All existing Myanmar companies need to re-register from 1st August 2018 on MyCo

You may have read this rather ominous news in Myanmar Times of 25th Jun 2018 that “All companies need to re-register from August 1”?

The Directorate of Investment and Company Administration (DICA) will start online registration of companies called Myanmar Companies Online (MyCO) electronic registry system starting 1st August.

All existing companies have up to 31st January 2019 to re-register on MyCO or they will be struck off the list.

As with all new computer system introduction – I expect chaos in the 1st month of implementation while DICA staff learn how to use the new system. So, I recommend that you do the re-registration after 1st September 2018.

You can go either go the MyCO website to update your company information yourself or you can engage our service. We charge USD 210 (inclusive of Commercial Tax) to update the information into MyCO using the standard constitution provide by DICA. We will ensure that after the update has been accepted by MyCO that the information is accurately captured and displayed on MyCO.

 If you are interested to engage our service to update MyCO please fill out the form here

Separate from updating your company info on MyCo – is the aspect of how the new company law that affects you.

For existing limited liability company, you need to be aware of the followings changes in the New Company Law:

Topics Old Law (MCL 1914) New Law (MCL 2017)
Constitution Memorandum & Article of Association (2 docs) One single constitution – option to:

·        Remove need to hold AGM

·        Add in pre-emptive right

·        Add in the clause “dividend must be paid out of profit”

Objective Required Not Required
Minimum no. of Shareholder 2 1
Minimum no. of Director 2 1 Resident Director1
Class of Shares Only 1 class = Ordinary share More than 1 class: Ordinary, Preference, Redeemable or Convertible2
Authorized Capital Required Not Required
Par Value of Share Required Not Required
Declaration of dividends Only from profit Not necessarily from profit. However, must pass the solvency test and must not materially prejudice the company’s ability to pay its creditors
Ability to do trading Foreign owned company & Foreign JV not allowed to do trading JV with ≥ 65% Myanmar ownership can do trading3
Director’s Duties Not clearly defined Clearly defined.4

 

1 Must spend ≥ 183 out of 365 days in the fiscal year in Myanmar. This director can be a foreigner.
2 The different classes of shares allow the investors to create different class of shares with different voting rights, distribution of capital. Shares with no voting rights can also be issued.
3 The 65% Myanmar ownership is determined by both the percentage of equity and voting right held by the Myanmar citizen or entity. Technically such a JV company can own land, can apply for import licence, can get an inbound and outbound tour licence, can apply for a overseas employment agent licence, etc. However, we will need to check with the relevant ministries after 1st August 2018 – as each ministry may have their own interpretation of what the new company law means to them. So we will get back to you on this after 1st August 2018.
4 Directors’ Duties is now clearly defined as:

  • duty to act with care and diligence;
  • duty to act in good faith in the company’s best interest;
  • duty regarding use of position;
  • duty regarding use of information;
  • duty to comply with the New Companies Law and constitution;
  • duty to avoid reckless trading;

I would like to highlight that if you are currently a Limited Liability Service Company you have the option of:

  1. Reducing the shareholder to just 1 person. If you have a subsidiary where 99% of share held by parent company and 1% held by a director – you may want to convert it to a full subsidiary where 100% of the share is held by the parent company.
  2. Reducing the director to just 1 (resident) director. If your spouse is currently the other director (so as to make 2 directors under the previous law) you may want to remove it as under the new law the director has a lot of duties and responsibilities.
  3. Appoint a resident director i.e. he/she spend ≥ 183 out of 365 days in the fiscal year in Myanmar.
  4. Adding a local Myanmar shareholder that has ≥ 65% voting share so that you can get apply for an import licence.

If you are currently a Branch or a Rep Office:

  • You need to have an Authorized Representative who is a resident officer of Myanmar i.e. he/she spend ≥ 183 out of 365 days in the fiscal year in Myanmar.

If you are interested to engage our service to update MyCO please fill out the form here