Sources have confirmed to Pozières Consulting that we can expect to see the proposed modernisation of Myanmar’s Companies Act submitted to parliament in the first session of 2017. The current Companies Act 1914 is outdated and cumbersome forcing more than 80% of businesses in Myanmar to exist in the informal economy. The Act of 1914 is however built upon British common law standards and it is expected that this will continue with new Act bringing overall standards in line with international norms and thus helping businesses, both local and foreign, to easily navigate and comprehend the requirements.
In describing the proposals earlier this year, the Director General Myanmar’s Directorate of Investment and Company Administration (DICA) Aung Naing Oo stated that “In the new law, we only need the single shareholder and single director…according to the new law, those small company, they don’t need to provide annual auditor financial report to us. Our idea is to pave the way for the family business… to be registered one in Myanmar… because there are number of family businesses which are not properly registered in our office or in any other government agencies…”.
It is thought that reforms will include streamlining the process of registering companies, providing an online due diligence gateway and better provisions for international partnerships.
With growth rates of more than 8% a year, the recent removal of sanctions and the passing of the revised Foreign Investment Law which makes investing more transparent, these further developments will be extremely positive for Foreign Direct Investment as the ease of doing business increases.
These conditions will be of particular interest for financial services companies and banks who have been all but locked out of the country for the past 60 years. Raising capital has been particularly difficult for both foreign and local investors looking to develop investment projects. The lifting of sanctions and the formalisation of company ownership in a transparent environment will facilitate the re-inclusion of Myanmar into the international banking infrastructure system and open the way for capital inflows from the private sector.