Myanmar

2 Chapter Incorporation

    • Characteristics of business base

      When you establish a business base in Myanmar, proceed according to the Myanmar Company Law. If you consider advancement you need to select the form of advancement, and to decide investment amount and ratio.
      [form of advancement]
      When foreign corporation start business under the Myanmar Company Law, they can select the type; Local corporation, Branch office, Liaison office, or Partnership.
      Entry by private company is general, however many corporation establish a liaison office because the business environment is uncertain.
      Type
      Classification
      Characteristics
      Local corporation
      Resident foreigner
      ・Have a another corporation from the investor.
      ・100% investment from foreign capital is possible.
      ・In case of a merged company, 35% or more investment of foreign capital is needed.
      Branch office
      Non-resident foreigner
       
      ・Increase revenue is possible
      ・sales activity base
      Liaison office
      Non-resident foreigner
      ・activities are limited to information gathering and investigation.
      ・No profitable activities.
      Partnership
      no corporate status
      ・Mainly, it’s manufacturing maintenance and machine lending.
      ・Outside of project activities are not allowed.
       
       [local corporation]
      Under the Myanmar Company Law, companies are roughly divided into four types; Limited Company, Limited by Guarantee Company with share capital, Limited by Guarantee Company without share capital, and Unlimited Company.
      Limited company is divided into Private Limited Company and Public Limited Company. Foreign corporation is accepted to establish only private limited company.
      Difference between Private limited company and Public limited company is on the below table.
       
      Private
      Public
      Number of founder
      Minimum number of shares held by founders
      2people or more
      1share or more
      7people or more
      1share or more
      Number of shareholders
      50people or less
      7people or more
      A director
      2people or more
      3people or more
      Accounting auditor
      1person or more
      1person or more
      Creation of shareholder registry
      Needed
      Needed
       
       [advancement form other than local corporation]
      Even if it is Liaison office, it is classified as a Branch office on registration. Liaison office’s activities are limited to non-profitable activity such as information gathering.
       [branch office]
      Corporate status is foreign corporation and it must be same as headquarter. Branch office’s income tariff is 35% and it’s higher late than local office [25%].
       [partnership]
      Partnership is consisted by 2~20members of unlimited company. The main case of establishing partnership is when you act for development of resources such as natural gas, petroleum, and mineral with Myanmar national enterprise.
       [partnering with local companies]
      Partnering is formed by contract to do a project with local corporation. Concluding CMP instead of founding new corporate is possible. Also, you can found a factory and conclude CMP with the new corporate. CMP is mainly used at the field of shoes production and sewing which is main industry of Myanmar. The advantage is that you can exempted from taxation of import material.

    • Establish a business base

      There are two procedure ways for establishing. One of it is application for investment permission to MIC [Myanmar Investment Committee]. This procedure is needed only for the case if you receive preferential treatment based on the foreign investment law. Other one is application for business license and corporate registration to DICA [Directorate of Investment and Development] of MNPED [Ministry of National Planning and Economic Development]. Every foreign corporate need to do this procedure not depend on the type of business. In addition, you need to apply for permission before those procedure is done, if business license is required to doing the industry.

       

       [pre-application for business permission]

      When establishing a merged company with national enterprise or the industry needs business license, you need to get business permission from each ministry before you start your business. The industry which need to get license are travel industry, hotel industry, house rental business or finance industry.

       [application for investment permission]

      When the company want to receive preferential treatment, this procedure is needed. The process is below.

      1. Request for cooperation to competent ministries and related agencies

      2. Creation of lease agreement draft of land to do business

      The lease period can be up to 30 years and extension of 15 years is possible up to 2 times

      3.  Preparation of application documents and confirmation of ministries and agencies

      Necessary documents for an investment permission application are; application form, merger agreement draft, company’s basic constitution and bylaws, feasibility study and cash flow forecast, bank balance certificate, reference materials of land rental agreement draft and application for tax exemption / reduction tax reduction.

      When you submit those documents, you will get a confirmation and understanding. After this, ministries and agencies apply to MIC. At that time, you need to get a recommendation letter or no objection letter from ministries and agencies.

      4.  Application for investment permission from the competent ministries to the MIC

      When it applies to MIC, MIC has to be discussed from the host institution; Trade Policy Council and Cabinet. Least 3monthes are needed to get investment permit.

