OVERVIEW
For many foreign investors, entering a new market often begins with setting up a small or medium- sized enterprise (SME) to explore the local business landscape before making a larger commitment. Myanmar is no exception.
As in other jurisdictions, any foreign investor intending to carry on business in Myanmar is required to establish a legal presence in the country in accordance with the Myanmar Companies Law (“MCL”). Regardless of whether it is a SME, selecting a suitable and appropriate business structure is foundation when starting a venture in Myanmar. In this article, we provide an overview of the types of business entities typically available to foreign investors in Myanmar, along with the key regulatory requirements associated with each option.
TYPE OF BUSINESSES ENTITIES FOR FOREIGN INVESTORS
Foreign investors can choose from several types of business vehicles to establish their presence in Myanmar, each with different legal and regulatory implications. The most common forms are listing below:
- Private Company Limited by Shares
A Private Company Limited by Shares (hereinafter referred to as the “Company”) is the most common form of business entity chosen by both foreign and local investors looking to commence operations in Myanmar. The Company is a separate legal entity, capable of entering into contracts and conducting any lawful business activities in accordance with Myanmar’s laws and regulations. Under the MCL, there are specific requirements applicable to the establishment and operation of a Company. Below, we highlight the key regulatory provisions and compliance obligations for setting up a Company in Myanmar.
Directors
A Company must have at least one director, and the MCL does not impose a limit on the maximum number of directors. Importantly, the Company is required to have at least one director who is ordinarily resident in Myanmar. If the Company has only one director, that director must be the ordinarily resident director.
An ordinarily resident director is defined as an individual who is either:
- A permanent resident of Myanmar; or
- A person who has resided in Myanmar for at least 183 days within each 12-month period calculated from the date of the Company’s incorporation.
In summary, a Company may have an entirely foreign board of directors, provided at least one director satisfies the residency requirement under the MCL.
Capital
The MCL does not prescribe any minimum authorized or legal capital requirements. Additionally, there is no mandatory minimum paid-up capital unless otherwise required by a specific industry regulator or licensing authority.
This means a Company may be incorporated with any capital amount, subject to practical business needs or sectoral rules
Shares
A Company is allowed to issue different classes of shares, and the MCL does not require shares to have a par value. The types of shares that may be issued include:
- Ordinary shares
- Redeemable shares
- Preference shares
- Other classes of shares as defined in the Company’s constitution
The rights attached to each class of shares (e.g. voting, dividend, redemption rights) must be clearly set out in the constitution.
Registered office address
Companies must have a registered office address in Myanmar. All notices and communication will be addressed to the registered office address. Companies do not need to carry on their business at the registered office address.
Business activities
In general, a Company may conduct any business activities that are not expressly prohibited under Myanmar law. However, certain foreign ownership restrictions or regulatory requirements may apply depending on the nature of the business.
For instance, foreign-owned companies engaging in wholesale or retail activities must obtain specific permits and satisfy minimum investment thresholds in accordance with the relevant notifications and licensing frameworks issued by the Ministry of Commerce.
Company Status
Under the Myanmar Companies Law (MCL), companies are classified as either Myanmar companies or foreign companies, and this classification can have a significant impact on the company’s eligibility to engage in certain business activities, particularly those subject to foreign investment restrictions.
According to the MCL:
- A company is considered a Myanmar company if foreign ownership—direct or indirect—doe not exceed 35% of the total ownership.
- A company is classified as a foreign company if an overseas corporation, a foreign individual, or any combination thereof owns or controls, directly or indirectly, more than 35% of the shares.
This distinction is important, as certain sectors and activities are either restricted, prohibited, or require special approval or investment thresholds for foreign companies.
Tax Residency and Corporate Taxation
From a tax perspective, a Company incorporated in Myanmar is treated as a tax resident.
Corporate income tax (CIT) is at a flat rate of 22% on its worldwide income, including income derived both from sources within Myanmar and outside Myanmar.
Foreign-sourced income may be subject to foreign tax credits or exemptions under applicable double taxation agreements (DTAs), if Myanmar has entered into a DTA with the relevant jurisdiction.
- Overseas Corporation
Another form of legal presence that a foreign investor may consider is registration as an Overseas Corporation (“OC”). Under the Myanmar Companies Law (MCL), there is no separate legal concept of a branch or representative office. Instead, both are legally treated as an OC and must be registered as such if they intend to operate in Myanmar.
