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Characteristics of Ownership in Myanmar

There are five types of business ownership in Myanmar - sole proprietorships, partnerships, limited companies, joint ventures, and wholly foreign-owned subsidiaries. Sole proprietorships offer flexibility but the owner has unlimited personal liability. Partnerships allow for more than one owner but partners are also fully liable. Limited companies provide liability protection for owners but have more registration and reporting requirements. The most common business vehicle is a private company limited by shares.

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259 views

Characteristics of Ownership in Myanmar

There are five types of business ownership in Myanmar - sole proprietorships, partnerships, limited companies, joint ventures, and wholly foreign-owned subsidiaries. Sole proprietorships offer flexibility but the owner has unlimited personal liability. Partnerships allow for more than one owner but partners are also fully liable. Limited companies provide liability protection for owners but have more registration and reporting requirements. The most common business vehicle is a private company limited by shares.

Uploaded by

Shin Thant
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Types of Ownership in Myanmar

According to domestic legislation, there are five types of business in Myanmar such as sole
proprietorships, partnerships, limited companies, joint ventures or wholly foreign-owned
subsidiaries. Among them, the differences in characteristics of sole proprietorships, general
partnerships, and limited companies are discussed as follows;

Table
Sole Proprietorship

The Sole Proprietorship is the most convenient option. We don’t have to do any legal work to set
up our business as a Sole Proprietorship—it happens automatically when we start to do business,
if we don’t take action to establish a different kind of business. In a Sole Proprietorship, we are
the sole owner of the entire business, and we have total control over it. No formalities are
required (unless we hire employees or set up a retirement plan, which triggers some
recordkeeping and tax filing requirements), and dealing with taxes is fairly simple. The main
disadvantage of this form of business is that there is no legal distinction between the owner and
the business, leaving personally liable for any debts or obligations the business may incur, with
no limitations and no protection for our personal assets. A natural person trading as a sole
proprietorship is common for small businesses in Myanmar. It can be a very flexible form as
there are very few formal rules and regulations. There are no minimum capital requirements or
ongoing filing obligations. But the owner has unlimited personal liability for the debts and
liabilities of the business. Business ceases on the owner's incapacity or death.

Partnership: An Enterprise for Two (or More)

A Partnership is a business operated by two or more partners. There is no federal regulation that
governs how Partnerships are formed; each state has its own rules on the matter. The exact
nature of the Partnership will depend on the Partnership agreement, which should be drafted with
the help of an attorney and should comprehensively regulate business matters to avoid
misunderstandings down the line.

In the simplest form of Partnership, all partners contribute capital and all are fully liable for
business debts. Each partner will pay taxes separately, although information about income and
expenses is filed for the Partnership as a whole. The partnership agreement is merely a way to
share Sole Proprietorship. However, other variants of Partnerships may differ in how liability or
capital contributions are structured.

General partnerships are sometimes preferred over an LLC or incorporation when a business is
still small or in the conception phase. While many partnerships exist, the legal liability will be
that of the owners. If you’re planning to start a business for profit, a partnership does provide
flexibility and control to the partners.
Limited Partnership

The main forms of business vehicle are private companies limited by shares and public
companies limited by shares.

Private company limited by shares

The most common business vehicle is a private company limited by shares. Private companies
are incorporated under the Companies Act 1914 (CA). The Directorate of Investment and
Company Administration (DICA) administers the CA and is also the registrar.
The CA distinguishes between Myanmar companies, that is, companies whose entire issued
share capital is owned and controlled by Myanmar citizens at all times, and foreign companies,
that is, where any shares in a Myanmar incorporated company are held by a foreign national.
The advantages of a private company are:

 It is relatively straightforward to incorporate.


 Liability of each member is limited to the amount unpaid (if any) on the shares held by
that member.
 It is an entity separate from its members and can enter into contracts and hold assets in its
own name.

The disadvantages are:

 Filing and reporting obligations, which means certain information becomes publicly
available.
 Minimum capital requirements for foreign companies.
 Incorporation certificate must be renewed every five years, which adds extra cost.
 Activities are limited by the objects in the memorandum of association, and if a foreign
company, its permit to trade.
 A private company must have a minimum two directors and two shareholders.

Public company limited by shares

Public companies are becoming more common in Myanmar. The Yangon Stock Exchange was
set up in 2016 and as at February 2018, five companies have been listed. In August 2017, DICA
released a list of 55 public companies whose shares can be traded over the counter.
A public company essentially has the same advantages and disadvantages as a private company,
but is subject to greater regulatory oversight and reporting requirements. A public company can
also raise funds by offering shares to the public.

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