The Myanmar Companies Act – a pivotal piece of legislation that will reform how companies are regulated and allow foreign investors onto the Yangon Stock Exchange – was submitted to the Pyithu Hluttaw at the start this month, according to Directorate of Investment and Company Administration Director General U Aung Naing Oo.
The new act was approved at a government cabinet meeting on January 5 and went to parliament the following day, he said at a press conference this week.
“If everything goes well the law will be out soon,” he said.
The legislation will replace a colonial-era Myanmar Companies Act from 1914 that is replete with antique stipulations – companies have to seek presidential approval to change their names, and court approval to change business objectives.
In addition to simplifying requirements for small and family-owned businesses, improving corporate governance standards and removing outdated regulations, the act will also allow foreign investors to hold shares in Myanmar firms. The authorities hope this will make it easier for local companies to attract international funding and expertise.
Nor will the new legislation automatically treat companies with a degree of foreign ownership differently. The act’s latest draft no longer defines any company in which foreigner holds shares as a foreign-owned company. U Aung Naing Oo said foreign-owned companies will be defined as those where foreign ownership exceeds 35 percent, but that the Ministry of Finance and Planning can change this ratio as the economy develops.
This will also allow foreigners to buy shares on the Yangon Stock Exchange for the first time; something many people think will be beneficial for the new bourse.
“Myanmar’s stock market is still very young,” said U Ye Min Aung, managing director of Myanmar Agribusiness Public Corporation (MAPCO), which plans to list on the YSX this year. “Trading is only made by the domestic market, and in order to boost trading it is necessary to allow foreigners with higher purchasing power to trade.”
Source: Myanmar Times
