Reliable sources in Myanmar reported that a new Myanmar Company Act will come into effect soon. Under the new Act, a company incorporated in Myanmar whose 35% of the total share capital is owned by foreigners (whilst 65% of its capital is owned by Myanmar citizens) can maintain its status as Myanmar company as opposed to the present law that treats a company invested by foreigner ‘only just one share’ as foreign company.
This prudent move of the Myanmar Government relaxes the limitation imposed on foreigners’ investment and at the same time, helps to induce investments inbound to Myanmar and to ease foreign investors’ decision as to the ownership and management control in and over their investments (especially, in trading business which is prohibited to be carried out by a foreigner or foreign company).
Furthermore, under the new Act, the largest shareholder in the company will be considered as the owner regardless of whether he is a Myanmar citizen or a foreigner. Accordingly, as we interpret, if 35% of the company’s total capital is owned by a foreigner shareholder and is the largest portion whilst the other portion of 65% is scattered and held by and among several Myanmar citizens (each holding less than 35%), the foreign shareholder will be regarded as the company’s owner. As such, a joint venture business between foreigners and Myanmar citizens can be structured in a more practical way that serves the business needs and reflects capital contributions from the joint venture parties.
Besides, the new Act will provide a more up-to-date framework for commercial businesses in Myanmar, and will allow companies to be registered online.
We will be able to confirm the above understandings once the new Act is published and comes into effect.
30 January 2017