When does an overseas corporation have to register a commercial presence in Myanmar?

31
Oct
2019

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Under section 43 of the Myanmar Companies Law 2017 (“MCL”), an overseas corporation is not allowed to ‘carry on business’ in Myanmar unless it has registered its commercial presence with the Directorate of Investment & Company Administration (“DICA”). The central concept of ‘carrying on business in Myanmar’ has, unfortunately, not been defined in the MCL. However, the law does provide some guidance by providing a list of activities that do not qualify as carrying on business. This list (in section 43(b)) includes the following activities:

  • being or becoming a party to legal proceedings in Myanmar;
  • holding directors and/or shareholders’ meetings;
  • maintaining a bank account;
  • effecting a sale of property through an independent contractor;
  • lending money;
  • securing or collecting debt;
  • conducting an isolated transaction that is completed within a period of 30 days, not being one of a number of similar transactions repeated from time to time;
  • investing funds or holding property.

This list is not exhaustive. Section 12 of the Myanmar Companies Regulations 2018 sheds some further light on what it means to “carry on business”, by stipulating that it

  1. includes the administration, management or otherwise dealing with property situated in the Union as an agent, a legal personal representative, or a trustee, whether by employees or agents or otherwise; and
  2. does not exclude activities carried on without a view to any profit.

Non-profit activities are thus brought within the scope of ‘business’ for the purpose of section 43 of the MCL.

An interesting point to note is the ‘isolated transaction that is completed within a period of 30 days’, which is excluded from the definition of carrying on business in Myanmar. Therefore, if an overseas company conducts a regular transaction, i.e. ‘one of a number of similar transactions repeated from time to time’, or a transaction that takes longer than 30 days to complete, it must register. In practice, this—rather short—30-day requirement is not being strictly enforced by DICA. For example, we doubt commercial registration will be accepted by DICA if an overseas company will perform drilling activities on a platform for 45 days. On the other hand, if an overseas company sends in its employees for prolonged periods of time to assist with the development of a project in Myanmar, registration will certainly be required.

AUTHOR
Tim Vanderlee
Tim Vanderlee
Legal Associate
Corporate Commercial & M&A Team
VDB Loi, Myanmar

Tim is a Legal Associate in our Banking & Finance team, who also advises clients on corporate matters. Before joining VDB Loi, Tim worked for over two years as an associate with a major international Dutch law firm, specializing in capital markets and supreme court litigation. He holds an LL.B. and a 2-year research LL.M. from Utrecht University, as well as degrees from King’s College, Cambridge (Examination in Law for European Students) and Sidney Sussex College, Cambridge (LL.M.).

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