      5.   Approval of Investment Permit [Issuance of investment permit]

      After getting investment permit, you will apply for permit to trade and corporate registration.

       
       

      [Application for permit to trade and corporate registration]

      If you don’t receive preferential treatment, you will start this procedure. Permit to Trade and Certificate of Incorporation is given permit and issued by CRO [Company Registration Office]. The process is below.

      1.  Create application documents

      In the case of local corporation, the company name is regulated by the company law. The name related to the Kingdom of England and the name related to government agencies are prohibited in principle. For limited company, you need to add “Limited” on the end of company name. The Myanmar Company Law has provisions on capital. So, you must establish a capital amount equal to or more than minimum capital.

      When the company is established by 100% investment from foreign capital, only Private Limited Company is allowed to establish. Private Limited Company must have General meeting of shareholders, a director and, accounting auditor. Accounting auditor must be certified public accountant of Myanmar.

      In the case of branch office, the purpose of business is selected by the articles of incorporation. You can’t select “Trading”.

      2.  Apply for CRO

      When you prepare all required documents, apply for CRO. CRO submit those application documents to EC Meeting. At the meeting, deliberation will be held. After the deliberation, Application for Permit and Condition Letter is issued. It takes about 2monthes from apply to issue.

      3.  Receipt, confirmation, signature and return of Application for Permit and Condition Letter

      Submission of application documents, returned deadline of signed Condition Letter and remittance instructions and deadline of capital are on the Application for Permit.

      Confirmation of application contents and agreement of various things are on the Condition Letter.

      You need to sign and return Condition Letter, and pay capital.

      4.  Payment of the capital

      You need to remit payment the capital within the date on the Condition Letter. And you must pay more than half of minimum capital to the designated bank.

      Designated bank is MFTB or MICB. Minimum capital is 150,000 US dollar for manufacturing industry, construction industry and hotel industry, 50,000 US dollar for service industry.

      5.  Confirmation of landing and payment of registration fee

      After payment of capital, certification of receipt of initial capital is issued by the bank.

      6.  Complete permission of Permit to Trade and Certification of Incorporation

      Submitted application documents to TC from CRO and get approval. It takes least 1 week for this procedure.

      7.  Open a bank account

      To withdraw funds that have been remitted, open an account. About 1 week is needed to open, and deposit passbook and check book are issued.


       [other procedures]

      Exporter/ Importer Registration

      If you perform export/ import business after establishing the company, you need to register as importer. There are 4 steps to register as importer. First step is to get exporter/ importer registration form from Ministry of Commerce, Directorate of Trade. After applying, Exporter/ Importer Registration Certificate is issued. The issue fee is depending on term, and for 2 years is 100,000 Kyat, or for 1 year is 50,000 Kyat. Second step, you need to join The Union of Myanmar Federation of Chambers of Commerce and Industry. The enter fee is 300 US dollar and year fee is 150 US dollar. Third process is to get import license. This procedure is also done with Ministry of Commerce, Directorate of Trade. It is necessary to get a license for each item. This license’s expiration date is usually 6 months and you can update. The fee is depending on the item. There are some items which prohibited to import. Last step is to get export license. This license is also necessary to get for each item. The license’s expiration date is 3 months, however there is no fee. There are some items which prohibited to export.

      Procedure at the time of New Factory Establishment

      When you establish new factory in Myanmar, you need a permission. You will apply for this permission to YCDC [Yangon City Development Committee] or MCDC [Mandalay City Development Committee]. You need to get four permission which are Construction Permit, Internal Water Supply, Septic tank Permit, and Building Completion Certificate. After the factory is established, you need to register at Ministry of Industry before operating.
       
       

    • Company liquidation and withdrawal

      Company liquidation is started to decide the liquidation at board of directors. At committee, liquidator is nominated. Liquidator has to be certified public accountants. Company liquidation of liabilities or tax payment is done by liquidator. After all payment is done and cash or foreign currency deposit remain, it is possible to remit payment to abroad if you obtain approval from the Central Bank of Myanmar. Regarding the liquidation of liabilities, it is necessary to make public notice to creditors by Myanmar Gazette or newspaper.

    • Websites

      [1] JETRO

      [2] DICA

    • Babiliography

       [1] DFDL Mekong Legal And Tax Advisers『Myanmar Legal, Tax and Investment Guide, 2011-2012』