We have received many calls from companies seeking more information on the changes that came into effect in August of this year, via the Myanmar Companies Law.
Here is an overview of the major changes and some detail that answer many of the questions we received. Please contact us for more detailed information on how the beneficial changes relate to your company.
Regulations in the previous law, placed restrictions on company operations and investments from overseas. For the majority of cases the new rules now encourage investment from overseas.
All company documents, including those of incorporation are brought together within a new electronic registry.
|Subject||Companies Law 2017||Previous Regulations|
|Minimum Number of Shareholders required||One||Two|
|Minimum Number of Directors required||One||Two|
|Share Classes||Preference, Ordinary, Redeemable/Convertible||Ordinary Shares|
|Stipulated duties of Directors||Clear explanation of requirements||Definition not clearly outlined|
|Restriction on trading operations||Trading authorised with up to 35% investment in Joint Venture with a Myanmar Company. Also for "permitted sectors" 100% foreign ownership is authorised.||No licence available|
|Reporting of Dividends||These need not be solely from profits. A test of solvency is introduced, to protect creditors, to assure company can reimburse creditors if required.||From profits only|
|Company Incorporation||One Constitution||Both Memorandum and Articles of Association|
The English translation of the law comprises 184 pages so there is of course considerable more detail. These changes, including those within the new Myanmar Investment Law, bring positive changes.
For the majority of trading activities, foreign investors may take up to a 35% stake in a local company before the company is categorised as a foreign company. Under the previous law, a local company was classified as a foreign company even if just one share was allocated to an investor from overseas.
Overseas investors may also now own up to 35 percent of shares in a company listed on The Yangon Stock Exchange.
For a private company only one Director or Shareholder is required. Note, any further person even if not officially appointed, who “acts as if appointed as the position of Director”, is deemed to be a Director. Public companies require at least three Directors.
A company can be incorporated if one Director is ordinary resident in Myanmar. A person is considered resident if they are in Myanmar for at least 183 days within a period of 12 months.
The entire process to obtain permission to trade is now much simpler and no requirements remain that stated the objectives of the company had to be defined.
If a company’s constitution is changed, notice must be provided within 28 days from the date of passing of the special resolution. Then and only then is the change effective.
Annual returns must be filed within 28 days of the financial year end, for each trading year, with no period exceeding 15 months when no return has been filed.
Note: An overseas corporation that ceases to trade in Myanmar must register the change within 21 days.
Rules for smaller companies are simplified. A small company means a company that is not a public company or subsidiary of a public company and has no more than thirty employees. Annual revenue should be less than a stipulated figure, currently this is 50,000,000 Kyats. Protection for smaller companies is improved.
All these changes not only open the door for foreign companies and investors but also bring good news to existing Myanmar companies seeking new sources for further investments.
The Company Law was announced last year by Mr. U Aung Naing Oo, Director General of The Directorate of Investment and Company Administration (DICA). He also stressed that the changes that would enhance corporate standards in Myanmar, with the clear aim to establish world class standards in Myanmar.
FocusCore is here to help you with your Company Incorporation, together with all the initial and ongoing procedures for trading in Myanmar and we offer a wide range of corporate supporting services. Contact us today and join the growing range of overseas companies now trading in Myanmar.