Sole Trader Enterprise

Limited Liability Company

Partnership

Representative and Branch Offices

Forms of Business Organization in Laos.

Text I.

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Under the Business Law (1994), the Ministry of Trade and Tourism (MTT), Department of Enterprise Registration is responsible for registering all businesses in a Company Register. The Business Law makes no distinction between foreign and domestic companies. There are several types of business forms in Laos.

The Business Law regulates the formation, conduct of affairs, and liquidation of all companies. The Bankruptcy Law of 1994 also deals with liquidations. In order for a company to be considered as a lawfully established juristic entity, it must be properly registered with the MTT and obtain an Enterprise Registration Certificate. If no errors or omissions are made in the application form or in the documentation submitted, the application will be processed within 10 to 30 days.

Most importantly, a foreign investor must first obtain a Foreign Investment License (FI License) before applying for a Business License. The Articles of Association of a foreign investor will already have been vetted and approved by the Department of Domestic and Foreign Investment (DDFI) as part of the approval process to obtain a FI License.

The FI Law permits the establishment of both representative offices and branch offices in Laos. Under the DDFI interpretation of a representative office, such an office cannot conduct business on its own, but must refer all business operations to units outside the country.The procedures for registering a branch office are the same as for any other type of company. A branch office is regarded as the same legal entity as its parent company. The parent company, therefore, can be held responsible for all liabilities of the branch in Laos.

A partnership can be formed between two or more partners to carry out business. There is no capital requirement for a partnership. The partnership can be managed by either or all of the partners or by a designated manager.

A limited liability company is comprised of from one to twenty shareholders. It must have a registered capital of at least kip 5,000,000 ($US 470 as of April 2003). A limited liability company is the most common structure for conducting business in Laos. Its liabilities to others are separate from those of its shareholders.

A sole trader enterprise is a business entity with a minimum registered capital of 1,000,000 kip created by one person who is fully liable for the activities of the entity. The owner of such a business acts on behalf of the entity and may assign a manager to run the business.

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