Directorate of Investment and Company Administration (DICA) invites comment on draft Companies Act

Directorate of Investment and Company Administration (DICA) invites comment on draft Companies Act

The government has revealed a draft of its much-anticipated Companies Act, an update to a law that is over a century old.

Work has been under way on legislation to replaced the 1914 Companies Act since mid-2013. Critics say the previous law, while expansive and detailed, is out of touch with the modern economy.

Businesspeople and members of the public are invited to submit opinions on the draft law, according to state media.

Although the current draft has only recently been released, experts say they have seen positive changes in the document. U Moe Kyaw, managing director of Win Tin and Associates audit firm, says the draft allows for exemption from audit for small and medium enterprises, while the old law formerly required all companies to hire auditors. It also allows for online company registration, removing a need for company officials to go to government offices with hard copies of paperwork.

One of the most contentious issues around the Companies Act is what constitutes a foreign company.

Currently, a single foreign shareholder in a company makes an otherwise Myanmar company into a foreign company. This has significant ramifications – for instance, local banks or local distribution companies are not allowed to be foreign companies, officially precluding foreigners from any share in the business.

U Moe Kyaw said there is still discussion over what will constitute a Myanmar company or foreign company, with some mooting a figure of 65pc local ownership as the threshold to make a company locally owned.

“People are criticising that it needs to be in line with international practices, and also discussing that definitions could be confused,” he said.

U Moe Kyaw’s firm is participating in discussions around the law in the role of auditor. The next discussions with companies, legislators and related officials will be held this week, he said.

Directorate of Investment and Company Administration director general U Aung Naing Oo said previously the government targets passing the law this year, though it must still pass parliament.

The draft law has received support from the Asian Development Bank as well as Baker & McKenzie Yangon.

Inviting in the public allows people to take part-ownership over drafting various laws.

U Aung Thura, chief executive of Thura Swiss research and consulting, said public discussion is a good practice to follow when creating laws, as people will be more satisfied with laws in which they provided input and clearly know.

U Aung Thura said his current understanding is the new law will simplify government procedures for companies and reduce the overloading of activities.

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