Overview
Cambodia’s Securities and Exchange Regulator of Cambodia (“SERC“) is expected to pass a new regulatory framework governing the offering of securities to directors and employees under employee share ownership plans (“ESOPs“) and related investment plans. This framework is set out in a Draft Prakas on the Offering of Security Equity to Directors and Employees, dated 6 December 2025 (“Draft Prakas“), which remains under the SERC review. The final Prakas is anticipated to be issued within this year.
The Draft Prakas applies broadly, covering both domestic and offshore offerings and all persons and entities involved in related transactions within Cambodia. All foreign parent companies operating global ESOP plans with Cambodian participants – including through local subsidiaries or branches – will be directly affected upon the Prakas coming into force.
This update focuses specifically on the implications for foreign companies offering offshore ESOPs to directors and employees of their Cambodian affiliates, subsidiaries, or branches.
SERC’s Approval Now Required for Offshore ESOPs – Three-Step Processes
Step 1 – Prior SERC Approval. Before launching an offshore ESOP in Cambodia, a foreign company (via the local Cambodian entity) must obtain prior written approval from SERC. This requires submission of a formal application together with a detailed plan covering the plan’s objectives, scope, eligibility criteria, securities offered, pricing methodology, lock-up periods, committee structure, and associated risks. SERC must respond within 30 working days of receiving a complete application.
Step 2 – Reporting Obligations. Following the launch of the plan, the local Cambodian entity must report the offering results to SERC within 7 working days of completion. Any amendments to the plan must be notified with the SERC prior to their implementation.
Step 3 – Registration. The local entity must register the relevant equity securities with the SERC within 7 working days of submitting the offering results under Step 2 above.
Exemption for Companies with Existing SERC Approval
Although not expressly stated in the Draft Prakas, SERC clarified during the stakeholder consultation that Step 1 will apply only to ESOP not having the SERC approval. Cambodian entities that have already obtained SERC approval for an existing ESOP plan are, therefore, expected to be exempted from the prior approval requirement. For such companies, only Steps 2 and 3 will apply. Companies in this position should preserve documentary evidence of their prior approvals and any voluntary reporting history.
Sanctions and Fees
Non-compliance may result in fines of up to KHR 250,000,000 (approximately USD 62,500). In terms of official fees, the initial prior approval application carries a fee of KHR 20,000,000 (approximately USD 5,000), whilst fees for continued plan approvals (i.e., registration under Step 3) and plan amendment approvals are KHR 4,000,000 (approximately USD 1,000) per application.
Recommended Actions
- Assess your current structure. Determine whether your ESOP plan has Cambodian participants and whether prior SERC approval has already been obtained.
- Preserve key documentation. Retain all evidence of prior approvals and SERC communications, which will be essential to benefit from the potential exemption described above.
- Engage us early. Contact us for advice tailored to your specific plan structure. We are actively engaged in the SERC consultation process and will update you as key positions are confirmed.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
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