Comprehensive Guide to Company Registration in Myanmar

Introduction

Myanmar, once known as Burma, has gone through significant economic and political transitions in recent decades. As the country opened up to foreign investments and businesses in 2011, the process of company registration became a critical pathway for both local and international entrepreneurs looking to establish a foothold in the nation. This article provides an in-depth look at company registration in Myanmar, covering its history, laws and regulations, requirements, costs, and the current landscape for businesses.

A Brief History of Company Registration in Myanmar

Colonial Era and Pre-2011 Framework

Company registration in Myanmar dates back to the British colonial period. During this time, the Companies Act of 1914, inherited from the British legal system, served as the legal foundation for company incorporation. The framework was largely outdated and rigid, making it challenging for both local and international businesses to operate effectively within Myanmar.

After gaining independence in 1948, Myanmar’s socialist policies restricted private sector growth, and the majority of industries were nationalized. It wasn’t until the country began to open up in 2011 that the private sector started flourishing, prompting the need for more comprehensive company laws.

The Companies Act of 2017

In 2017, Myanmar adopted the Myanmar Companies Law (MCL) to modernize and reform its business registration and corporate governance system. The law came into effect on August 1, 2018, replacing the outdated Companies Act of 1914. The MCL made significant reforms, particularly regarding foreign ownership, online registration, and governance.

Key changes introduced by the Myanmar Companies Law (2017):

  1. Foreign Ownership: Foreigners were allowed to hold up to 35% of shares in local companies, enabling more joint ventures.
  2. Online Registration Portal (MyCO): The introduction of the MyCO portal streamlined the company registration process, making it easier for businesses to incorporate online.
  3. Reduced Minimum Capital: The law removed minimum capital requirements, making it more accessible for small businesses and startups.
  4. Revised Company Types: The law distinguished between different types of companies, including private, public, and foreign companies.

Current Laws and Regulations Governing Company Registration

Key Governing Laws

  • Myanmar Companies Law (2017): This is the primary legislation governing company registration, outlining rules for incorporation, operation, and dissolution of businesses.
  • Investment Laws: Companies seeking foreign investment must also adhere to the Myanmar Investment Law (2016) and its associated regulations, especially if applying for tax incentives and investment benefits through the Myanmar Investment Commission (MIC).
  • Special Economic Zone Law: Businesses located in Myanmar’s Special Economic Zones (SEZs) have additional requirements under the Special Economic Zone Law (2014).

Types of Companies in Myanmar

According to the Myanmar Companies Law (2017), the types of companies that can be registered include:

  1. Private Company Limited by Shares (PVT LTD): This is the most common type of business entity. It requires a minimum of one shareholder and one director (who must be a Myanmar citizen).
  2. Public Company Limited by Shares (PLC): These companies can sell shares to the public. It is commonly used for large ventures or companies aiming to list on a stock exchange.
  3. Foreign Company: A company where foreign ownership exceeds 35%. These companies need to adhere to specific regulations concerning foreign investments.
  4. Branch or Representative Office: Foreign businesses can establish a branch or representative office, but they are limited to specific activities, mainly for administrative or liaison purposes rather than engaging in full business operations.
  5. Non-profit Organizations: Also recognized under Myanmar law for charitable or non-commercial purposes.

Requirements for Company Registration in Myanmar

General Requirements

To register a company in Myanmar, you must meet the following criteria:

  1. Shareholders: A minimum of one shareholder (either a local or foreign individual or entity).
  2. Directors: At least one director is required, and they must be a resident of Myanmar. Foreigners can also be directors but must appoint a local representative if residing abroad.
  3. Company Secretary: While not mandatory, a company secretary is advisable for corporate governance.
  4. Registered Office: Companies must have a registered office within Myanmar.
  5. Company Constitution: A company’s internal governance document, which outlines the rights and responsibilities of directors and shareholders, is required.

Specific Requirements for Foreign Companies

  • Investment Permit (if applicable): Foreign companies may need an MIC Permit if they are applying for tax incentives or operating in restricted sectors.
  • Foreign Ownership Limit: Foreigners can hold up to 35% of shares in a local company. Companies with more than 35% foreign ownership are classified as foreign companies and must adhere to additional regulations.

The Company Registration Process in Myanmar

The Myanmar Companies Law (2017) streamlined the registration process through the MyCO (Myanmar Companies Online) portal, which made the procedure more transparent and efficient.

Step-by-Step Guide:

  1. Create an Account on MyCO: Businesses must first register an account on the MyCO portal (https://www.myco.dica.gov.mm).
  2. Submit Application: Complete the required forms, including details about shareholders, directors, and the company constitution. The necessary documents will be submitted electronically.
  3. Approval and Payment: Upon submission, the authorities will review the application. Once approved, the registration fees are paid online.
  4. Certificate of Incorporation: Upon successful registration, the company receives its Certificate of Incorporation, which is proof that the company is legally recognized in Myanmar.

Costs and Fees

The cost of registering a company in Myanmar is relatively affordable compared to neighboring countries. Here’s a breakdown of common fees:

  1. Company Registration Fee:
    • The registration fee for a private company limited by shares is MMK 300,000 (approximately USD 150).
    • Public companies and foreign entities have higher registration fees.
  2. Annual Filing Fee: An annual fee of MMK 50,000 must be paid to keep the company in good standing.
  3. Professional Services: Companies may opt for legal or consultancy services, which range from USD 500 to 2,000 depending on the complexity of the company structure and the services required.

Post-Registration Compliance

Once registered, companies in Myanmar must adhere to several compliance requirements:

  1. Annual Returns: Companies must submit annual returns to the Directorate of Investment and Company Administration (DICA).
  2. Corporate Tax Filing: Registered companies are subject to corporate income tax (CIT) at 25% of their net profit.
  3. Financial Statements: Financial reporting is mandatory for all registered companies, and an auditor must be appointed for auditing services.
  4. Permits and Licenses: Depending on the industry, certain businesses may need additional sector-specific licenses.

Conclusion

Myanmar has made significant strides in reforming its company registration process, creating a more accessible and business-friendly environment. The introduction of the Myanmar Companies Law (2017), the MyCO online portal, and reduced fees have streamlined the incorporation process, making it easier for both local and foreign entrepreneurs to establish businesses. Myanmar remains a market with immense potential, especially in sectors such as technology, energy, and manufacturing.

Opportunities abound for businesses willing to navigate the regulatory landscape, particularly in Special Economic Zones (SEZs), which offer tax incentives and special privileges for companies investing in these areas. While careful planning and awareness of compliance requirements are essential, the rewards for investing in Myanmar’s emerging economy can be substantial. With a clear understanding of the process and proper support, registering a company in Myanmar is a straightforward and promising venture.