Since Union of Myanmar has decided to promulgate the new Myanmar Company Law (“MCL”) on 1st August 2018, there are some issues that have to be concerned by an investor whose company is incorporated under the previous law (Myanmar Company Act. 1914)
- The companies that were incorporated under the previous law have to be re-registered under the MCL.
The New Myanmar Company Law requires all existing companies to be re-registered with the Directorate of Investment and Business Administration (“DICA”) under the provision of the MCL from 1 August 2018 and no later than 31 January 2019; otherwise the company may be revoked from the record.
However, DICA has prepared an online system called Myanmar Company Online System (“MyCO”) to support all entrepreneurs who owned a company or willing to incorporate their company in Myanmar. MyCO will start to be operated on the same day of the promulgation of the MCL.
- Amending some of the significant rules.
- MCL let the foreign investors to invest in local company up to 35 percent.
Under the previous law (Myanmar Company Act. 1914), all Local Company are defined as (a company) 100% owned by Myanmar Citizen. Therefore, the foreigner is not allowed to participate in the ownership of the local register company.
Therefore, any citizen of another nationality wishes to incorporate a company to manage his business in Myanmar, must establish his own company as a foreign company as his right may be limited by any applicable law.
Nevertheless, the MCL will come up with alternation of definition for the foreign company as a company that is directly or indirectly owned by foreigners for more than 35 percent which mean the foreigners can hold up to 35 percent of local company’s shares and still be defined as a local company.- Qualification of the shareholders and directors
MCL states that every company must have at least one shareholder and director and at least one of the directors must be “ordinarily resident” which mean a person who is a permanent resident of the Union under an applicable law or is resident in the Union for at least 183 days in each 12 month period commencing from the date of commencement of the MCL for the company registered under the previous law, and from the date of registration of the company for the company registered under the MCL.
- Revocation of company’s object
According to the previous law, every company must declare its object in the Memorandum of Association. This object determines the company’s authority to make or take an action on other people or companies.
The company must not undertake or perform actions that exceed their object of being registered with the registrar. However, the new MCL will revoke this objective requirement by defining that the company registered in MCL will no longer have to declare its object.
Therefore, the company will have the power to performance any kind of commercial activity provided that it complies with this law and any other applicable law.- The replacement of Memorandum and Article of Association
Previously, the Memorandum and the Article of Association are significant documents that must be filed with the conservator of the company during the registration process. The MCL does not require applicants to file these documents, but only have to file the company’s Constitution during the registration process.
The Company’s Constitution is a document that establishes the administrative rules of the company. Furthermore, the Constitution determines a relationship between shareholders, directors and other members of the company.
In conclusion there are two important steps that must be made by entrepreneurs who have owned or own a company in Myanmar
First, they must try to understand to comply with the law, so that they can properly manage their business for their best interest of the company.
Secondly, they have to re-register their company to the DICA before 31 January 2019. Otherwise, their company ( and business ) could be revoked.
