The benefits and complexities of the trust sector in Cambodia were explained and discussed at an informative workshop hosted by DFDL with the key participation of His Excellency Sok Dara, Director General of the Trust Regulator.
In his opening remarks, H.E. Sok Dara highlighted that the emergence of a regulated and managed trust sector would be crucial contribution to the economic and social development of Cambodia.
“We are committed to implementing policies, strategies and targeted plans to develop the trust structure in Cambodia, which will certainly increase the inflow of investment in all sectors of economy,: he said.
H.E. Sok Dara said Cambodia was moving to provide security for all parties, adding that all established trusts must be registered under a legally binding regime between the fund or asset owner and the trustee – and all trust companies must be licensed by the Trust Regulator.
“In just one year and half, the Trust Regulator can announce that the trust market in Cambodia is in full operation and six companies as licensed trustees.”
His remarks were followed by a presentation by Ms. Chheam Sokhary, Director of Legal Affairs and Inspection Dept of the Trust Regulator, who explained the function and duties of the Trust Regulator and how to apply to establish a trust.
DFDL experts were up next as Ms. Davy Kong, Co-head of the Real Estate and Construction Practice, and Mr. Jonathan Blaine, Tax Director and Co-Head of Regional Compliance & Investigations Practice, gave a presentation on trust structuring options for managing immovable properties and the accreditation and valuation of companies’ s immovable properties.
Ms. Davy Kong explained the structuring options for land ownership and gave an overview of Prakas 052 on the accreditation of valuation companies and valuation specialists. Mr. Jonathan Blaine noted that the tax implications for the trust sector were still in development.
“The authorities have yet to issue guidance on how trusts are to be taxed so we have to make some assumptions based on overseas jurisprudence,” Mr. Blaine said, adding that “the tax department has been in touch with the Trust Regulator, and, for the moment, the onus of tax compliance is on the trustees.”
Ms. Vansok Khem, Partner and Deputy Head of the DFDL Cambodia’s Corporate and Commercial practice, gave a detailed presentation on Real Estate Investment Trusts (REIT).
She said a REIT was essentially a collective investment scheme authorized by the Securities and Exchange Regulator of Cambodia.
“A REIT invests in income-generating real estate assets and distributes income to investors, including shopping malls, land and special economic zones – as long as they follow all Cambodia regulations,” she said.
Mr. Blaine then focused on a very popular type of trust, the family trust.
“A family trust is an individual trust – normally a situation of estate planning. They are very flexible and very useful for succession planning,” he said.
“If you have a business, you can put shares into a trust to structure and manage the succession, especially if your children are young still young and you don’t want to give them the shares right away.”
Mr. Blaine also compared the benefits of a family trust compared with a will, noting that trusts trusts were private, executed immediately and not normally challenged. He added that assets are distributed according to one’s wishes can distributed over extended periods.
The seminar concluded with an engaging panel discussion moderated by Ms. Vansok Khem, who was joined by Ms. Chheam Sokhary, Mr. Blaine, Ms. Davy Kong and Buth Bunseyha, Executive Vice President and Legal Group Chief of ACLEDA Bank. Questions from the audience were welcomed and addressed.
The closing remarks were delivered by Ms. Seka Hep, Partner, Sarin & Associates & Cambodia Deputy Managing Director.