LAW Assignment (July ,2022)

1. Requirements for setting up a company in Myanmar

General requirements for setting up a company in Myanmar

 Allowed foreign ownership.

 Minimum capital requirement.
 Registered address in Myanmar.
 Limited liability company (LLC)
 Joint venture with a local partner.
 Joint-stock company (PLC)
 Branch office.
 Representative office.

Legal Requirement means any treaty, convention, statute, law, regulation, ordinance, license,
permit, governmental approval, injunction, judgment, order, consent decree or other requirement
of any governmental authority, whether federal, state, or local.
Statutory requirements come from statutes; in other words, these are legal requirements that
come from laws passed by State or Federal Government (e.g., Congress). › Regulatory
requirements come from regulations; such as. EPA Requirements, OSHA Regulations,
Regulations provided by the FDA, FAA, FCC, DOT, etc.
In a general sense, business compliance requirements mean abiding by a set of rules. For your
business to function legally, it needs to comply with specific industry standards, laws,
regulations, and ethical conduct standards that apply to your business.
As per regulations, foreigners can start a 100% owned representative office in Myanmar.
However, manufacturing or domestic commercial activities are barred for foreign companies.
Foreign investors can set up 100% foreign-owned companies in most sectors in
Myanmar. However, there are also certain business activities that foreign investors
cannot undertake, such as:
 1. manufacturing of products for security and defense, arms and
ammunition
2. tour guide services
3. mini-markets and convenience stores
4. etc.

Minimum capital requirement

There is no official minimum capital requirement in Myanmar for companies with
foreign shareholders. However, service sector companies need at least US$50,000 and
manufacturing companies requires US$150000 of minimum capital.
Furthermore, to establish a branch or a representative office in Myanmar, need to have
US$50000 of minimum capital. The parent company needs to deposit this from their
equity.
Registered address in Myanmar
Another prerequisite for setting up a business in Myanmar is to have a registered
address for your company.

Following is the list of the requirements for creating company.

 Number of Shareholders of Company.

 Number of Directors (Composition of Board of Directors)
 The requirement of an Indian Resident Director.
 Proper and eligible Name (Name Approval Guidelines)
 Registered Office Address & NOC from Owner.

Documents that companies need are as follows:

 Financial Records. Invoices and receipts for the goods and services being sold. ...
 Protecting Legal Records. Leases. ...
 Employee Records. All financial records such as bank accounts, tax file numbers and their
superannuation details. ...
 Policies & Procedures. ...
 Other Business Records.

references
https://emerhub.com/myanmar/company-registration-myanmar-guide/

2. Winding up a Company under Myanmar Company law

 Just and equitable:

Winding up refers to closing the operations of a business, selling off assets, paying off
creditors, and distributing any remaining assets to the owners. Once the winding-up process is
complete, the dissolution step comes into play. This is when the company formally under law
ceases to exist.

Winding up is a means by which the dissolution of a company is brought about and its assets
realized and applied in payment of its debts, and after satisfaction of the debts, the balance, if
any, remaining is paid back to the members in proportion to the contribution made by them to the
capital of the company.

In law, a liquidator is the officer appointed when a company goes into winding-up or liquidation
who has responsibility for collecting all of the assets under such circumstances of the company
and settling all claims against the company before putting the company into dissolution.
A winding up petition is a perfectly proper remedy for enforcing payment of a just debt. It is the
mode of execution which the Court gives to a creditor against a company unable to pay its
debts." It is possible in the case of insolvent companies.

When it comes to winding up in Myanmar, there are mainly two laws which are (1) Myanmar
Companies Law, 2017 (“MCL”) and (2) Insolvency Law, 2020 (“IL”). Basically, winding up of
a company occurs based on two circumstances; (1) solvency or capacity of paying debts and (2)
insolvency or incapacity of paying debts.

In Myanmar there are three ways of winding up of a company, by Court, voluntary winding up, it
may be either by members or by creditors, and by supervision of the Court. The process of
winding up of a company may be done by a liquidator.

The salient point of each winding-up process is set out below.

A. Members Voluntary Winding-up

The process for a member's voluntary winding-up are governed under Part VII – Division
2 of the Insolvency Law 2020 (“the Law”). Voluntary w'inding-up commences, (i) where
the constitution fixed a period for the duration of the company, or, more commonly
where (ii) a company resolve by special resolution that the company be wound up
voluntarily.

