30 August 2018
The Myanmar Companies Law 2017 (“Companies Law”) is in force as of 1 August 2018. The Companies Law brings about sweeping changes to the regulation of companies in Myanmar.
At a glance
From 1 August 2018:
- Foreigners are able to own 35% of a Myanmar company.
- A private company can be incorporated with a minimum of one shareholder and one director.
- At least one director of every company must be ordinarily resident in Myanmar.
- Directors must comply with stipulated directors’ duties.
- Companies must register on Myanmar Companies Online.
Foreigners able to own 35% of Myanmar company
The new regime retains the distinction of the now superseded Myanmar Companies Act 1914 of “Myanmar Company” and “Foreign Company”. To be classified as a Myanmar Company, the company was required to be 100% owned and controlled by Myanmar citizens.
From 1 August 2018, foreigners are able to own up to 35% of a Myanmar Company, without changing the characterisation of the local company. Exceeding the 35% ownership threshold would render the company a “Foreign Company”, and therefore subject to restrictions under the Myanmar Investment Law.
Single shareholder and director companies allowed
From 1 August 2018, a private company can be incorporated with a minimum of one shareholder and one director. Public companies must have at least three directors.
Requirement of residency
From 1 August 2018, a private company must have at least one director and a public company must have at least three directors, one of whom must be a Myanmar citizen. The Companies Law stipulates that at least one director of every company must be ordinarily resident in Myanmar. The ordinarily resident director may be a permanent resident of Myanmar or be resident in the country for at least 183 days in every 12-month period.
Directors’ duties introduced
The Companies Law introduces directors’ duties for the first time, including the duty to act with care and diligence, the duty to act in good faith in the company’s best interest, and the duty to disclose certain interests. The Companies Law also states that a director has a duty to avoid “reckless trading”, specified as causing or allowing “the business of the company to be carried on, or agree to the business being carried on, in a manner likely to create a substantial risk of serious loss to the company’s creditors”.
Companies must register on Myanmar Companies Online
From 1 August 2018, the Myanmar Companies Online registry system (“MyCO”) comes into effect. It is maintained by the Directorate of Investment and Company Administration (“DICA”). All company documents must be filed with DICA, including a copy of the company’s constitution, as set out in the Companies Law and the Myanmar Companies Regulations 2018.
The requirement of registration also applies to companies and body corporates already registered under the previous regime. These entities must re-register on the MyCO between 1 August 2018 and 31 January 2019.
Compliance from 1 August 2018
With effect from 1 August 2018, all companies must:
- Have a registered office in Myanmar; must inform DICA of its location
- Keep proper company registers (such as register of members and directors)
- Maintain financial records
- Disclose details of directors to DICA
- Notify DICA of changes in company information (such as issuance of new shares, changes to shareholders or directors, or change to registered address)
- Submit annual returns on the MyCO registry; failure to do so may result in the company being suspended or struck off DICA’s register
- Pay filing fees to DICA when registering company and filing certain documents
- Comply with directors’ duties as set out in the Companies Law
The following materials are available on the DICA website www.dica.gov.mm or by clicking on the links below:
- Myanmar Companies Law 2017
- Myanmar Companies Regulations 2018 and Notifications
- Prescribed Model Constitution under Myanmar Companies Law 2017
- Company Directors Guide: A Guide to the Myanmar Companies Law 2017