Limited Liability Company (LLC) in Myanmar
Since the opening up of its economy in 2011, Myanmar has seen a surge in the economic growth due to spur in the business activities. The country has a large market with tremendous opportunities for manufacturing, agro-processing, and import-export as the people of Myanmar faced severe shortages of competitive services and lack of jobs. The situation in Myanmar is improving as the country is now more open towards private companies, industries and businesses to accelerate development in the nation.
In a business perspective, Myanmar is rich in natural resources such as minerals, precious stones, gems, oil, natural gas, timber, forest and agricultural products. The country is a major agricultural producer cum exporter in Asia while this may be true, industries other than agriculture and mining are least developed with little to no competition in numerous business sectors, this is due to a long period of isolation and reduced focus on building infrastructure for diversified industrial growth.
The nation has tremendous human resources for low wages when compared to its competitors. This can component can serve very well to companies that perform labour intensive tasks and give them a competitive edge in the global market. The people in the country are eager to avail new jobs as the employment opportunities in outdated sectors are rapidly diminishing, a majority of the human resources in Myanmar are semi-skilled labour force who are ready to be trained to perform a skilled task if the industry requires it. Moreover, the government has made the procedures streamlined for foreign companies in the country to hire and employ native citizens.
What is a Limited Liability Company in Myanmar?
The Limited Liability Company structure is a legal business entity that allows directors, investors and shareholders to pool the shared capital to start a company and share the profits earned from the business operations performed by the entity. An LLC company is a legal entity that is separate from its owners, directors, investors and shareholders while offering maximum flexibility to its owners and directors depending upon the business situation and government rules.
The Limited Liability business structure provides liability protection to its owners, investors, directors and shareholders in terms of share capital. The directors, investors and shareholders are responsible of the assets and liabilities of the legal company structure only to the extent of their shared capital which reduces the risk factor making it easier to attract investment capital from various sources. However, the LLC registered legally with the government must follow all the rules, regulations and compliances set by the governing bodies to stay in operation, in addition to this the LLC structure is taxed according to the corporate tax laws.
Note that starting an LLC in Myanmar involves a significant amount of documentation and paperwork like preparing Articles of Association (AOA), Memorandum of Association (MOA), Articles of Incorporation (AOI), operating agreements between directors, investors and shareholders.
Types of LLC in Myanmar
According to Myanmar Company Law, the following types of legal business entities based on the Limited Liability concept are allowed to be registered in the country. The following corporate bodies may be incorporated and registered in Myanmar under the Myanmar Company Law.
1.Limited Liability Company Limited by Shares
The LLC Company limited by shares are common forms of businesses registered in Myanmar, this popularity is due to the security which it offers to the directors, investors and shareholders through legal structuring of the share capital.
- Private Company with no more than 50 shareholders
- Public Company with more than 50 shareholders
2.Limited Liability Company Limited by Guarantee
This type of LCC Company offers an alternative business structure which is primarily used for Non-Profit Organisations that require a legal structure. This legal business entity is limited by guarantee and usually does not have a share capital or shareholder as a significant source of revenue are in the form of donations, campaigns and services.
Who can start a Limited Liability Company?
After a clear assessment by the Myanmar government, the government framed the Myanmar Companies Law now foreigners and non-residents of Myanmar are allowed to register and start their business operations in Myanmar. In addition to this, large corporations and well-established companies can form Limited Liability Company as a subsidiary to their organisation to handle operations in Myanmar or to expand their services in the region.
Advantages of starting a Limited Liability Company in Myanmar
Starting an LLC in Myanmar offers unique benefits to the business owners and investors, here is a list of advantages that the popularly used business structure LLC offers.
- No minimum capital requirement
- Limited liability company structure
- Can be started with a minimum of one shareholder
- Flexibility in governance as there can be a maximum of fifty shareholders
- Can hire and employ citizens and residents of Myanmar
- Lesser recordkeeping requirement than corporations and joint-ventures
- Allows foreign ownership for most of the industries
- Company registered as a Tax resident in Myanmar
- Can benefit from tax exemptions, special customs duties and income tax reliefs by submitting proper documentation to the Myanmar Investment Committee
- Offers significant protection to investors and shareholders
- Can be easily dissolved and converted into a corporation
Documents required for registering your LLC in Myanmar
There are certain documents which are required before registering your business with the Company Registration Office (CRO) at the Yangon Directorate of Investment and Company Administration (DICA)
- Application cover letter
- Declaration of Registration (form 1)
- Local Myanmar address proof of the company’s office space/factory
- Statement of the company’s objectives
- Director details (form 26)
- Copies of Passports of directors if the individuals are foreigners
- Memorandum of Association
- Articles of Association
Succeeding as an LLC in Myanmar
Starting a business in Myanmar is a little bit harder as understanding the legal arrangement is complex even though the government is actively updating the laws to make it easier and transparent for business to come and start their operations in the country.
Secondly selecting the right location, finding the right partners, suppliers and infrastructure hurdles make it tricky for the entrepreneurs to register their start-ups in Myanmar. At the same time, most of the entrepreneurs who are native to Myanmar are finding it difficult to obtain sufficient financing as the interest rates are exorbitantly high and loans are often not available without any recommendations. Such a scenario opens up bright opportunities for international entrepreneurs and business leaders with proper funding and investment to take action and steer towards success by starting a business in Myanmar.
As an emerging economy in Asia, company formation in Myanmar has umpteen of opportunities along with its fair share of challenges, the foreign start-ups can take advantage of the business structures by forming joint-ventures with local partners, or bring in outside help by means of partnership with international industry leaders who can offer you financial assistance, business support and industrial guidance on your business endeavours in Myanmar.
The process of registering your company in Myanmar is where our experts can lead you through the complicated process carrying experience in Myanmar legal structure and extensive knowledge of the local business environment. Contact us to get in touch with our Myanmar team for consultation or any queries related to the business set up in Myanmar.