Over the last few years, Myanmar has drastically loosened limitations on foreign investment, making the market more open to foreign investors. This article contains useful information on the many forms of legal entities available to you.
Foreign investors interested in starting up firms in Myanmar can benefit from understanding Myanmar’s business forms. Only by understanding the strengths and weaknesses of each business establishment can investors select which sort of business will allow them to achieve their goals. Myanmar Companies Law, 2017 (“MCL”), Myanmar Investment Law, 2016 (“MIL”), and Partnership Act, 1932 (“PA”) will be used to establish the most popular types of business.
Private Company Limited by Shares
Only one director and one shareholder are necessary when forming a private company. A private company’s sole shareholder might also be the sole director. The total number of stockholders is limited to 50. Furthermore, shareholders’ responsibility is restricted to the amount owed on their shares. The most popular type of corporation in Myanmar and international business is a private company limited by shares.
Public Company Limited by Shares
A public business with shares must have at least three directors, one of whom must be a Myanmar national. If the firm is liquidated and there are insufficient assets to cover any outstanding debts, members’ liability is limited to the shares they contribute. Most significantly, the company’s shares can be freely exchanged on a stock exchange in accordance with the stock exchange’s requirements and criteria.
Overseas Corporation
Foreign enterprises doing business in Myanmar may be required to register with the Directorate of Investment and Company Administration as an overseas corporation (DICA). An overseas corporation, on the other hand, is essentially a Myanmar branch of a company formed outside Myanmar.
Partnership
A partnership is made up of a group of people. The agreement between the partners and the PA establishes the partnership’s rights and obligations. In Myanmar, all partnerships are infinite. A partnership does not have to be registered, and the business terminates when all partners agree to dissolve it.
Joint ventures
One of the most prevalent company formats in Myanmar is a joint venture involving international and Myanmar investors. Investors must follow the provisions of the MCL and MIL while forming a joint venture firm. Local investors, in particular, must possess at least 20% of the commercial operations limited by the MIL notification.
Branch office
Myanmar’s Company Law also permits foreigners to establish branch offices with at least one shareholder and an authorized company representative, who can be a foreigner.
A Myanmar branch office can carry out commercial operations and issue invoices. Keep in mind, however, that the parent firm is solely responsible for the acts of the branch.
The branch will be required to have a minimum capital of $50,000 and will be subject to a corporation tax rate of 35%, as opposed to the 25% rate that applies to firms formed in Myanmar. As a result, creating a new company in Myanmar may be less expensive than opening a branch office.
Representative office
With a minimum shareholder of 1 and an authorized business representative, foreign corporations can operate 100 percent foreign-owned representative offices in Myanmar. A minimum financial investment of US$50,000 is also required to create a representative office in Myanmar.
On behalf of the main office, representative offices can engage in liaison or marketing operations. Its operations, however, are restricted to:
- data collection
- market research
- feasibility studies
It is unable to engage in production or commercial activities, nor can it make money or issue bills.
