One of the key ways that the Myanmar Companies Law 2017 (MCL) supports basic corporate governance is through creating compulsory information and transparency obligations in the form of company register and index requirements. These are separate – but related – record-keeping obligations from the requirements to notify the Directorate of Investment and Company Administration (DICA) of changes to company details for updating of the Myanmar Companies Online (MyCO) electronic company registry. MyCO is a public registry, most of the contents of which are supposed to be publicly available under the MCL (although this is currently not the case). For private companies, the main purpose of company registers and indexes is to allow shareholders and other internal stakeholders to access company information.
The main company register requirements under the MCL are as follows:
The registers/indexes of documents required to be kept by companies under the MCL are:
Register of Members (Shareholders) (including share issue/allotment and transfer details)
The Myanmar Companies Regulations 2018 also require that a paper version of all forms and documents filed or lodged by a company with DICA via MyCO be properly executed and kept together with the company’s registers/indexes. That is, the PDF versions of MyCO filings (downloadable from the MyCO website) must be filled out, signed by a director or company secretary and kept with the company registers/indexes. It is not sufficient to only make a MyCO filing online.
A private company must make all registers and indexes that it is required to maintain under the MCL available for inspection by any shareholder of the company at its registered office (or another registered location where the information is kept) during ordinary business hours, free of charge. Public companies must let any person inspect their registers/indexes, but may charge a reasonable sum.
Any such shareholder (private company) or person (public company) can require that the company give him/her a copy of all or part of any register/index on payment of a reasonable sum. The company much comply within 10 days.
Every director and officer of a company has a duty to take reasonable steps to ensure that the registers/indexes under the MCL are maintained and made available as required by the MCL, and that relevant DICA/MyCO filings are made and related obligations under the MCL are met. The company and every director and officer who is involved in a default in these obligations is potentially liable to fines ranging from MMK150,000 to MMK10,000,000 (depending on the relevant register/index and the type and circumstances of the default).
A court may impose additional penalties (as determined by it) where a director or officer is knowingly and wilfully involved in a default relating to company registers/indexes and the court determines that they have behaved dishonestly. DICA may also make a court application seeking an order that a director or officer be disqualified from acting as a director or officer of any company for a period determined by the court.
Non-compliance with company register/index obligations is made an offence under the MCL to protect the interests of shareholders in being able to access up-to-date information on many of the key aspects of the company’s affairs and the interests held in the company. In practice, these requirements are essentially internal. DICA does not ‘police’ company register compliance and is unlikely to consider fines or other enforcement measures unless a shareholder or director makes a complaint to DICA regarding non-compliance.
However, directors and officers should still bear in mind that failure to comply with company register/index requirements is a breach of the MCL and still carries a risk of potential exposure to fines and additional penalties, which can include disqualification. Also, inspection of company registers/indexes by third parties is often a requirement of financing and investment activities, such as during due diligence exercises for proposed borrowings or equity capital investments, or M&A deals. If due diligence reviews identify that there are material deficiencies in the company’s internal registers/indexes (or perhaps that the company does not even maintain the required registers/indexes), this can be an issue in progressing the proposed transaction.
It is therefore sensible for directors to take steps to make sure that the company’s registers/indexes are at least reasonably complete and up-to-date at all times (and preferably actually in full compliance with the MCL requirements).
Professional services firms sometimes get to see company registers/indexes of companies that are not (or have not previously been) their clients as part of due diligence exercises, or where companies transfer their company secretarial work to a new service provider and their existing company register/index files are passed to the new provider. Our own experiences in this regard unfortunately indicate that failure to maintain fully compliant company registers/indexes seems to be common in Myanmar at this time. (And we don’t just mean small items of non-compliance that are not material. We mean actual structural deficiencies – such as required sections of the registers not having been created – or missing or clearly incorrect material information). We also suspect that it’s likely that a great many private companies in Myanmar do not maintain registers at all.
It takes a bit of understanding, some attention to detail, and decent administrative skills to create and maintain company registers/indexes that meet the MCL requirements. Good templates (and an understanding of how to use them) help a lot in this regard. But, overall, with the application of some time and the right resources – and with cooperation from key people within the relevant company itself – company register/index compliance is not a difficult task.
If your company would like to ensure it is compliant with MCL requirements, protect its directors from potential fines and other penalties, and be prepared in advance for corporate and finance due diligence exercises when it needs new funds or investment to grow, Calibre can assist through our company register and company secretarial retainer services. Or if you would just like an expert second set of eyes to check on your current company register/index compliance, we can also review your existing registers/indexes and provide a report on any items or areas that we think need further attention.
If you would like to discuss our company register and company secretarial services, please contact us on contact@calibrecs.com.