Laos has published a new Decision setting fines and corrective measures for businesses that violate the Law on Enterprises, which takes effect on June 27, 2026.
The Decision applies to businesses of all sizes and forms, including individual enterprises, partnerships, limited companies, sole limited companies, and public companies, on a wide range of issues, from basic registration matters to internal corporate governance obligations, including shareholders’ meetings, share certificates, company registers, and board or auditor requirements.
Interestingly, the Decision also addresses misconduct from enterprise registration officers, those officers in charge of dealing with enterprises on corporate administrative matters.
The Decision is a welcome elaboration on the Law on Enterprises which only set out sanctions in very broad terms, with no details on any threshold of fines that may be imposed or the process leading to the imposition of sanctions, making the implementation of the Law on Enterprises on these issues ineffective in practice.
The article below provides some of the key aspects of the new Decision.
I. Sanctions and Scope of the Decision
A. Fines and Other Measures (ການປັບໃໝ ແລະ ການນໍໃຊ້ມາດຕະການອື່ນ)
The Decision on Fines and the Application of Other Measures Against Violators of the Law on Enterprises (ຂໍ້ຕົກລົງ ວ່າດ້ວຍການປັບໃໝ ແລະ ການນໍາໃຊ້ມາດຕະການອື່ນ ຕໍ່ຜູ້ລະເມີດກົດໝາຍວ່າດ້ວຍວິສາຫະກິດ) covers acts that violate the Law on Enterprises, but which do not constitute criminal offenses. To sanction these acts, the Decision provides for two types of measures (Article 2): ‘Fines’ which are financial penalties and ‘other measures’ which include education and training, warnings, and suspension of the use of the Enterprise Registration Certificate (ERC). The ERC is the document confirming the correct registration of an enterprise (e.g., individual enterprise, limited company) with the company registrar.
B. Education and Training (ການສຶກສາອົບຮົມ)
“Education and training” is an expression commonly used in Lao regulations when listing possible sanctions, but it is rarely defined. The Decision provides a definition (Article 3), although the definition itself uses the expression ‘education and training’ without explaining what it actually means in practice:
“Education and training means administrative measures, such as education and training and warnings, by preparing a record, in order for the violator to improve and correct its violation.”
The Decision also frequently lists “warning,” “education and training,” and “preparation of a record” as apparently separate sanctions, without clarifying how they relate to each other or to the definition above. It is therefore unclear whether education and training is a standalone corrective measure or a broader process that includes warnings and record preparation.
In practice, despite what the expression might suggest, the definition does not appear to require attendance at a formal training course. It describes a corrective administrative process: explaining the violation to the offender, issuing a warning, and recording the matter so that corrective action can be taken. The Decision provides no detail on whether the explanation is delivered orally or in writing.
C. ERC Suspension (ການໂຈະການນໍາໃຊ້ໃບທະບຽນວິສາຫະກິດ)
The Decision also defines suspension of the ERC (Article 3). As noted above, the ERC is the document proving the valid registration of an enterprise with the company registrar. This is different from the Business Operating License, which may be required to operate specific activities and is granted by the line ministry responsible for the activity in question (e.g., the Ministry of Health for businesses intending to operate the import, export, or distribution of medicines). The definition reads as follows:
“Suspension of the use of the enterprise registration certificate means an additional administrative measure applied to an enterprise that violates laws and regulations.”
The definition provides little detail on what the sanction actually entails. Based on the reading of the Decision, suspension prevents an enterprise from operating its business for the duration of the suspension. It applies to specific types of misconduct, as detailed below.
II. Sanctioned Conduct and Applicable Measures
The Decision sets out specific violations of the Law on Enterprises and the measures that may apply to each. Most sanctions combine a fine with corrective administrative measures. In this section, “corrective measures” refers to warning, education and training, and a written violation record. For some violations, repeat occurrences attract only a written record, without the warning and education and training component. This is noted where relevant below.
A. Violations by Businesses
1. Unauthorized Business Operations
Conducting business activities without enterprise registration (Article 6):
Subject to graduated fines:
- LAK 5 million (approx. USD 227, as of June 8, 2026) for the first occurrence;
- LAK 10 million (approx. USD 455) for the second occurrence; and
- LAK 20 million (approx. USD 910) per occurrence from the third occurrence onward.
Corrective measures apply to the first occurrence. From the second occurrence onward, only a written record applies. The individual or legal entity must register the enterprise within 10 working days from the date of the written record.
Operating a business without the required authorization to conduct business (Article 7):
The Decision does not set a specific fine for this violation.
Corrective measures apply, and the enterprise registration officer must coordinate with the relevant sectoral authority so that measures may be taken under the applicable laws and regulations.
