- By Maung Ti Kar
Myanmar Companies Law
- The Myanmar Companies Law signed by the President which was released on 6 December 2017 came into force starting from 1 August 2018. The new company law comprising modern procedures and improvements in legal affairs being exercised in the international community set up the harmonized framework which is clear and transparent for companies. Companies at home have opportunities for easily abiding by the company law because of easing procedures. Hence, the new law is more effective not only for companies but for relevant governmental departments which take responsibilities for controlling the companies. Significantly, as the new law consists of full text of provisions on corporate management affairs which were not included in the old law, the law contributes a great deal towards creation of connections between businesses of Myanmar and international business firms. Moreover, the law reduces burdens of rules and regulations for small- and medium-scale enterprises as well as cuts the cost in practising the law.
A new online registration system namely Myanmar Companies Online (MyCO) was established together with the new company law in order to ease the processes of setting up the company for businesspersons in Myanmar. As such, all the businesspersons who have experienced in applying the MyCO show their satisfaction. Foreign businesspersons praised that MyCO was much better than online registration system of some regional countries. Thanks to MyCO, a total of 11,658 new companies could be registered from 1 August 2018 when the MyCO was launched to the end of February 2019. Moreover, a total of 46,377 companied which took registration under the old law were re-registered through the online system. That is why 58,035 companies in total have been registered through the online facility so far. With regard to the statistics on yearly registration, new record of registering the companies was remarkably set within seven months by breaking the old record with 9,286 companies registered in 2017-2018 fiscal year. Active registration of companies through the online was based on modernity of new company law and clearness and ease of MyCO which remarkably cut work procedures, duration of procedure and cost for registration of companies. Such a plan will contribute much towards the tasks being vigorously encouraged by the government in uplifting the position of Myanmar in the Doing Business Report yearly issued by the World Bank.
Registrar and Regulator
Some people ask that if companies have registered in easy processes, how the company registration office will regulate them to correctly operate their businesses and how to tackle increasing number of companies doing misdeeds. Actually, it was found that the majority of questioners do not really understand the duty and authority of the Directorate of Investment and Company Administration (Registrar) which handles the company law and the role of relevant governmental departments (Registrar) which controls businesses of registered companies under respective laws.
The company means a business group which is formed with share-holders with or without limitation of liability under the relevant company law. In fact, a company is a separate group which is set up under the law. Legal vocabularies related to economy define the company as “Legal or Judicial Person” and human being as “Natural Person”. It means a company has the rights of possession, the rights of living and the rights of arguing the cases in a court of law similar to that of a human. The DICA scrutinizes and controls things whether the companies abide by provisions of the company law or not. That is why the DICA is taking responsibilities for registering the companies as well as controlling the company law. On the other hand, the DICA can be dubbed as immigration for companies because immigration department scrutinizes the citizens to be able to issue the citizenship scrutiny cards.
If a registered company starts a business, it needs to seek permission order, licence and permit from relevant governmental organizations under the provisions of the respective law as well as operate tasks of business under the supervision of relevant governmental organizations in line with the law. For example, one wish to operate hotel services, one must seek licence for hotel at the Ministry of Hotels and Tourism. Likewise, one wants to carry out export and import businesses, one need to apply for hospital licence from the Ministry of Health and Sports. So also, one wishing to operate security services must seek permission order from the Ministry of Home Affairs. Only when they get such permission orders and licences, will they have to initiate their businesses. Registration at the DICA is not to allow operation of a business but it helps emerge a company under the law. The majority of people seem the business can be operated after taking registration at the DICA but it is untrue. With regard to the issue of a company related to security services spreading in the social media, it is necessary to apply for the permission order from the Ministry of Home Affairs at first, and only when it receives the permission, can it launch the business. However, the Ministry of Home Affairs has not received the application for the business yet. And, the ministry has not given permission to it yet.
Who will take action against companies doing misdeeds?
Somebody ask that at a time when the events emerge that some companies doing misdeeds in the economic arena break the laws, how will the DICA take action against them? Actually, the relevant governmental organizations which handle relevant laws will take action against the companies which broke the laws. Only when the companies break the company law, will the DICA take action against them under the provisions of the company law. On the other hand, relevant government organizations will take action against a citizen who violates the law. “The immigration” cannot take action against such citizen although the Immigration issued the citizenship scrutiny card to him. So also, relevant governmental organizations must take action against the company which breaks the law. However, if members of the Board of Directors from the company fail to duty and qualification of BOD members prescribed in the company law, the DICA will take necessary action against them under the company law. Moreover, if those BOD members commit dishonest activities, they can be prosecuted to face separate penalties sentenced by the court.
New era of Myanmar with modern law
Enacting and practising the modern company law means that the government lays a sound foundation for development of private sector. In fact, the company law brings development to all companies which are systematically operating the businesses under the law. However, companies in operating relevant businesses need to take registration through MyCO with ease, quick and clear facilities. And then, as it is important that these companies must exactly and correctly carry out their tasks under relevant laws in respective business fields, I would like to urge these companies to contact relevant departments for seeking permit if necessary.
Translated by Than Tun Aung