Ensuring Compliance With The Myanmar Companies Law 2017

The Myanmar Companies Law 2017 (MCL), which entered into force on 1 August 2018, introduces a modern legal framework for foreign investment in Myanmar. The Draft Companies Regulations 2018 (DCR) was published by with the Myanmar Directorate of Investment and Company Administration (DICA) on 2 May 2018. The MCL replaces the abolished Myanmar Companies Act 1914 (MCA).

The MCL introduces a number of key changes to the regulation of companies of Myanmar that you need to be aware of, in order to avoid harsh penalties for non-compliance. Below is an outline of the most important changes introduced by the MCL.

Electronic Registration System and Re-Registration of Existing Companies

Upon the entry into force of the MCL, a new online electronic registration system called Myanmar Companies Online Registration (MyCR) will also be launched.

Existing companies have to re-register on MyCR within six months from the entry into force of the MCL (so called "re-registration period". An existing company which does not re-register on the MyCR within the re-registration period will be struck off the companies' register. Upon publication in the Gazette of the relevant notice by the Registrar, the company will then be dissolved.

Regulation of Foreign Companies

Foreign Shareholding in Myanmar Companies

The MCL changes the definition of a Myanmar company to include any company incorporated in Myanmar where foreign ownership does not exceed 35%.

This change will allow foreigners to hold a minority 35% interest in companies that are:

engaged in sectors which are currently closed to foreign investorsunderparagraph 1(b) of the MIC Notification no. 15/2017 as well as banking and insurance sectors. listed on the Yangon Stock Exchange which is currently limited to local investors. active in a wide range of import, export and trading activities, which were, until recently, largely restricted to Myanmar citizens and entities (see section on liberalisation of trade). own land - which is otherwise prohibited for foreigners under the Transfer of Immovable Property Restriction Act 1987. Upon reregistration, existing companies with foreign shareholding up to 35% will be considered Myanmar companies.

Overseas Corporations

With the MCL in effect, overseas corporations that carry on business in Myanmar will no longer register as branch offices or representative offices, but rather as overseas corporations.

While the MCL does not define activities which constitute carrying on a business in Myanmar, it states that an overseas corporation is not deemed to be carrying on business in Myanmar merely because it maintains a bank account, conducts an isolated transaction that is completed within a period of 30 days (not being one of a number of similar transactions repeated from time to time), holds property, becomes a party to legal proceedings, or lends money.

Accordingly, overseas corporations that conduct an isolated transaction that is not completed within a period of 30 days or conducts an isolated transaction that is completed within 30 days but is related to a number of similar transactions repeated from time to time, the overseas corporation will need to consider registering with DICA as an overseas corporation in order to avoid penalties for non-compliance.

Overseas corporations registered with DICA must, among other things, comply with a number of obligations under the MCL upon (re)registration. These include the...