No sooner was the Myanmar Companies Law passed its effective date of August 1, 2018, when the Directorate of Investment and Company Administration (“DICA”) the company regulator in Myanmar, published an announcement on ‘Anti-corruption Code of Ethics for Companies and Body Corporates’ (the “Code”). But what exactly does the Code herald for businesses?
In this client briefing note, we examine key questions surrounding the Code including:
Where does the Code fit within the broader anti-corruption framework in Myanmar:
The Code is by no means a groundbreaking development in anti-corruption regulation in Myanmar, indeed at a high-level Myanmar already has the Anti-Corruption Law (Law No. 23) (the “ACL”), as amended, and the Anti-Corruption Rules (Notification No. 3/2015) (the “ACR”).
The salient points to take from the ACL, read with the ARC, are:
On the other hand, the Code makes no reference to either the ACL or the ACR. However, what is certain, is that the Code bridges the uncertainty in the ACL regarding the scope of persons captured within the act. In this regard, the Code indicates that “All companies and body corporate incorporated within the Union have to abide by and exercise the anti-corruption code of ethics”.
What does the Code mean for existing businesses in Myanmar and does it add an extra level of compliance upon Myanmar Companies?
The Code puts in place a series of prohibited activities which companies and body corporates are required to comply with in the carrying out of their business activities. These prohibitions include the following:
A key point of departure between the Code and the ACL/ACR is that compliance with the above prohibitions applies to companies when they are carrying out “business activities” whereas the ACL/ACR aim to regulate vertical dealings (i.e. between persons and the Government, including Government institutions).
Whether the Code can therefore be regarded as an extension to the ACL/ACR is uncertain, an uncertainty compounded when considering the fact that the Code, while ostensibly setting out offences in the form of prohibitions, is silent on any penalties for non-compliance. Further doubt is cast over the proper body for enforcement with no rules or procedures in the Code on investigating non-compliance.
One likely interpretation, however, is that the Code could be implied into the ACL/ACR and that the Anti-corruption Commission may still have powers of investigation on the basis that the Directorate of Investment and Company Administration (“DICA”) can act as a complainant, this appears to be supported by a reading of the ACL which allows the Anti-corruption Commission to act on complaints. Such an interpretation, however, does little to cure the uncertainty of enforcing the Code, particularly, in how broadly DICA will interpret the prohibitions and detect non-compliance. In particular, it is unclear whether corporate social responsibility could fall within the ambit of “charitable donations”.
On the question on whether companies bear an additional level of compliance; it should be bourn in mind that while the Code mandates a certain degree of behavior (i.e. not to do certain things) it is unclear precisely whether such prohibitions need to be incorporated into constitutional documents or contracts between companies. Nonetheless, companies should always act ethically and undertake other obligations such as their customer due diligence as mandated under comparable legislation such as the Anti-Money Laundering Law.
 Section 3.
 Section 5(a), Anti-Corruption Code of Ethics.
 Section 5(b), Anti-Corruption Code of Ethics.
 Section 5(c), Anti-Corruption Code of Ethics.
 Section 4, Anti-Corruption Code of Ethics.
 Section 16(l), Anti-Corruption Law.