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 from which an investor may choose:

• Representative office
• Branch office
• Sole Trader
• Partnership
• Limited Company
• Public Company
• Private-State Mixed Enterprise

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.

Representative and Branch Offices

The Business Law does not mention either representative offices or branch offices. Many branch and representative offices have been established in Laos. The FI Law permits the establishment of both representative offices and branch offices in Laos. The DDFI has standard descriptions for both these forms of business operations. 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.

A foreign enterprise established in Lao PDR may be either a new company or a branch office of a foreign company. A branch office of a foreign company may have the Articles of Association of the parent company or separate Articles of Association providing they are consistent with the laws and regulations of the Lao PDR. 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.

Partnership

A partnership can be formed between two or more partners to carry out business. There is no capital requirement for a partnership. The partners each may contribute funds, capital equipment, land, patents and trademarks, and technological know-how based on a formula to which they have agreed. The partnership can be managed by either or all of the partners or by a designated manager. All partners are jointly and severally liable for the liabilities of the partnership.

Limited Liability Company

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 ($US470 as of April 2003) with at least half of the registered capital paid up upon registration of the company and the remaining capital paid up within two years of such registration. A limited liability company must establish reserve funds appropriated at 5 to 10% from its net profit. The shares of a limited liability company must all have the same value and are transferable only upon approval of two-thirds of the shareholders. A limited liability company must hold a general shareholder meeting at least once a year. One or more managers, chosen at a general shareholder meeting, may manage the company. The manager may bind the company and may be liable to the company and third parties for his or her wrongful acts.

A one-person limited liability company is a business unit created by a single person. It must have capital of at least 5,000,000 kip. This person is responsible for the company’s liabilities only up to the extent of the company’s registered capital.

A limited liability company is the most common structure for conducting business in Laos. By law, a company is regarded as a juristic person that has the right to own property and carry out business under its name. Its liabilities to others are separate from those of its shareholders.

Sole Trader Enterprise

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.

Public Company

A public company can be created by a minimum of seven shareholders. All shares in the company must have equal value. Shareholders in public companies are liable up to the limit of their unpaid capital contribution. Shares in public companies may be paid in cash or in kind. The maximum value of each share is 10,000 kip. A public company’s registered capital must be 50,000,000 kip or greater.

The management of a public company is conducted by the Executive Council, which includes 5 to 17 members, including one or two workers’ representatives. A public company must hold an ordinary general meeting of shareholders at least once each year. Shareholders and proxies representing two-thirds of the shares can call an extraordinary general meeting upon first notification or half of the shareholders on second notification.

Shares of public companies may be sold to outsiders as well as inside shareholders. Shares in a public company are transferable. At present, however, there is no stock market in Laos. A public company is incorporated in a similar manner to a private company. A limited company may be transformed into a public company. Unlike a private company, a public company may issue debentures and shares to the public.

Mixed Enterprise

A Joint-Venture enterprise is a joint enterprise between the state on one side, and other forms of private business entities on the other side. In mixed enterprises, the state must hold at least 51% of the shares. Mixed enterprises are regulated by the same rules as public companies with the following exceptions:

1. The government has the decision over the transfer of shares owned by the state; 
2. The private shares are managed as shares of public companies;
3. The share certificates are transferable;
4. The Chairman of the Board of Director is appointed by the Minister of Finance and the Vice-Chairman is selected by the private party and approved by the Minister of Finance;
5. The President of the Board of Directors has a casting vote.