Public consultations of the draft regulations end on May 31.
Existing companies registered in Myanmar have until January 31 next year to re-register on an electronic system once the new Companies Law and related regulations come into effect on August 1.
Draft regulations of the Companies Law, which was enacted last December, have been released by the Directorate of Investment and Company Administration (DICA).
Public consultations of the draft regulations end on May 31. Feedback can be submitted by email or fax until then (dica@mptmail.net.mm, lawreform.dica.mm@gmail.com, and fax 01 658135).
The law and regulations, called the Myanmar Companies (Electronic Registry System and Miscellaneous Matters) Regulations 2018, will be enacted on August 1, according to DICA.
U Aung Naing Oo, DICA director general, told The Myanmar Times that the new law modernises practices and streamlines procedures for businesses, and introduces new incentives for international investors to invest in the country.
“The Companies Law will be enforced on August 1. The Companies Law paves the way for all foreign investors to come and work together with Myanmar local companies.
“A lot of barriers and restrictions will be removed for foreigners in doing business in Myanmar by using our new Companies Law,” he remarked.
The new law was drafted based on the British common law system and builds on the 1914 Companies Act (formerly the Burma Companies Act), which has served as the legal foundation for incorporated business in Myanmar for over a century.
The authorities will release the model constitution for private companies limited by shares at a later date.
Key points of draft regulations
The Myanmar Times summarises the main points of the draft regulations below:
The registrar will establish and maintain the electronic registry system. Any registry transaction will be carried out using the electronic registry system.
The registrar will electronically issue, certify and send a notice, certificate or document relevant to the new law.
A director of a company shall not resign or vacate his office unless there is remaining in the company at least one director who is ordinarily resident in the country.
Re-registration
All existing companies registered prior to the implementation of the new law must re-register on the electronic registry system within the re-registration period, which lasts for six months starting from August 1.
If an existing company does not re-register electronically before the deadline, i.e. end of January, the registrar may strike its name off the register and announce that the company shall be dissolved, while continuing to enforce the liability of its directors and members.
An application for the re-registration of an existing company must include: (i) the full name, date of birth, gender, nationality and address of every director and secretary of the company, (ii) the address of the registered office and (iii) the address of the principal place of business of the company.
In the case of an existing company, the application must include the full name and address of every member of the company, and the number and class of shares issued to each member; whether the company has an ultimate holding company, and whether the company will, on re-registration, be a foreign company or domestic company.
The re-registration of an existing company does not create a new legal entity, affect the property, rights, obligations, proceedings or liability of the company. All shares issued by the existing company before re-registration are deemed to be converted into shares of no par value but that conversion does not affect the rights and obligations attached to the shares.
An existing company is exempted from filing an annual return if the filing falls due during the re-registration period.
A step forward for the economy
The new Companies Law, enacted in early December last year, is a landmark reform which changes the rules of the game for the economy. The legislative reform will liberalise many sectors and allow domestic businesses to grow by seeking foreign capital and expertise via joint-ventures. It allows foreign entities to take up to a 35-percent stake in domestic companies and opens up the Yangon Stock Exchange for non-Myanmar customers.
The business community is convinced that the legislation brings about desperately needed reforms for cash-strapped businesses in the local economy and hence sets the conditions for further economic growth.
However, the unanticipated decision by the government to delay implementing the legislation until mid-2018 sparked widespread disappointment among the private sector.
William Greenlee, DFDL partner and former chair of American chamber’s legal group, argued that the setback resulted in “a loss of potential foreign investment enthusiasm”. During the new year, Katsuji Nakagawa, chair of the Japan Chamber of Commerce Myanmar, even said that swift enforcement is “the most important” task for the authorities.
Since implementation of this law is touted by many officials and business leaders as imperative and essential for foreign investments to come in, the private sector will certainly look forward to August 1.
