Knowledge Highlights 29 November 2019
On 15 November 2019, the Myanmar Directorate of Investment and Company Administration (“DICA”) issued Directive No 17/2019 on Disclosure of Beneficial Ownership Information (“Directive”), with the stated objective of effectively increasing the transparency and accountability of beneficial ownership of a legal entity or legal arrangement (such as express trusts or similar) and also to deter tax evasion, money laundering and terrorist financing.
Beneficial ownership information must be submitted using the online form which will be available on the DICA website www.dica.gov.mm.
The Directive comes into force on 1 January 2020.
Scope of Directive
The Directive states that all legal entities or legal arrangements incorporated Myanmar must comply with the Directive. Failure to provide accurate and up-to-date information and comply with the Directive, any successor regulations and directives shall constitute an offence and shall be penalised in accordance with Chapter XI of the Anti-Money Laundering Law. Generally, the penalties set out therein include both fines and terms of imprisonment upon conviction.
“Beneficial ownership” is defined in the Directive as the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.
A beneficial owner is any individual who:
- directly or indirectly holds more than 5% of the shares and/or voting rights;
- directly or indirectly has the right to appoint and remove the majority of the board;
- has the right to exercise, or actually exercises, significant influence or control over the public or private company or corporate entity.
All legal entities and legal arrangements are required to obtain and hold up-to-date information on their beneficial ownership and submit it in a timely manner to DICA and the Internal Revenue Department. All legal entities and legal arrangements are also required to cooperate with the competent authorities to the fullest extent possible in determining the beneficial owner by:
- authorising one or more natural persons resident in Myanmar, accountable to DICA, for providing all basic information and available beneficial ownership information, and giving further assistance to the authorities; and/or
- authorising a Designated Non-Financial Business and Professions (“DNFBPs”) in Myanmar, accountable to DICA, for providing all basic information and available beneficial ownership information, and giving further assistance to the authorities.
The Directive states that DNFBPs include company service providers which, as a business, provide any of the following services to third parties:
- Acting as formation agent of legal organisations;
- Acting as a director or secretary of a company, a partner of a partnership, or as a person in a similar position in another legal entity or arrangement; and
- Providing a registered office or accommodation or business address or correspondence or administrative address for a company, a partnership or any other legal entity or arrangement.
The Directive also includes in the DNFBP category persons, including lawyers and accountants, who provide any of the following services:
- Organisation of contributions for the creation, operation or management of companies
- Creation, operation or management of legal entities or arrangements
Record keeping and protection of information
The Directive mandates the maintenance of information and records referred to in the Directive for at least five years after the date on which the company is dissolved or otherwise ceases to exist, or five years after the date on which the company ceases to be a customer of the professional intermediary or financial institution.
Additionally, individuals may request that their information be protected. The Directive states that such a request can be made to DICA by individuals at risk of violence or intimidation as a result of being on the register. The Directive stipulates that “basic” information will be publicly available and beneficial ownership information will be made available to competent authorities.