VDB LoiUpdates & Analysis

Client Alert: Immediate Enforcement of Capital Requirements for Foreign-invested Trading Companies

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On 25 June 2019, The Ministry of Industry and Commerce issued Notice No. 0764/ERMD.IC (the “Notice”) instructing its provincial and Vientiane Capital divisions to inspect the company registration of foreign-invested wholesale and retail trading companies.

The intention of the Notice is to ensure that all foreign-invested trading companies (both wholesale and retail) are in compliance with the minimum capital requirements specified in Instruction No. 1005/IC.DC dated 22 May 2015, as follows:

  • Trading companies that are 100% foreign-owned must have registered capital of at least LAK20 billion or US$2.3 million.
  • Joint venture trading companies with a foreign/local ownership of 70:30 requires minimum capital of at least LAK10 billion or US$1.15 million; joint ventures with a foreign/local ownership of 50:50 requires minimum capital of at least LAK4 billion or US$460,000.

Per the Notice, any foreign-invested trading company (either joint venture or 100% foreign-owned) that fails to meet the above requirements will be terminated, and its enterprise registration certificate revoked immediately.

Our reading of the Notice is that inspections will begin right away, although it does not mention a start date. Therefore, we strongly suggest that all trading companies review their corporate registration information and rectify any issues without delay.

If you have questions on this alert, or need help with this review, please contact the undersigned or your usual VDB Loi adviser.

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9 Jul 2019