On December 6, 2017, President Htin Kyaw approved the new Myanmar Companies Law but it will come live in the coming year. The main objective of new law is to boost and attract foreign investment
Replacing the country former act of 1914, the new law aims to attract more foreign investment. It aims to modernize company formation and management and keep company legislation keep abreast of international standard. The new law was drafted by Myanmar’s Directorate of Investment and Company Administration (DICA) with technical assistance from the Asian Development Bank (ADB).
Aung Naing Oo, Director General of DICA, said the promulgation of bylaws and application of the law and working on the operating manual for online registration will be done at the end of July 2018. The new companies law will facilitate online registration system through online quickly.
According to former law, even a company with even one percent of its shares being owned by a foreign investor was classified as a foreign company.
The new Companies Act allows foreign investors to hold up to 35 percent of shares in a domestic company without the company losing its classification as a local company.
With former law, foreigners are not able invest in Yangon Stock Exchange (YSX) and only invest in selected sectors. The change in foreign company definition unlocks huge business potential in areas that were previously restricted to foreign investors, such as banking and finance. It authorizes foreign investors to trade in shares on the Yangon Stock Exchange. Under the new law, foreigners can legally own unmovable properties including condominium apartments which foreigners were not allowed to buy in the past.
As per new law, the director of the company need not be a Myanmar citizen, but must fulfill conditions to pass the “ordinary resident” status. It means she or he must be present in Myanmar for a minimum of 183 days in a year to qualify as the director of a company.
