Corporate governance for companies in Cambodia

The Prakas (a regulation issued by a Minister) on Corporate Governance for Listed Public Enterprise of 15 December 2010 sets out the specific requirements for the corporate governance of Listed Public Enterprises. The object is to ensure good corporate governance through formulating mechanisms to protect shareholder’s rights, organizing the management structure and corporate governance, defining the authority and obligations of the board of directors and setting up an effective controlling system.
Number of directors
A public limited company must have at least three directors but the board of directors must not exceed seven members. The board is required to have at least one independent director and one non-executive director as representatives of the private shareholders.
A private limited company must have one or more directors
Duties of directors: The directors are required to manage the business and affairs of a company.
Article 19 of the Prakas on Corporate Governance for Listed Public Enterprise further provides that directors of public limited companies are expected to be independent in judgment and action, and take all reasonable steps to ensure the soundness of board of directors’ decisions.
Such obligations include:
1. acting in good faith for the benefit of the Listed Public Enterprise and shareholders as a whole;
2. exercising proper powers for the benefit of the Listed Public Enterprise as a whole;
3. performing duties carefully, skillfully, and diligently;
4. properly resolving any conflicts related to the interests of the Listed Public Enterprise;
5. not entering into any transactions, in which the directors have interests, except in compliance with approved policies and procedures;
6. not taking advantage of their position as a director;
7. not making improper use of information from the Listed Public Enterprise;
8. not accepting gifts from third parties; and
9. declaring any conflicts of interest related to the Listed Public Enterprise.
The board of public limited company shall approve and publish a Code of Conduct for directors and senior officers.
The board of directors will elect a chairman among its members. The chairman may be removed from the office of chairman, but not from its position as a director, by a majority vote of the directors.
The rights and interests of minority shareholders shall be protected by the board of the Listed Public Enterprise, such rights include:
1. the right to seek information (such as the financial statements of the company, its audited accounts, shareholder resolutions or any documents in relation to the affairs of the company that may be of interest to shareholders);
2. the right to voice opinion (i.e right of expression and speech during a general meeting, provided that the statements are not considered as defamatory or abusive); and
3. the right to redress (for any damages resulting from negligence, misconduct or fraud caused by any members of the company).
The board should ensure effective interaction between minority shareholders, senior officers and the board.