Company Registration in Myanmar- An Overview Myanmar offers a large market with more than 50 million inhabitants. Myanmar has a diverse culture, and youngsters comprise the key demographics in Myanmar. This country is considered one of the fastest-growing economies in South East Asia. With GDP figures also depict a promising future, it can be safely concluded that Myanmar is one of the fastest-growing countries in Asia. Many international financial institutions have offered funds to Myanmar for progressive development. World Bank has offered loans worth millions of dollars for doing business in the country. Major industries that are present in Myanmar include manufacturing and imports. The majority of exports include textiles, peanut oil, food, and plant products. The Government of Myanmar has removed the red tape required to incorporate companies. Hence companies can be easily established. All the incorporation procedures can be carried out through one process. Many Special Economic Zones (SEZs) have been established in Myanmar to carry out businesses for export purposes. Foreign companies can secure multiple benefits by incorporating their businesses in these SEZs. Some of the benefits include tax holidays for a certain period of time and exemptionson customs duties on the import of manufacturing machinery and other forms of equipment. No withholding tax is charged on the dividends offered by companies in Myanmar. Myanmar has entered into various forms of double taxation treaties with other countries, which include India, Bangladesh, Indonesia, Myanmar and other South-East Asian Countries. Natural resources are abundant in Myanmar, which include gas, oil, and precious metals like copper, gold and other forms of ores. Apart from this, forestry and timber products are also present. This country is one of the world's oldest crude oil producers. Regulatory Authority/ Body for Company Registration in Myanmar The primary regulatory authority for company registration in Myanmar is the Directorate of Investment and Company Registration (DICA). This authority is the nodal agency known as the Companies Commission of Myanmar. Apart from this, foreign companies in Myanmar must also register themselves with Myanmar Investment Commission (MIC). What are the preferred Industries to Start a Business in Myanmar? The following sectors have been thriving in Myanmar, and the Myanmar government has been offering incentives to foreign companies to set up their businesses in Myanmar: Gas and Oil; Mining and refining of precious metals like copper and gold; Forestry; Forestry and timber products; and Manufacturing. Benefits of Company Registration in Myanmar Following are the benefits of company registration in Myanmar: Location Myanmar is located between India, Bangladesh, Laos, Thailand and China. It is one of the largest countries situated in South East Asia. Double Taxation Agreements Myanmar has entered into various forms of double taxation avoidance treaties with other countries, which include India, Bangladesh, Indonesia, Malaysia and other south East Asian Countries. Natural Resources Natural resources are abundant in Myanmar, which include gas, oil, and precious metals like copper, gold and other forms of ores. Apart from this, forestry and timber products are present. This country is one of the world's oldest crude oil producers. Special Economic Zones (SEZ) There are many SEZs present in Myanmar. Foreign companies can availmultiple benefits by incorporating their businesses in these SEZs. Some benefits include tax holidays for a certain period and exemptions on customs on importing manufacturing machinery and other forms of equipment. Along with establishing these zones, the government has removed the red-tapismin company formation in Myanmar. Hence, the procedure for incorporating a company in Myanmar has become straightforward. Types of Business Structures in Myanmar- Company Registration in Myanmar Following are the types of business structures adopted in Myanmar: Sole Proprietorship- This form of entity is commonly adopted for small businesses in Myanmar. This entity has very few formal regulations. A sole proprietorship business structure requires only one owner, and his/her liability is unlimited towards the debts and liabilities of the business. There are no minimum capital requirements. Private Company Limited by shares- A private company limited by shares is Myanmar's most common form of business vehicle. A private limited company is registered under the Myanmar Companies Act 2017 (CA). The CA distinguishes between a Myanmar company and a foreign company. A foreign company is one where an overseas corporation or a foreign entity owns or controls, directly and indirectly, an ownership interest of more than 35%. Public Company Limited by shares- A public limited company is a company whose shares can be offered to the public for trading purposes. A Myanmar public company limited by shares comprise a minimum of three directors, where at least one of them should be a Myanmar citizen ordinarily resident in Myanmar. Public limited companies are listed on the stock exchange and are governed by the Securities Exchange of Yangon. Branch Office- Foreign companies wanting to establish their presence in