Myanmar's Directorate of Investment and Company Administration (DICA) announced late last year that it will be replacing the colonial-era Myanmar Companies Act of 1914. The new law combines the elements of the Myanmar Companies Act of 1914 and the Special Companies Act of 1950, in hopes that the new law will be more attractive to foreign investments.
In this blog post, we will outline some key developments in this new law.
In this blog post, we will outline some key developments in this new law.
Definition of foreign company
The new law no longer defines any company in which a foreigner holds a minimum 1% share as a foreign-owned company, but only those where the foreign ownership exceeds 35%. The new law also removes the requirements for foreign companies to obtain a separate 'Permit to Trade' (Form 1) thus reducing the regulatory burden.
Concept of small company
The new law introduces the concept of 'small company' which is defined as a company with less than 30 employees and with an annual revenue less than MMK 50,000,000. This does not apply to public companies and its subsidiaries. A small company is exempted from a number of reporting and meeting requirements, such as holding an annual general meeting, preparing and auditing of financial statements.
Online company registration process
Currently there are more than 60,000 registered companies with DICA under the old law, those companies will have to register online under the new law over the next six months. The government is also looking to establish a system and process for the electronic authentication, submission, filing, storage and maintenance of company records.
Removal of company objectives
Since Form 1 will disappear, companies will no longer need to indicate their intended objectives. This is provided that they comply with the law and have any other permits and licenses relevant to their business activity.
Requirements for resident directors
The new law state that a company in Myanmar must have at least 1 resident director, who does now necessarily have to be a Myanmar citizen, but in accordance to the taxation laws, the nominee must be residing in the country for at least 183 days each year.
Directors' duties
The new law emphasizes that it is the duty of the directors to ensure that the company is properly run and managed in the best interest of the company. The law clearly sets out the various duties and high standards for corporate conduct. In some circumstances, directors may become liable to penalties if they breach their duties.
Penalty and fine for non-compliance
Under the new law, corresponding monetary penalties range from MMK 50,000 to MMK 10,000,000. Below is a summary of the changes to key compliance matters.
Key Compliance Matters |
Old Law |
New Law |
Notify Registrar for Issuance of share |
Within 1 month |
Within 21 days |
Issue share certificates |
Within 3 months |
Within 28 days |
Notify Registrar for appointment of directors of company or chief representatives of branch / representative office |
Within 14 days |
Directors - within 28 days Chief Representatives - within 7 days |
Notify Registrar of change of address |
Within 28 days |
Within 28 days |
Hold annual general meeting (AGM) |
Within 18 months after incorporation, and subsequently once at least in every calendar year but no later than 15 months apart |
Within 18 months after incorporation, and subsequently once at least in every calendar year but no later than 15 months apart |
Notify Registrar of holding AGM, filing of annual returns and audited financial statement |
Within 21 days of AGM |
Written minutes ready for inspection within 21 days Annual returns and audited financial statements to be filed within 2 months of incorporation, and subsequently once at least every calendar year but no later than 15 months apart |
The above-mentioned only highlight some of the changes that will be effective upon the implementation of the new Myanmar Companies Law.
Not sure how these changes will affect your business?
Please contact us to discuss further and what steps you can take.
Our Myanmar Business Services team will be happen to assist you.