New insolvency legislation passed

Pyidaungsu Hluttaw on February 14 passed a new Insolvency Law to further strengthen the business environment and draw more foreign investors to the country. The new legislation will become effective after a notification is issued by the President of Myanmar.

The new law replaces the Yangon Insolvency Act (1909) and the Myanmar Insolvency Act (1920).

The law, which has 425 sections, includes recourse for micro, small and medium-sized enterprises (MSMEs) and directives related to cross border insolvency.

It aims to achieve nine objectives, including compatibility between national law systems and commerce systems, effective management, predictability and fairness throughout the process of insolvency and providing support for MSMEs facing financial difficulty as well as protection for local firms entering the international market by building a framework for cross border insolvency.

According to the law, a registered expert on insolvency and council to supervise the registered expert about insolvency will be established.

Resolving insolvency is also one of criteria measured by the World Bank on its Ease of Doing Business Index. Although Myanmar raised its ranking on the World Bank’s Doing Business 2020 Report to165th place out of 190 countries on the index compared to 171st place in 2019, resolving insolvency was one of the areas in which improvement is still much needed.

The law will facilitate the government in keeping track of any insolvency cases after implemention, according to the Myanmar Doing Business Team.

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Source : Myanmar Times

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