The Myanmar Companies Act (originally called the Burma Companies Act in English) was enacted in 1914 and establishes the ground rules for individuals wishing set up a company in Myanmar. It is quite similar to the British Companies Act of around the same period. The law has been amended twice – in 1989 and 1991. All that foreign investors really need to know about this law is that the Myanmar Companies Act states that foreigners may own 100% of the following entities:
• Sole proprietorship
• Local branch of a foreign company
The Myanmar Companies Act also explicitly states that foreigners cannot be shareholders in local companies. In essence this means that you cannot directly invest in any local Myanmar company. If you were to try to do so, you would have absolutely no legal recourse in case of a dispute. If you’ve found a Myanmar company that you think would make a good investment, the only suitable option at this point is to partner with that company in a joint venture.
Potential investors to Myanmar should understand that the new foreign investment law really only applies to larger ventures, and that most smaller firms will invest under the Myanmar Companies Act. In Myanmar a foreign company is said to either be an FIL company (which enjoys the benefits of the new foreign investment law) or a DICA or MCA company (smaller firms which do not qualify under the FIL).
Due to the recent influx of investment interest, DICA (The Directorate of Investment and Company Administration) has announced plans to update the Myanmar Companies act with the help of the Asian Development Bank. This would be an important step for investors, and would modernize some of the more antiquated parts of the law. No timeframe has been announced for this project, but we could see a new Myanmar Companies act by the end of 2013.