Note: The Lao text uses the expression ‘ອະນຸຍາດດໍາເນີນທຸລະກິດ’, which translates more broadly as ‘authorization to conduct business.’ This may cover a wider range of approvals and licenses than what is formally referred to as a ‘Business Operating License’ under Lao law. Readers should consider whether their specific activity requires any form of authorization beyond enterprise registration, regardless of how that authorization is formally named.”
2. Misuse or Falsification of Enterprise Registration Documents
Providing an ERC to another person for use (Article 8):
Subject to graduated fines:
- LAK 10 million for the first occurrence;
- LAK 20 million for the second occurrence; and
- LAK 50 million (approx. USD 2,280) per occurrence from the third occurrence onward.
The second occurrence also triggers suspension of the use of the ERC. The first occurrence includes corrective measures; the second and third occurrence onward refer only to a written record.
Using another enterprise’s ERC (Article 8):
The person using another enterprise’s ERC is deemed to be conducting business without enterprise registration and is subject to the measures applicable to that violation.
Forging an ERC, the signature or seal of the enterprise registration officer, or changing the text of an ERC (Article 9):
The fine is LAK 20 million per occurrence, together with corrective measures.
Using a forged ERC (Article 9):
The fine is also LAK 20 million per occurrence, together with corrective measures.
Using an ERC after its use has been suspended (Article 15):
The fine is LAK 2 million (approx. USD 91) per occurrence, together with corrective measures.
The Decision treats this conduct as equivalent to conducting business without enterprise registration, but applies this specific fine.
3. Inaccurate Information and Failure to Notify Required Changes
Providing information that is not factually and/or legally accurate (Article 10):
This applies to information provided for enterprise registration, changes to the ERC, or enterprise dissolution. The fine is LAK 10 million per occurrence, together with corrective measures.
Listing an enterprise owner, partner, or shareholder who is not the actual capital contributor or beneficial recipient (Article 10):
This provision targets nominee arrangements. Where the enterprise owner, partner, or shareholder listed in the ERC is not the actual capital contributor or the person who actually benefits from the business operation, the fine is LAK 20 million per occurrence, together with corrective measures, if discovered by the relevant officer.
Changing the contents of the ERC without notifying the enterprise registration officer within 30 days (Article 11):
The fine is LAK 2 million per occurrence, together with corrective measures.
This covers changes such as office location, telephone number, registered capital, enterprise name, director, manager, enterprise owner, partner, shareholder, or branch.
Public company failing to notify a required change of status, company form, dissolution, or liquidation (Article 11):
Where a public company no longer meets the conditions for public company status, no longer intends to raise capital through the capital market, or ceases to be listed on the Lao Securities Exchange, failure to notify the enterprise registration officer is fined LAK 5 million per occurrence, together with corrective measures.
Ceasing business activities or terminating the taxpayer identification number without notifying enterprise dissolution (Article 12):
The fine is LAK 1 million (approx. USD 45) per occurrence, together with corrective measures. The enterprise must also notify the dissolution within 10 working days from the date of the written record.
4. Non-Compliance With Enterprise Identification Obligations
Failing to install the enterprise name sign (Article 13)
- First occurrence leads to corrective measures;
- Second occurrence is fined LAK 1 million, together with a written record; and
- Third occurrence onward, the fine is LAK 2 million per occurrence, together with a written record and suspension of the use of the ERC.
The enterprise must install the sign within 30 days from the date of the written record.
Failing to remove the enterprise name sign after dissolution (Article 14):
- First occurrence leads to corrective measures;
- Second occurrence is fined LAK 1 million, together with a written record; and
- Third occurrence onward, the fine is LAK 2 million per occurrence, together with a written record and suspension of the use of the ERC.
The enterprise must remove the sign within 10 days from the date of the written record.
5. Breaches of Internal Corporate Governance Requirements
Partnerships and companies without their own bylaws (Article 16):
The fine is LAK 1 million per occurrence, together with corrective measures. The enterprise must prepare its bylaws within 30 days from the date of the written record.
Limited companies and public companies failing to convene an ordinary shareholders’ meeting (Article 17):
The fine is LAK 1 million per occurrence, together with corrective measures.
Managers of partnerships and directors of companies failing to issue share certificates (Article 18):
The fine is LAK 1 million per occurrence, together with corrective measures.
The share certificates must be issued within 10 days from the date of the written record.
Limited companies failing to prepare a shareholder register (Article 19):
The fine is LAK 1 million per occurrence, together with corrective measures.
The shareholder register must be prepared within 10 days from the date of the written record.
Limited companies and public companies failing to prepare a register of directors (Article 20):
The fine is LAK 1 million per occurrence, together with corrective measures.
The register of directors must be prepared within 10 days from the date of the written record.