Myanmar can opt for the option of a Branch office. It is easier to register this vehicle and allows the foreign company to directly involve itself in the decision-making of the branch office in Myanmar. However, it needs to make elaborate filings with the state departments. It must be remembered that a branch office is not a separate legal entity and makes the foreign company responsible for the business's liabilities. Here, the branch office can carry out revenue generation activities too. Representative Office- A representative office is similar to a branch office in Myanmar, and this entity has not been permitted to carry out business activities in Myanmar. However, it shall always be registered as an extension of its foreign entity and not as a separate legal entity. Partnership- Partnerships are associations formed not by statute but by an agreement between the parties. Partnerships in Myanmar are governed by the Partnership Act of 1932. The purpose of coming into a partnership should be to earn profits generated from the partnership's economic activities. A partnership does not have a legal personality of its own, making the partners liable for the business activities of the partnerships. Partnerships are registered with the DICA. Those partnerships that are not registered with the DICA cannot enforce their rights against third parties. It is therefore suggested to get the partnerships registered with the DICA. The foreign companies also have other options to set up their businesses in Myanmar by adopting the following business vehicles also: Subsidiaries Most foreign companies set up their subsidiaries in the form of private companies limited by shares. Joint ventures (JVs) The majority of foreign investors set up their businesses in the form of JVs with local companies. These vehicles comprise both incorporated and contractual entities. Acquisition of shares A foreign company can acquire shares in a Myanmar-incorporated entity. If such an acquisition crosses the mark of 35% of the total shares of the Myanmar Companies, then such a company needs to inform DICA about the acquisition. However, this does not act as a bar over the acquisition of shares by foreign companies. The foreign company only needs to inform the DICA. Franchisee or Distribution Overseas companies can access the Myanmar market by entering into a contract with distributors or franchisees to sell their products in the Myanmar market. If foreign companies want to enter into the trading business, they need to take approval from the Ministry of Commerce. Some less common business vehicles include companies limited by guarantee, companies with unlimited liability and business associations. Eligibility Criteria for Company Registration in Myanmar The following eligibility requirements need to be satisfied by the applicant for company registration in Myanmar: Foreign Ownership The private limited foreign companies can be 100% foreign owned and have been allowed to engage in nearly all service provision and manufacturing activities. There are specific industries that allow limited foreign ownership, and the list has been provided in notification no. 26/2016. In most cases, foreign companies are required to engage an entirely domestic company for conducting trading activities in Myanmar. Company’s registered office in Myanmar Another requirement for company registration in Myanmar is to have a registered place of business with an address for correspondence. This is a mandatory requirement for company formation in Myanmar. Offices can be rented and leased out for some years. Foreign companies can lease the premises with permission. Minimum capital requirement There is no general minimum level of capital requirement for a company in Myanmar. However, ministries have independently set limits with respect to minimum capital requirements depending on the nature of business. Minimum number of shareholders and directors As per the Companies Act, 2017, a Private Limited Foreign company should have at least a minimum of 2 directors and 2 shareholders, and a maximum number of shareholders cannot exceed 50. Registered Office Address Every incorporated business in Myanmar needs to have a registered office address. Documents for Company Registration in Myanmar The following documents are required for company registration in Myanmar: Company name; Constitution of the company (registration certificates); Primary business activities; Declaration of compliance with the Companies Act; Address in Myanmar; Details of directors and shareholders; Financial documents of the company (bank statement); Land rights authorisation; Evidence of land ownership/ land lease agreement; Recruitment of employees; Production plan; Layout plan; Annual services and investment plan; Percentage of the shareholding of each shareholder; and Minimum paid-up capital. Compliances for Company Formation in Myanmar The following compliances have to be carried out for company formation in Myanmar: Corporate Tax The corporate tax paid in Myanmar is 22%.Prior to 1st October 2021, the corporate income tax rate was 25%. Annual General Meetings All companies in Myanmar would have to carry out annual general meetings at least once a year, and for a newly formed company within the