Myanmar Companies Law & Myanmar Companies Online MyCO
Myo Min Director Company Affairs Division Priorities of Companies Law reform
1. Modernise the law to align 4. Improve corporate with international practices governance legal developments 5. Improve transparency and 2. Create a clear, transparent, accountability for consistent and stable companies through an for companies electronic registry system 3. Clarify the law and simplify 6. Assist SMEs by lowering procedures to provide compliance burden and for companies and increasing flexibility for managing companies Commenced on 1st August 2018
2 Key changes in the new law
Single No more fixed Company Foreigners allowed shareholder/single value for shares or constitution to own up to 35% director companies authorised capital
Overseas Easier decision Myanmar resident Small company corporations (as making (written director exemptions branch offices) resolutions)
New DICA Better corporate Directors duties Solvency tests enforcement governance and liabilities powers
3 Legal characters of a company
1. Artificial legal person The modern world is 2. Separate legal built on two personality centuries of 3. Limited liability industrialisation. Much of that was 4. Perpetual existence built by equity 5. Transferability of finance which is shares built on limited 6. Separate property liability. 7. Delegated management (The Economist, 31 4 December 1999) “Foreign company” concept
“ownership interest” (s. 1(c)(22)) “Foreign company” means a legal, equitable or prescribed interest in a company means a company including: incorporated in the Union (A) a direct shareholding in the in which an overseas company; (B) a direct or indirect corporation or other shareholding in another company foreign person owns or which itself holds a direct shareholding, or an indirect controls, directly or shareholding, in the first company; indirectly, an ownership or interest of more than 35% (C) through an agreement which provides a direct or indirect right (s. 1(c)(14)) to exercise control over the voting rights on any resolution of the company;
5 Quiz: Which of these are foreign companies?
35% of 65%= 22.75 % Foreigner 35%
30% Myanmar Company B citizen 65% 35% Myanmar Company A citizen Myanmar 50% 35% citizen Company C Overseas 50% corporation 50% of 35%= 17.50 % 6 “Foreign company” requirements
Only 3 sections in the MCL mention “foreign companies” (FC) Section 6(b)(viii) Must state in company registration application whether a company is an FC Section 86(b) Must state whether share transfer causes a company to become or cease to become an FC Section 97(b)(vii) Must state in the annual return whether a company has become or cease to become an FC
All sections of the Companies Law apply equally to all companies (foreign or local)
7 “Foreign company” concept
NOT a type of company
A classification of companies based on ownership. “Foreign company” can be private company, public company or a company limited by guarantee, unlimited company.
8 Overseas corporations = branch offices
“Overseas corporation” – Any company or other corporation incorporated outside the Union (section 1(c)(21) An overseas corporation must not “carry on business” in Myanmar unless registered with DICA (section 43) “Carrying on business” test (section 43(b)) Must appoint an “authorised officer” (section 47(b)(iii)) Authorised officer is a person who resides in Myanmar for 183 days minimum Residency requirement starts from date of registration 9 Company constitution
MoA
Company constitution
AoA
10 Company constitution
Section 11(a) Each company will have a constitution … to bind … the company and the members ... as if … [it] had been signed by each member and contained a covenant on the part of each member to observe all the provisions of the constitution. Company constitution is a statutory contract members and the company Contract enforceable by the company and the DICA or other parties) A company can include whatever it wants in the constitution, and it is valid to the extent it is the law (section 12(a)
11 Who makes decisions for a company?
Rules for decision making 1. Companies Law 2. Company constitution Shareholders Directors 3. Shareholders Agreement (or Joint Venture Agreement)
12 Decision Making Powers
Shareholders Directors 1. Request shareholder 1. Sign contracts on meetings of the behalf of the company 2. Vote on resolutions at 2. Make decisions such as shareholder meetings hiring employees 3. Only shareholders can 3. Decide business plan approve members’ and strategy resolutions such as: 4. Approve BOD Change constitution resolutions such as: Change name Approve share transfers Change company type Issue or allot new shares Appoint or remove Hire employee Pay dividends
13 Decision making by companies (Meetings)
Shareholder Director Creditor Meetings Meetings Meetings
Annual Debenture Board General holder Meetings Meeting meetings Creditor and Special contributory Committee General meetings Meetings Meeting (for liquidation) Statutory Meeting
14 Shareholder resolutions
Ordinary resolution – Passed by a majority of votes (Section 1(c)(20))
• Appoint a director and remove a director • Appoint an auditor • Approve financial reports • Approve benefits and pay for directors’ • Shareholder resolutions must be passed by ordinary resolutions law requires a special resolution (Section 155) Special resolution – Passed by 75% or more of votes (Section 1(c)(40))
• Change of company name, change of company type, change of approve capital reduction and share buy-back, issue preference conversion of shares 15 DICA’s Role under the Companies Law
Register companies, overseas corporations and associations 2)
Maintain public Take legal action for breaches of registry of Law in Court information on (sections 436-8) in Myanmar (sections to 421)
Issue penalty notices for offences under Monitor and inspect Companies Law and impose late filing fees information filed with (section 439) DICA (sections 426-7)
Investigate suspected breaches of Companies Law 269 to 278, 426) 16 How companies are regulated Internal Affairs of External Affairs of companies companies (Governance & management) (Conduct of business) • Regulated by Companies • Regulated by laws Law and: concerning business • Company constitution activities: • e.g. Investment Law, Taxation • Shareholders Laws, Competition Law, Agreements (JV) Labour Laws • Securities Exchange • Laws regulating sectors: Law and Rules • e.g. Mining Law, Hotel and • Court rules and Tourism Law, Financial procedures on winding- Institutions Law up • Criminal (Penal) Code and Procedures
17 Electronic registry
or
Myanmar Companies Online MyCO
18 www.myco.dica.gov.mm
19 Re-registration of companies
All existing companies, associations and branch offices will be required to re-register in the new registry Myanmar Companies Online (MyCO).
Re-registration is completely free. Update all company details in the Re-registration Form (without separate filings or fees). Re-register within six months by 31 January 2019 Simply complete a “Re-registration Form” online or deliver a hardcopy to a DICA office.
20 Prepare for the new Companies Law 1.Review new model company constitution – Decide whether to adopt it and whether to retain objects of the company 2.Check company’s share capital – Confirm how many shares on issue, issue price for each share, capital, unpaid capital, shareholders details 3.Prepare company registers – Update register of members, register of directors, register of charges, register of options/ debentures/securities and decide where they will be kept 4.Review Directors Duties – New director duties and liabilities under the new law 5.Re-register your company – Complete re- registration online or at DICA
21 [email protected] +95 9 259003179 +95 1 656891