Limited companies with assets exceeding LAK 50 billion failing to have a board of directors and an auditor (Article 21):
The fine is LAK 1 million per occurrence, together with corrective measures.
The company must establish a board of directors and appoint an auditor within 30 days from the date of the written record.
Limited companies failing to have a reserve fund in accordance with the regulations (Article 22):
The fine is LAK 1 million per occurrence, together with corrective measures. The company must establish the reserve fund within 30 days from the date of the written record.
These internal governance sanctions are particularly relevant in practice. They show that corporate documents and governance steps, such as bylaws, shareholders’ meetings, share certificates, shareholder and director registers, board composition, auditors, and reserve funds, should not be treated as simple administrative formalities.
B. Misconduct by Enterprise Registration Officers
The Decision does not only target businesses but also sanctions officers responsible for implementing the enterprise registration framework (Article 5(B)).
Under the Decision, the following misconducts are subject to administrative measures:
- Issuing documents inconsistent with laws and regulations, or requiring enterprises to renew ERCs where renewal is not required by law;
- Refusing, without reason, to process registration, ERC changes, or enterprise dissolution;
- Requesting additional documents or obstructing or delaying the processing of registration, ERC changes, or dissolution, contrary to the law; and
- Refusing to disclose enterprise registration information.
The sanctions available are a warning, education and training, a written record, or removal from the position of enterprise registration officer. The Decision does not provide detailed criteria for deciding which measure should apply in each case, or explain, for example, when a warning would be sufficient or when removal from the position would be appropriate.
III. Beyond the Decision: Other Possible Liabilities
The Decision is an important new administrative sanctions framework, but it should not be read as the full extent of possible liability of business operators. In some situations, additional consequences may arise under the Law on Enterprises, sector-specific regulations, or even the Penal Code. This is particularly relevant where the same conduct may trigger both administrative and criminal liability, or where repeated non-compliance continues after the sanctions set out in the Decision have been applied.
A. Administrative Sanctions Do Not Exclude Criminal Liability
The Decision should not be read as excluding criminal liability. For example, conducting business without enterprise registration is sanctioned administratively under the Decision, but it may also fall within Article 297 of the Penal Code on conducting business illegally. The Decision does not clearly explain the threshold between administrative handling and criminal enforcement.
A similar caution may apply to nominee arrangements: while the Decision imposes a specific administrative fine where the registered owner, partner, or shareholder is not the actual capital contributor or beneficial recipient, criminal liability may still arise if the arrangement is deemed to be conducting business illegally, or involves forged documents, false declarations, tax evasion, unauthorized business activity, or another criminal offense.
B. Sector-specific Measures May Still Apply
The Decision does not elaborate on the situation of business operators who operate without the appropriate Business Operating License, when this license is required by law. Although corrective measures may apply, further sanctions may be imposed depending on the laws and regulations from the ministry in charge of supervising the relevant activity.
C. What Happens After the Third Occurrence
The Decision provides a graduated scheme for some violations, with sanctions becoming more severe depending on whether it is the first, second, or third occurrence. Beyond the third occurrence, however, the sanction simply repeats and the Decision gives no indication of what may happen if the operator still does not address the violation. In that case, any further escalation would likely need to rest on another legal basis under the Law on Enterprises or another applicable law or regulation.
Conclusion
The Decision provides a clear set of measures to promote compliance with enterprise law requirements. The sanctions are straightforward and relatively easy for enterprise registration officers to apply. The Decision also provides useful guidance on the procedure to follow before imposing a sanction (Article 24). The fact that sanctions may also be imposed on enterprise registration officers themselves should help discourage delays and encourage the timely processing of administrative formalities. Overall, the Decision is a welcome addition to the legal framework for better compliance with Lao corporate law.
More broadly, the Decision reflects a wider trend toward more structured and transparent enforcement of corporate law in Laos, and signals that compliance with enterprise registration and governance requirements is being taken more seriously. Businesses operating in Laos should treat it as an opportunity to review their corporate documentation and governance practices, and address any gaps before enforcement begins.
Disclaimer
This article is for general informational purposes only and does not constitute legal advice. For legal assistance or advice regarding law matters in Laos, readers must contact a qualified Lao lawyer.
Translation Note
This article is based on an independent reading of the official Lao text of the regulation. While every effort has been made to ensure accurate and contextually appropriate terminology, some terms may be subject to refinement as legal usage and official interpretations evolve. If readers have a more accurate translation supported by reliable sources, I would be happy to read it. Please feel free to share in the comments or via private message. This is not an official translation.
Exchange rate note: USD equivalents are provided for convenience only and are approximate. They were calculated based on the exchange rate available on June 8, 2026, and may vary depending on the applicable exchange rate source.