ANNOUNCEMENT 07 Dec 2017

Myanmar has approved a new companies act with several liberalizations for foreign companies.

NUMBER OF INTERVENTIONS

2

  • 1 harmful
  • 0 neutral
  • 1 liberalising
Inception date: 07 Dec 2017 | Removal date: open ended

FDI: Entry and ownership rule

On 7 December 2017, Myanmar's President approved a new Myanmar Companies Act 2017, replacing the Companies Act of 2014. The amendments in the new Act affecting foreign companies have been listed below - 

  • The definition of a foreign company has been amended. Earlier, any company with at least one share owned by a foreign person was classified as a foreign company. With the new law, only companies with a foreign shareholding of at least 35% will be classified as a foreign company.
  • Further, no approval will be required from the Directorate of Investment and Company Administration (DICA) by a foreign company to invest in a domestic company unless the foreign shareholding after such investments increases the 35% threshold.
  • The new law also allows foreign investors to purchase and trade in shares of domestic companies listed on the Yangon Stock Exchange (YSX).
  • The earlier law required that any company incorporated in Myanmar must have at least 2 shareholders. Henceforth, a company can be incorporated with only 1 shareholder. This will allow the creation of wholly owned subsidiaries.
  • Earlier foreign companies before incorporating in Myanmar were required to obtain a Permit to Trade, a general business license. This requirement has been removed.
  • The new has clarified that all overseas corporations transacting in Myanmar have to register under the New Companies Law unless they are a party to legal proceedings, maintaining bank accounts only, engaged in lending money and collecting debts or are conducting an isolated transaction that completed within 30 days and not done repeatedly.

AFFECTED SECTORS

 
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AFFECTED PRODUCTS

 
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Inception date: 07 Dec 2017 | Removal date: open ended

FDI: Entry and ownership rule

Also in the Myanmar Companies Act of  2017, the government introduced the requirement that at least 1 of the directors must be ordinarily resident in Myanmar i.e. resident in Myanmar for at least 183 days in each 12 month period. A public limited company must have at least 3 directors, at least 1 of whom has to be a citizen and ordinarily resident in Myanmar. The requirement to be an ordinarily resident also applies to the authorized officer of an overseas corporation.

 
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