An Overseas Corporation refers to a company incorporated outside Myanmar that carries on business within Myanmar, regardless of whether it is for profit-generating purposes or not. Any such foreign entity must register as an OC with the Directorate of Investment and Company Administration (DICA) before conducting any activities in Myanmar.
Once registered, the Myanmar OC is recognized as a legal presence in Myanmar and is permitted to engage in lawful business activities. However, it is not considered a separate legal entity from its parent company in the jurisdiction of incorporation. As a result:
- All contracts, liabilities, debts, and legal obligations incurred by the Myanmar OC are legally binding and enforceable against the foreign parent entity.
- The parent company bears full responsibility for the actions and obligations of its OC in Myanmar.
This structure is often suitable for foreign companies wishing to maintain a controlled extension of their operations in Myanmar without incorporating a separate legal entity.
In practice, registration as an Overseas Corporation is commonly used in the following scenarios:
- By foreign contractors that have long-term service contracts (typically over one year) with local companies in Myanmar; and
- By foreign companies seeking to establish a presence in Myanmar for non-commercial purposes, such as market research, liaison activities, or administrative support functions.
Carry on business in Myanmar
The MCL does not expressly define what constitutes “carrying on business in Myanmar” (“COBIM”). However, it does provide a non-exhaustive list of activities that are not considered COBIM, meaning that a foreign entity conducting only these activities would not be required to register a legal presence in Myanmar.
- Acting as a party to legal proceedings or the settlement of legal proceedings or a claim or a dispute.
- Holding meetings of its directors or shareholders or carrying on other activities concerning the management of its internal affairs.
- Maintaining a bank account.
- Effecting a sale of property through an independent contractor.
- Soliciting or procuring an order that becomes a binding contract only if the order is accepted in Myanmar.
- Lending money, creating evidence of a debt, or creating a charge on the property.
- Securing or collecting any of its debts or enforcing its rights in relation to securities relating to those debts.
- Conducting an isolated transaction that is completed within a period of 30 days.
- Investing its funds or holding property.
Authorized officer
The Overseas Corporation must appoint a person to act as its authorized officer for its office in Myanmar. Importantly, the authorized officer must be ordinarily resident in Myanmar, meaning the individual must either be a permanent resident or must have resided in Myanmar for at least 183 days in each 12-month period from the date of the Overseas Corporation’s registration.
Tax Residency and Corporate Taxation
From a tax perspective, an Overseas Corporation (OC) registered in Myanmar is considered a non- resident taxpayer under Myanmar tax laws.
Although the applicable corporate income tax (CIT) rate is the same as that for resident companies—currently 22%—the taxable income base differs. A non resident OC is taxed only on income sourced within Myanmar, meaning only profits derived from business activities carried out in Myanmar are subject to CIT.
Income earned outside of Myanmar is not subject to taxation in Myanmar for non-resident entities.
- Other forms of establishment
In addition to the two common types of establishments—Private Company Limited by Shares and Overseas Corporation—the Myanmar Companies Law (MCL) also permits the formation of several other types of entities. While these are less frequently used by foreign investors, they may be suitable depending on the business structure, ownership, or specific investment goals.
The additional entity types include:
Public company limited by shares
This structure is typically suitable for large-scale or capital-intensive projects, particularly for companies that intend to raise capital from the public or pursue a future listing on a stock exchange. Public companies are subject to more stringent reporting and regulatory requirements under the MCL, especially in relation to shareholder rights, financial disclosures, and governance.
Company limited by guarantee
This vehicle is commonly used for non-profit organizations, such as chambers of commerce, business associations, or charitable institutions. Instead of shareholders, the company has members who guarantee a nominal amount in the event of winding up. This type of entity is prohibited from distributing profits to its members and is typically established for social, educational, or advocacy purposes.
Unlimited company
This type of entity is rarely used in practice, primarily because the shareholders have unlimited liability for the company’s debts and obligations.
Take the First Step Toward Success in Myanmar
Choosing the right legal structure is essential to unlocking the full potential of your investment in Myanmar. At SCLV, we provide a comprehensive range of services—from assisting you in selecting the best legal vehicle for your business to facilitating the entire setup process, and managing ongoing compliance requirements including corporate secretarial, bookkeeping, accounting, and tax filings. Beyond compliance, we walk with you side by side as your trusted business strategy consultant, helping you build and expand your presence in Myanmar’s dynamic market.