January 20
Nominal directors and shareholders will not be allowed, according to the notification released by the Directorate of Investment and Company Administration (DICA) dated 17 January 2023.
By exercising the power conferred by Sub-Section 462 (A) (II) of the Myanmar Companies Law, the DICA hereby notified that nominal directors and shareholders shall not be permitted.
According to Chapter 18 stipulated in Myanmar Companies Law, regarding the rights of the directors and officials, those who direct corporate affairs are considered directors even if the position of the director is not appointed. Additionally, the appointment of alternate directors is allowed under the existing law. Electing nominee directors is not officially approved.
Furthermore, any person who holds the shares has to submit reports to a registrar and make entries in a list of the participants of the companies archived at the company, stipulated in the Myanmar Companies Law.
At present, nominal shareholders are legally registered in some countries on behalf of the actual beneficial owner.
However, company registration with nominee shareholders is not allowed in Myanmar. Those registered persons and legal entities kept in the company file and registered with the registrar are considered actual beneficial proprietors.
Furthermore, the information of beneficial owners can be observed at a fixed fee under Section 421 of the Myanmar Companies Law.
This notification has come into effect from 17 February 2023.
Following that notification, the owners of foreign companies have to stay in the country instead of the nominal director. Yet, it could pose problems and challenges to some foreign firms during the pandemic and in the state of political turmoil, Myanmar Enterprise Solutions indicated.
Under the Myanmar Companies Law, each company must have at least one director who must reside for more than 183 days in the State. Thus, foreign firms usually appoint Myanmar citizens or foreigners who stay more than 183 days in the country as nominal directors. Nominal directors are officially permitted in other foreign countries as well.
Myanmar Enterprise Solutions elaborated that it would be more appropriate if nominal directors are allowed and only nominal shareholders are unconstitutional. — NN/EMM