first 18 months. Other registrations Registering with the Myanmar Investment Commission and the DICA are the requirements that companies must carry out. Procedure for Company Registration in Myanmar The following procedure has to be followed for company registration in Myanmar. It must be noted that the following procedure is for the registration of a Pvt. Ltd. Foreign Company under the Myanmar Investment Law (MIL) of 2017: Name Checking Appointment of directors and shareholders Registration with the MIC Registration with DICA Obtaining Licenses and Compliances Name Checking The primary thing that a foreign company must do is to check whether the desired name for the company is available and appropriate for registration. The entrepreneur is required to submit a name check form to the DICA. Once the DICA gives the go-ahead, the entrepreneur can secure the desired name for the business by registering it under its company's name. Appointment of directors and shareholders A Private Limited Foreign company should have at least a minimum of 2 directors and 2 shareholders. Unless otherwise specified, all the directors and shareholders can be foreigners. These private limited foreign companies are allowed a maximum of 50 shareholders. Registration with the MIC The foreign entrepreneur must submit a project proposal to the MIC to receive a Foreign Investment Permit. The MIC communicates the acceptance or rejection of the proposal within a period of 15 days from the date of making the project proposal. If the proposal gets the acceptance, it will be reviewed by the commission. The approval or denial of the project proposal by the commission is made within a period of 90 days. Evaluation of the project proposal is done on the basis of the following criteria: Whether the proposal is compatible with the Foreign Investment law or not; Financial viability of the project; and Financial soundness of the company and its compliance with the existing laws. It is recommended that the entrepreneur must first secure a land lease and consult DICA before making the proposal. All the forms are required to be submitted in English language only. Registration with DICA Foreign entrepreneurs must register with the DICA to legally operate a company in Myanmar. Once the registration has been done, the DICA approval is virtually an automatic process. The documents are submitted simultaneously for both MIC and DICA registration. However, the forms are different. Once DICA has approved, it issues a temporary license. It is incumbent on the applicant to confirm his registered office address within one of receiving approval from the DICA in order to obtain a permanent Registration Certificate and Permit to trade. The applicant must also submit proof of transfer of minimum capital into a Myanmar bank account along with a signed letter of conditions to obtain a Permanent Registration Certificate and Permit to Trade. Obtaining Licenses and Compliances The foreign company can commence business operations upon receiving the MIC permit and DICA permanent license if no further licensing is required for the intended commercial activities. The inquiries related to further licensing can be further directed to the licensing division of the DICA. Procedure for Branch Office registration in Myanmar A foreign company can open a Branch Office registration in Myanmar by following the steps given below: Securing lease of the land or property The investors are required to furnish information on their branch office's future office address. This requires securing a lease of the land or property beforehand. Appointment of the Authorised person The investors must appoint a minimum of one person to be their authorised representative in Myanmar. Such a person should be a resident of Myanmar. This person will accept notices intended for the company. The company is also required to appoint someone with a power of attorney as well. Registration with DICA The investors are required to submit the registration forms available on the website of DICA to receive the Registration certificate and permit to trade. The submission includes company’s annual report or audited financial statements for the last two years, MoA and AoA, and Power of Attorney/ appointment letters of the authorised persons. All these documents need to be notarised by the company’s resident authorities and the local embassy of Myanmar. These documents should be prepared in English language only. Once DICA has approved, a temporary license is issued by the DICA. It is incumbent on the applicant to confirm his registered office address within one of receiving approval from the DICA in order to obtain a permanent Registration Certificate and Permit to trade. The applicant must also submit proof of transfer of minimum capital into a Myanmar bank account along with a signed letter of conditions to obtain a Permanent Registration Certificate and Permit to Trade. Obtaining licenses and fulfilling compliances The foreign company can commence business operations upon receiving the MIC permit and DICA permanent license if no further licensing is required for the intended commercial activities. The inquiries related to further licensing can be further directed to the licensing division of the DICA.