The Directorate of Investment and Company Administration ("DICA") issued an announcement on 24 August 2015 requiring all companies, representative offices and branches that are carrying on business in Myanmar to notify DICA of their activities in Myanmar, as it is in the process of updating its registers. The initial deadline for notification was 14 September 2015. However, DICA recently issued an announcement that this deadline would be extended to 16 October 2015. Failure to notify DICA may result in deregistration from DICA’s company register.
Companies, branches, and representative offices may notify DICA that they are carrying on business in Myanmar via phone, email, fax or letter. However, we would recommend that a written notification be submitted either via email (by attaching a signed cover letter to the email) or letter by hand (with an acknowledgement slip) in order to retain some form of evidence that the company, branch or representative office has complied with this requirement to notify DICA. The letter should be prepared on the relevant entity’s letterhead, and signed by one of its directors or representatives. Copies of the Certificate of Incorporation and Permit to Trade, Form 6/26 or Certificate of Registration and Form 18 (as the case may be) of the entity should also be submitted to DICA.
A second draft of the Myanmar Companies Law ("MCL") was made available on DICA's website (http://www.dica.gov.mm) in June 2015. This draft was published following a public consultation on the first draft which was held in March 2015. The MCL will repeal the Myanmar Companies Act 1914 ('current MCA"), and it is expected that the MCL will be enacted after the elections in November 2015.
Key amendments in this draft MCL include a revised definition of "foreign company". Under the current MCA, companies with a foreign shareholder holding even one share would constitute a "foreign company". It is expected that this definition will be revised such that a company would only constitute a "foreign company" if foreign interest in that company exceeds a "prescribed ownership amount". This threshold is currently the subject of deliberation amongst policy-makers. This new provision could potentially expand the types of businesses foreigners can engage in (e.g. trading, distribution) if foreigners engage in such businesses with a local party holding a majority of the shares in the company. The draft MCL also removes the requirement for foreign companies to hold a permit to trade, and abolishes the concept of par value. Further, under this draft MCL, companies will be given full legal capacity to "carry on any business and activity", and will no longer be required to exhaustively list out the objects of the company in their Memorandum and Articles of Association.
The Yangon Stock Exchange ("YSX") has just announced the deferment of its opening to December 2015, in order to enable the opening to take place after the elections in November 2015.
In preparation for listing, the YSX's Board of Directors published on 15 August 2015 the preliminary listing guidelines ("Guidelines") for companies that intend to list on the yet-to-be-launched YSX. The Guidelines are meant to be "minimum requirements" for listing. It is stated in the Guidelines that each listing company will be assessed on a case-by-case basis to ensure the listing is "safe for the interests of the public".
The Guidelines state that the applicant company must be a public company registered under the Myanmar Companies Act 1914. At present, foreign companies are not permitted to be listed. However, this restriction may potentially be lifted once the new Myanmar Companies Law is introduced.
Companies that are eligible for listing on the YSX must comply with several requirements, such as having a minimum of 100 shareholders and a paid-up capital of at least MMK 500 million (approximately US$415,000) on the application date. In addition, they must have a profit-generating track record for the past two years.
Myanmar's Ministry of Energy announced that foreign investment will be permitted in specified circumstances for the importation, storage, distribution and sale of a wide range of petroleum products in Myanmar. Given the current restrictions, this policy change will pave the road for liberalising of the downstream retail petroleum market in Myanmar to allow for foreign investment.
Foreign investment will be permitted by way of a joint venture with the Myanma Petroleum Products Enterprise ("MPPE"), the Ministry of Energy-owned enterprise responsible for retail and wholesale distribution of petroleum products in Myanmar. In addition to importation, storage, distribution and sale of specified petroleum products (excluding LPG and LNG), the joint venture will cover the rehabilitation and expansion of certain MPPE facilities ("Joint Venture Project"). The opportunity for foreign investment was announced recently by way of an invitation to tender issued by the MPPE. The MPPE has invited bids from qualified foreign companies to form a joint venture company to undertake the Joint Venture Project. Bidders have until 13:00 on 20 October 2015 to submit bids for the Joint Venture Project.
We have issued a Client Update on this which covers, amongst others, the bid requirements for the Joint Venture Project. To access the Update, please click here.