Re-register or be ceased!
Directorate of Investment and Company Administration (“DICA”) has issued a draft of the Companies Regulations 2018 called Myanmar Companies (Electronic Registry System and Miscellaneous Matters) Regulations 2018 (“Regulation”) with a commencement date of 1 August 2018.
The Regulation is a continuation of the Myanmar Companies Law issued in 2017 and is currently in preparation of establishing a new electronic registry system called Myanmar Companies Online (“MyCO”) which will be also launched in August.
The draft regulates the electronic registry system and transactions including filing, lodging of any documents, submissions of applications, accessing of any documents or information maintained by the Registrar under the Law.
Re-registration of existing entities
The Regulation requires all existing companies and body corporates (branch/representative offices) to proceed with a re-registration of their entities with the MyCo within 6 months from the commencement date. The Registrar may issue prior notice, however if the entity does not re-register within prescribed period, The Registrar may take action to strike its name from the register and publish a notice in the Gazette post which the company will be dissolved. The dissolution does not mean however that the company has been liquidated and liability (if any) of every director and member of the company may continue to be enforced.
If a company fails to re-register, the Registrar prior to its name being struck off, will still be able to restore the entity after a payment of a prescribed fee.
A company that does not re-register within the prescribed period, will not be allowed to carry on business in the Union of Myanmar until it follows all requirements.
The re-registration application of the company will require entities to provide additional information including whether it has an ultimate holding company or will it be a foreign company as per provisions and definitions of Myanmar Companies Law (note that companies with a foreign shareholding or control below 35% will have to be registered as local companies).
Also, with the new Myanmar Companies Law shifting from Memorandum of Association and Articles of Association to Constitution, the company will have to decide at the re-registration stage whether they will adopt the template issued by the DICA or have a customized constitution which will have to be attached to the application.
At the time of re-registration, entities will have to indicate whether they are categorized as “small company”, which means a company, other than a public company or subsidiary of a public company, which satisfies the following conditions:
- it and its subsidiaries have no more than 30 employees (or such other number as may be prescribed under this Law); and
- it and its subsidiaries had annual revenue in the prior financial year of less than 50,000,000 Kyats in aggregate (or such other amount as may be prescribed under this Law).
Post re-registration status
The Registrar after successful application will issue new certificate of incorporation with a new registration number. It is important to note that new number and certificate will not affect previous affairs of existing entities, therefore the entity continues its previous activity with same rights and obligations and liabilities.
As a result of the re-registration, all shares issued by the existing company before re-registration will be deemed to be converted into shares of no par value but that conversion will not affect the rights and obligations attached to the shares.
With the requirement of having a resident director, the director of the company will not be allowed to resign or vacate his office and his resignation will be void, unless at least one of the directors on the board is an ordinarily resident. If the company carries on business without having a resident director for over 6 months from the commencement of this Regulation, the member of the company having knowledge in this manner will be liable for the payment of all the debts of the company contracted during the period or, as the case may be, that part of it, and may be sued therefor.