1. Registration of business Organization
Operation in Myanmar can be carried out through one of the following business organizations:
– Companies limited by shares. i.e. joint venture companies; local companies; foreign companies
– Branch or Representative offices of a foreign company
– Associations not for profit
2. Limited by Shares
A company limited by shares is required to register. For foreign enterprises, the most normal method of doing business in Myanmar is through a limited company. Such a company could be a foreign company registered in Myanmar or by means of a branch office or representative office formed outside Myanmar. If one share is owned by a foreign partner, the company shall come under the definition of a foreign company, and shall apply and obtain a Permit before registration. There are two main types of company: a private limited liability company and a public limited liability company.
– In a private limited Liability company, the transfer of shares is restricted, the public cannot be called upon to subscribe for shares, and the number of members is limited to fifty.
– In a public limited liability company, the number of shareholders must be at least seven. The company, after registration, must apply for a Certificate of Commencement of Business to enable start the business operation.
– The governing law for the limited companies is the Myanmar Companies Act 1914. A company with share contribution of the State shall be registered under the Special Company Act 1950 and the Myanmar Companies Act 1914.
– There are generally no minimum share capital requirements. However, minimum requirements do exist for banking and insurance companies and foreign companies and branches of all business. For foreign companies and branches, the minimum capital to be brought in is as follows:
– Industrial company – foreign currency equivalent to K. 1,000,000.
– Services company – foreign currency equivalent to K. 300,000.
4. Documents required for registration
Under section 27A of the Myanmar Companies Act, a foreign company, whether a hundred percent owned or a joint-venture and a branch/representative office, is required to obtain a PERMIT before registration. However, a joint-venture with the State equity formed under Special Company Act 1950 is exempted from obtaining a PERMIT.
The application for PERMIT is to be accompanied by the following documents:
(1) Form A of the Myanmar Companies Regulation 1957
(2) Draft Memorandum and Articles of Association
(3) Duly completed questionnaire form
(4) Intended activities to be performed
(5) Estimated expenditures to be incurred in Myanmar for the first year operations
(6) Financial credibility of the company/individual
(7) Board of Directors’ resolution, if the subscriber is a company.
In the case of a foreign branch/representative office, the following shall be furnished in addition to the above mentioned documents.
(1) Instead of the companies draft Memorandum and Articles of Association, a copy of the Head Office’s Memorandum and Articles of Association or of the Charter, Statute or other instruments constituting or defining the constitution of the company, duly notarized and consularized by the Myanmar Embassy concerned in the country where the company is incorporated.
(2) The Annual Report for the last two financial years (OR) if it is the copies of the Head Office Balance Sheet and Profit and Loss accounts for the last two financial years, it is to be notarised and consularized by the Myanmar Embassy concerned in the country where the company is incorporated.
(3) Where the original Memorandum and Articles of Association and other relevant documents are not in English language, authentication of the translation into English.
The application for registration is to be accompanied by the following documents.
(1) Two sets of Memorandum and Articles of Association duly stamped and printed both in Myanmar and English
(2) Declaration of registration
(3) Declaration of legal and official version of the documents
(4) Declaration of the situation of registered office
(5) Translation certificate by a competent translator
(6) List of Directors
(7) List of person(s) authorized to accept services of process and notice in Myanmar on behalf of the company (i.e. for a branch office of a foreign company.)
For a Public company, the following additional documents shall be submitted before commencing the business
(1) List of person to act as directors
(2) List of person who have consented to act as director
(3) Agreement to take qualification shares.
Source: Directorate of Investment and Company Administration (DICA), Minstry of National Planing and Economic Development
MCA Companies – Foreign Ownership
It is fully possible to own 100% of an MCA (as well as an MIC) company even if you are a foreigner. The implication of this is that you will not be able to operate certain kinds of businesses like trading or education. However, it is important to note that any Myanmar company with one or more foreign shareholders is automatically considered foreign except in rare cases that involve joint ventures with the government.
Minimum Capital Requirements
The minimum investment required by a foreign service company under the MCA is US$ 50,000. Half of this amount needs to be invested in the company upon approval of the incorporation application. The remaining half needs to be invested in the company within 1 year of incorporation.
Currently, a foreign investor (whether investing through a joint venture or a 100% owned entity) manufacturing goods or providing services in Myanmar under an FIL Permit will be granted an exemption from income tax for three consecutive years, inclusive of the year of commencement, and the investment is “guaranteed” against nationalisation. The FIL also guarantees the right to repatriate “the rightful entitlement of the foreign investor” in foreign currency after the termination of the business and entitles foreign employees of the company resident in Myanmar to repatriate their savings.
In addition, any one or more of the following incentives may be granted by the MIC to the foreign investor which invests and operates under an FIL Permit:
Exemption or relief from income tax on the profits of the business kept in a reserve fund and reinvested in the business within one (1) year after the reserve is made
Accelerated depreciation in respect of machinery, equipment, building or other capital assets used in the business, at the rate approved by the MIC
Relief from tax on up to 50% of the profits accrued from the export of goods produced in Myanmar
The right to pay foreign employees’ income tax and deduct such payments from assessable income
The right to deduct from assessable income expenses incurred in respect of necessary research and development carried out within Myanmar
The ability to carry forward and set off losses up to three (3) consecutive years after the year in which the loss is sustained
Exemption or relief from customs duty, licensing requirements and internal taxes on the import of machinery, and components, equipment, instruments, spare parts and materials used in the business and deemed required by the MIC during the initial period/period of construction
Exemption or relief from customs duty, licensing requirements and internal taxes on the import of raw materials imported within the first three years’ of commercial production following start up/the completion of construction.
The incentives actually granted by the MIC to the foreign investor are specified in the FIL Permit when issued.
In addition to tax incentives, foreign investors holding an FIL Permit are entitled to “lease” land for up to 30 years from the Government at reasonable rates (see discussion below under “Investor Concerns”) and are exempted from obtaining an import licence from the Ministry of Trade for certain capital investment items and raw materials.
Fees: Lower cost/ Fees/ Charge
Naypyidaw, Yangunr, Myanmar