Multi-Level Marketing ("MLM") has often been viewed as an unethical way of conducting business because it enriches the higher up distributers in a pyramid-selling scheme at the expense of those at the lower levels, who are mostly people from the lower-income bracket.
Myanmar has long been in need of a law which prohibits this practice. Under the recent Notification 48/2018 issued by the Ministry of Commerce ("MOC") on 18 September 2018, MOC has deemed MLM as an 'Essential Service' pursuant to Section 4(c) of the Essential Goods and Services Act 2012 and has subsequently banned the practice of MLM. Any person found guilty of practicing MLM shall be liable for 6 months to 3 years of prison time and/or a fine under the Essential Goods and Services Act 2012.
A new online registry system called Myanmar Companies Online ("MyCO") has been launched with the coming into force of the new Myanmar Companies Law 2017 ("MCL") on 1 August 2018. This is aimed at streamlining company filings and making corporate compliance processes more transparent.
Re-registration
The implementing regulations of MCL, the Companies (Electronic Registry System and Miscellaneous Matters) Regulations 2018, mandate existing companies and entities to re-register via MyCO from 1 August 2018 to 31 January 2019. To re-register, companies can now submit a single document, called "constitution", instead of submitting two documents – Memorandum of Association and Articles of Association ("M&AOA") – as previously required. Existing M&AOAs which are not replaced with a constitution will effectively be converted into one. A template constitution is available at the Directorate of Investment and Company Administration ("DICA") website for companies that do not need a uniquely drafted constitution.
Online re-registration is free of charge. A company may also opt to re-register with the DICA office by submitting a complete set of hardcopies of its constitution and paying a filing fee of MMK50,000. A company that fails to re-register within the stipulated registration window will only be restored after payment of a prescribed penalty.
Formation or Incorporation
The documentary requirements under the MCL for the formation or incorporation of companies will be less onerous than those under the previous procedures. One of the key benefits of the MCL is that a permit to trade is no longer required, and private limited companies are allowed to be set up with a single member or shareholder.
Foreign investors may invest up to 35% in a Myanmar public or private company. If foreign ownership in a Myanmar-incorporated company is more than 35%, the entity is considered a foreign company under the MCL which must comply with the relevant provisions of the law.
Corporate compliance filing
Ongoing compliance requirements such as annual filings, secretarial filings (e.g. appointments of directors, change of registered office, principal place of business and shareholdings) have been made much easier, by filling a “notice” to the Registrar via MyCO using the standard forms.
Pursuant to Section 57 of the Arbitration Law 2016 ("ABL"), the Supreme Court of the Union has issued the Arbitration Rules ("ABR") on 31 July 2018. ABR will serve as a by-law to the ABL. It has provided clarity on the appointment of Arbitrators for both International and Domestic Arbitration.
It further sets out attributes that Arbitrators must have in order for disputing parties to appoint them as Arbitrators. In addition, the ABR has provided the regulations in assigning jurisdiction for relevant courts to confirm interim decisions and decision of the Arbitration Tribunals, and manage appeals.
ABR also sets out provisions and procedures for the enforcement of both Domestic and International Arbitral Awards pursuant to the ABL.
The Ministry of Commerce ("MOC") has issued two Newsletters following the issue of MOC Notification 25/2018 in relation to the Liberalization of Wholesale/Retail by foreign and joint venture companies.
Newsletter no. 2/2018 was issued on 26 July 2018. It sets out the Standard Operating Procedures regarding the implication of the notification and application for Wholesale/Retail Registration Certificate at the MOC. In addition to the procedures, provisions and details for application, the Newsletter also includes the categorisation of the different types of companies for registration in relation to post- or pre-incorporation.
Newsletter no.3/2018 was issued on 26 July 2018. It sets out a "priority list" of 24 categories of goods which investors would be allowed to trade with a Wholesale/Retail Registration Certificate. This list, however, is not exhaustive and subject to be changed from time to time depending on the requirements of Myanmar. This means more categories of goods may be added.