While citizens can buy real estate with any property title, this isn’t the same for foreigners who are only allowed to buy properties with strata titles. In short, condo units in Cambodia. While there are numerous ways to buy a strata-titled unit, setting up your own land holding company (LHC) is one of the best and safest way to invest in real estate in the country.
There are a variety of benefits that comes with having an LHC, but one of the main ones is that it’s recognized on a national level due to the due process done before the company was created. Check out the basic details you need to know to start an LHC in the country for an easier process.
Steps to setting up an LHC
To create a land holding company as a foreigner, you first need to take note that you can only own 49% of the company. In short, 51% of the shares left should be owned by a Cambodian citizen. While there are law firms that already offer which Cambodian nationals will be the major shareholders, it’s always better if you know the local citizen directly before owning a company with them.
In this case, the steps to setting up an LHC in Cambodia are the following:
- The foreign individual or company needs to establish a relationship with a Cambodian partner based on trust.
- A strict adherence to the application process of setting up a landholding company in Cambodia needs to be followed. Moreover, all legal consultations should be duly followed, if necessary.
- Both Cambodian and foreign parties need to complete the Article of Association.
- Once done, the Cambodian and foreign parties can get their landholding company registration.
Take note that similar to investing in real estate, you need to conduct your own due diligence when setting up a land holding company. This also means that all legal consultations should be followed, to avoid potential problems that may crop up.
Moreover, the most critical part of the process is completing the Article of Association since it outlines the ownership and rights of the shareholders. At this part, it can be indicated that the minor shareholder will be the one to make final decisions for the company. In short, major shareholders can focus on other rights and benefits in owning the company but they don’t necessarily have to be the driving force that cements the company’s decision.
What are the costs of setting up an LHC?
Setting up your own LHC in Cambodia costs anywhere from $4,000 up to $12,000. This can depend on the lawyer you hire to help you through the legal process, whether they’re local or not. However, this is only an estimate of the initial costs of setting the company up, since there are monthly or quarterly tax payments that you’d need to answer to. Considering this, it’s best to set up your own land holding company if you want to make an investment of more than $1,000,000.
Besides this, it takes around two to three months to set up your own LHC on average. However, this still depends if you have a local lawyer or not.
Need assistance on setting up a land holding company? Our real estate services include document processing on forming LHC in Cambodia.