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The Central Bank of Myanmar ("CBM") has announced that foreign banks and financial institutions will be allowed to have 35% equity investment in local private banks. As a corollary, local banks having a foreign equity injection up to the above-mentioned limit would now be allowed to operate in Myanmar.
Pursuant to this order, local banks must submit a copy of the agreement entered into with the foreign bank / financial institution together with the local-foreign equity ratio post the investment.
In the event foreign bank branches or subsidiaries that are permitted to conduct banking activities in Myanmar invest in the local banks, the local banks are required to comply with ensuing requirements of the Financial Institution Law ("FIL"). These include the restrictions that apply to cross-holding.
Previously, in the financial sector, foreign shareholder participation (applicable to banks) was legally permissible under the Myanmar Companies Law ("MCL"), but not permissible in practice. Through this order, the CBM has made it permissible for foreign banks to inject equity in a local bank which has further liberalized entailing restrictions in the banking sector.
This is a welcome development in Myanmar as it allows local banks to expand their services and operations. This will enhance competitiveness in the banking sector.
The Ministry of Planning and Finance ("MOPF") has issued Announcement No. 1/2019 inviting interested local and foreign insurers to submit Expression of Interest and/or Request for Proposal in order to transact insurance business in Myanmar. This announcement follows Notification No. 2/2017 which allowed foreign insurance companies to operate only in Special Economic Zones ("SEZ") of Myanmar such as Thilawa. This Notification provided that operating permits would be granted to companies which (i) would be in operation for at least ten years; (ii) have a total asset value or paid up capital of at least USD 1 billion in Myanmar; and (iii) have a rating of S&P (B+) or its equivalent.
The announcement provides two operating options to life insurance providers seeking to apply as such. The first option will allow foreign life insurers up to three licenses to operate as 100% wholly owned subsidiaries. The second option will allow foreign life insurers with a representative office in Myanmar to form a joint venture ("JV") with a local life insurer.
The announcement signifies further liberalisation of the insurance market, with the end in view of bolstering the insurance sector in Myanmar.
On 30 January 2019, Myanmar enacted the Trademark Law ("Law"). It has not yet come into force as the Notification for its commencement has not been issued by the President of Myanmar. There have been no regulations issued to implement the Law, generating some confusion among trademark owners with respect to the "First-to-file" system.
A close reading of the Law reveals that it does provide for a "First-to-file" system (for fresh trademark applicants), whereby trademark owners that submit applications first for trademark can prevent identical or similar marks from being subsequently filed. However, the Law provides an exception to the "First-to-file" system. It is called the "right of priority", whereby trademarks that were already recorded with or registered at the Office of Registration of Deeds ("ORD") under the previous regime would be afforded the "right of priority". This means they will be given the priority to register within a prescribed period.
It must also be noted that as a member of the World Trade Organization ("WTO"), Myanmar must abide by the principles of National Treatment. To give effect to international treaties such as the Trade Related Aspects of Intellectual Property Rights ("TRIPS"), specifically Article 3, as well as the Paris Convention for Protection of Industrial Property ("Paris Convention"), particularly Article 6, the Law introduced a "right of priority" for marks which have already been registered with the signatories of the Paris Convention and the members of WTO. These marks which have been registered would therefore not be subject to the "First-to-file" system.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Rajah & Tann
Myanmar Company Limited
Room No. 408(A), Prime Hill Business Square, No. 60,
Shwe Dagon Pagoda Road, Dagon Township,
Yangon, Myanmar
http://mm.rajahtannasia.com
Contacts: Dr Min TheinManaging PartnerD +951 9345343F +951 9345348min.thein@rajahtann.comChester TohDirectorD +65 62320220chester.toh@rajahtann.comJainil Bhandari DirectorD +65 62320601jainil.bhandari@rajahtann.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client. |
This update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this update. |
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