Delay in Commencement of New Myanmar Companies Law 2017: Implications
The new Myanmar Companies Law 2017 (Pyidaungsu Hluttaw Law No.29) (“MCL”) passed on 6 December 2017, replacing the century-old Myanmar Company Act 1914 (“MCA”). The MCL modernizes Myanmar’s corporate framework and provides new opportunities for local and foreign companies that didn’t exist under the MCA.
There are several new important developments to be aware of under the MCL. This is what you need to know:
1. Despite the passage of the MCL, presently the MCA is still in force, and is being applied by Myanmar ‘s company regulator, the Directorate of Investment and Company Administration (“DICA”);
2. Under §1(b) MCL, the law “commences on the date of notification determined by the President.” This means the MCL will not officially come into full force and effect until the President passes a seperate notification (regulation) stating the law is officially in effect ( “Commencement Notification ”) on a specified date ( “Commencement Date ”). Put simply, the MCL is not law at the moment until: (i) the Commencement Notification is passed; and (ii) the specified Commencement Date is realised.
3. This means it is still ‘business as usual’ for local and foreign investors under the MCA until the Commencement Notification is passed implementing the MCL;
4. We have been informed by DICA that the Commencement Notification is likely to be passed in mid June or July 2018, specifing that the MCL Commencement Date will be 1 August 2018. The Commencement Notification was previously expected to be passed before the end of 2017;
5. The MCL regulations will also pass prior to 1 August 2018, but will likely come into full force and effect on the Commencement Date of 1 August 2018;
6. DICA will spend the next eight months upgrading its: online applications; prescribed forms; procedures; policies; manuals; and conducting intense staff training sessions on the MCL.
Once 1 August 2018 arrives, Myanmar will have a new sophisticated corporate framework in place, able to effectively cope with the heavier intake of foreign investment and M&A activity expected under the MCL. This is a far better alternative than having the MCL in effect without the supporting implementing framework in place. This change means a ‘win -win’ for investors and government stakeholders alike. The process will now be better streamlined, modernized and ready.