Where voluntary winding-up is proposed, the majority of directors must make a statutory
declaration that they have made a full inquiry into the company’s affairs and formed the opinion
that the company will be able to pay all of its debts (with interest) within a period not exceeding
one year form the commencement of the winding up (“Declaration of Solvency”). The
Declaration of Solvency must:

 be made within three weeks before the passing of the special resolution for winding up;
and
 include a statement of the company’s assets and liabilities as at that day before the
making of the Declaration of Solvency.

In a general meeting, the company must appoint a liquidator for the purpose of winding-up the
company’s affairs and distribution of its property. Once appointed, the liquidator must file the
notice of appointment, together with the Declaration of Solvency, with the Registrar within two
business days of his or her appointment. Where the liquidator comes to the opinion that the
company will be unable to pay its debts within the period stated in the Declaration of Solvency
or within a further period considered by the liquidator to be reasonable (“Finding of
Insolvency”), the liquidator must summon a creditors meeting in accordance with the procedures
under the Law. A statement of the affairs of the company must be provided to the creditors
before the creditors’ meeting. Where a creditors’ meeting is held pursuant to the Finding of
Insolvency, the members voluntary winding-up will be converted to a creditors’ voluntary
winding-up.

B. Creditors’ Voluntary Winding-up

The distinction between a members and creditors’ voluntary winding up is when the Declaration
of Solvency was made. If there is a Declaration of Solvency it is a members’ voluntary winding-
up. Where there is no Declaration of Solvency, it is a creditors’ voluntary winding up (section
148 of the Law).

Any creditor or creditors of the company may present a petition to the Court for winding up,
alleging that the company is unable to pay the debts of the creditor in the manner specified in
section 433 or 434.

A creditors’ voluntary winding-up commences when the company calls for a meeting of its
creditors, on the same day the company proposes to pass the resolution for a voluntary winding-
up. Prior notice of the creditors’ meeting must be sent by post to all the company’s creditors
(appearing in its books or otherwise known to the company) not less than 14 days before the date
of the creditors meeting (Rule 31(g)). A notice given to a creditor must be accompanied by the
following documents for completion by or on behalf of the creditor:

 draft form enabling the creditor to prove its debt or claim for the purposes of the meeting;
and
 a draft proxy form for the appointment of proxies to attend and vote at any meeting
convened under the Law.
A notice of the creditors’ meeting must be advertised in daily newspapers in Myanmar. When the
creditors’ meeting is convened, the directors of the company must provide a statement of affairs
of the company before the creditors. Such statement shall be in the prescribed form and content
as provided under the Rules.

Any director failing to provide such a statement of affairs without reasonable excuse commits a
breach of statutory duty liable to a fine by the Registrar in an amount not exceeding
MMK1,250,000. During the creditors’ meeting, a liquidator must be appointed for the purpose of
winding-up the company’s affairs and distributing its assets. If the creditors fail to appoint a
liquidator, then one may be appointed by the company.

C. Winding-up By Court

A Court ordered winding-up differs from a voluntary winding-up in the sense that there are a
number of circumstances to which a court winding-up may occur. Section 161 of the Law sets
out the following circumstances:

 the company has by special resolution resolved that the company be wound up by the
Court;
 the company does not commence its business within a year from its incorporation or
suspends its business for a whole year;
 the company is insolvent;[1]
 the Court is satisfied that it is just and equitable that the company should be wound up; or
 the Court is satisfied there are proper grounds of public interest. Grounds of public
interest could be where the company has no directors or the company has carried on
business with intent to defraud creditors of the company or any other person, or for any
fraudulent purpose.

A Court ordered winding-up commences by the filing of a winding-up petition by a director or a

creditor (including contingent or prospective creditor). During the hearing of the winding-up
petition, Court may make the following orders:

 order the winding up of the company and appoint a liquidator;

  dismiss the petition;
 adjourn the hearing conditionally or unconditionally;
 make an interim order; or
 make any other order.

Once an order for the winding-up of the company has been made, the Court must also appoint a
liquidator. The liquidator must be appointed from the following persons and their consent in
writing must be tendered to the Court for the appointment to be effective:

 a nominee of the applicant for the winding up order; or

 where no person is nominated, the Official Receiver[2] must be appointed by the Court.

6 Grounds on which a Court can Order a Winding up of a Company in...

 Passing of special resolution for the winding up: ...

 Default in holding statutory meeting: ...
 Failure to commence business: ...
 Reduction in membership: ...
 Inability to pay debts: ...