charged on real property transactions?
Cambodia
Governing
Legislation
• Law on Commercial
Registration Rules and
Register of 1995 and its
amendment Law of 1999.
• Law on Commercial
Enterprise of 2005 (“LCE”)
Regulator
• The Ministry of Commerce
(“MoC”)
Indonesia
Laos
Law Number 40 Year 2007
regarding Limited Liability
Company (“Law 40/2007”).
Additional laws apply to direct
investment activities.
The Enterprise Law No. 11/NA
dated 9 November 2005 (the
“Enterprise Law 2005”
Ministry of Law and Human
Rights (“MLHR”).
• Department of Enterprise
Registration and
Management of Ministry
of Industry and Commerce
(General Business)
• The Registry Offices at
the Municipal/Provincial
Departments of Commerce
• Sole Proprietorship
A limited liability company.
• Partnership (General and
Limited)
• The Myanmar Companies Act
1914 (“MCA”)
Singapore
The Companies Act (Cap 50)
• The Myanmar Companies Rules
1940
Thailand
Vietnam
• The Civil and Commercial Code
(“CCC”)
• Law on Enterprises No.
60/2005/QH11
• The Public Limited Companies Act
B.E. 2535 (“PLCA”)
• Law on Investment No.
59/2005/QH11
Department of Business
Development, the Ministry of
Commerce (“DBD”)
• Provincial People’s
Committee
The Companies Commission
of Malaysia (“CCM”). The
Chief Executive Officer of the
CCM has been designated as
the Registrar of Companies
(“Registrar”).
The Company Registration Office
(“CRO”), a creature of the
Directorate of Investment and
Company Administration (“DICA”)
of Ministry of National Planning and
Economic Development.
The Accounting and Corporate
Regulatory Authority (“ACRA”)
• A sole limited liability
company
• A company limited by
shares
• A company limited by shares
• A company limited by shares
• Private limited company
• A company limited by guarantee
• A company limited by guarantee
• Public limited company
• A limited liability company
• A company limited by
guarantee
• Unlimited company
• An unlimited company
• A public company
• Limited Liability Company
(Private Limited Company,
Public Limited Company and Single Member Private
Limited Company)
The Companies Act 1965
(“CA 1965”).
Myanmar
• The Myanmar Companies
Regulation 1957
• Investment Promotion
Department of Ministry of
Planning and Investment
(Concession Business)
Types of
Companies
Malaysia
• Provincial Department of
Planning and Investment
• Provincial Management
Board of each industrial
zone/export processing
zone/economic zone
• Single-member Limited
Liability Company (or one
member limited liability
company) (“SLLC”)
• Multiple-member Limited
Liability Company (or limited
liability companies with two
or more members) (“MLLC”)
• An unlimited company
• Joint Stock Company (“JSC”)
Share
Capital
The minimum share capital
for setting up a company is
KHR 4,000,000 (approximately
USD1,000).
The minimum authorised
share capital for a company is
IDR50,000,000 (fifty million
rupiah). The minimum for
paid-up share capital is 25%
of the authorised share capital.
No share may be allotted
in excess of a company’s
authorised share capital.
The minimum registered (paid-up share) capital is 1 thousand million Lao Kip
(approx. US$ 125,000) for a
foreign investor. A par value
of share of a limited company
shall not less than 2,000 Lao
Kip (approx. US$ 0.25).
A company must have a
minimum of 2 issued shares.
No share may be allotted
in excess of a company’s
authorised share capital.
The minimum paid-up share capital
depends on the sector of investment
and the proposed types of business
activities to be carried out in
Myanmar.
Minimum shareholding S$1
The par value of each share in
a private limited company must
be not less than Baht 5. There is
no minimum requirement on the
registered capital, however, it should
be enough and adequate for the
intended business operation.
Except for some certain
conditional businesses
which require the minimum
legal capital (ie real estate,
insurance, banking, etc), there
is no specific requirement
regarding a minimum amount
of share capital.
Foreign
Ownership
Restriction
Foreigners can own 100% of
the shares in a Cambodian
commercial company. There
are, however, restrictions for
foreigners on land ownership.
In such a case, 51% of the
shares must be held by
Cambodians.
Companies may be whollyowned by non-Indonesians.
However, do take note
that regulatory licensing in
some sectors requires equity
participation by an Indonesian
party.
Companies may be whollyowned by foreigners.
However, do take note
that regulatory licensing in
some sectors requires equity
participation by Lao.
Companies may be whollyowned by foreigners.
However, do take note
that regulatory licensing in
some sectors requires equity
participation by Malaysians.
Generally, companies for services
may be wholly owned by foreigners,
depending on the relevant sector
and type of business activities
proposed to be carried out in
Myanmar. Where required by the
CRO, recommendations of the
relevant Ministry would also be
considered.
Yes, a company can be wholly
foreign-owned, subject to meeting
prescribed requirements.
Companies may be wholly-owned
by a foreigner. However, companies
with foreign-owned equity of 50%
or more operating in prescribed
sectors will be subject to the Foreign
Business Act B.E. 2542 (“FBA”).
Companies may be whollyowned by non-Vietnamese.
However, certain sectorial
legislation regulating activities
in the relevant sector requires
equity participation by
Vietnamese, eg advertising
services, tourism services,
logistics services, etc.
Directors
A private limited company is
required to have at least one
director, while a public limited
company must have at least
three directors.
Every company must have at
least 1 director.
Every company must have
at least 1 director, who may
or may not reside within Lao
PDR. Companies are permitted
to have foreign directors.
Every company must have at
least 2 directors, who each
have his principal or only
place of residence within
Malaysia. Provided that the
aforementioned is satisfied,
companies are permitted to
have foreign directors.
The MCA requires at least 3
directors for a public company but
this requirement is not applicable
to a private company. In practice,
every private company must have a
minimum of 2 directors. There are
no residential requirements for a
foreigner to be a director.
Every company must have at least 1
director who is ordinarily resident in
Singapore.
A private limited company must have
at least one director. There is no
restriction on residency or nationality
of director.
Every company must have
the board of the directors
(Members’ Council for MLLC/
SLLC or Board of Management
for JSC). If the director is also
the legal representative of
the enterprise, he must have
its permanent residence in
Vietnam.
Other
Business
Entities
• Commercial representative
office
• Limited Partnership
(Commanditaire
Vennootschap)
• Sole Proprietorship
• Sole Proprietorship
• Sole Proprietorship
• Sole-proprietorship
• Sole Proprietorship
Private Enterprises
• Partnership
• Partnership
• Partnership
• Partnership
• Ordinary Partnership
• Branch office of a foreign
company
• Branch office of a foreign
company
• Branch office of a foreign
company; and
• Limited liability partnership
• Registered Ordinary Partnership
• Limited partnership
• Representative Office
• Representative office of a foreign
company (reserved for foreign
banks and insurance companies
only)
• Limited Partnership
Branch Office, Representative
Office, Regional Office, and
Regional Operating Headquarters
• Branch office of a foreign
company
• Subsidiary
• Partnership
• Representative office of a
foreign company
• Foundation
• Cooperative
• Individual company
As at 1 March 2014
• Limited Liability Partnership
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