In brief
Key Takeaways
Following the various entry restrictions put in place by the Myanmar authorities since March 2020 to address the COVID-19 situation, many residents who left the country prior to the imposition of the travelling restrictions have yet to return to the country. As some of these individuals fulfil the role of resident directors of Myanmar-incorporated companies, their prolonged absence from the country could result in the company being in breach of the minimum residency requirement imposed on the directors of Myanmar companies under the Myanmar Companies Law ("MCL").
On 20 October 2020, the Directorate of Investment and Company Administration ("DICA"), announced, via Notification 92/2020 ("Notification 92"), a temporary relief for companies from the resident director requirements. It does so by excluding the period from 29 March 2020 until the official lifting of entry restrictions from the computation to determine a director's residency status.
Recommended Actions
Pursuant to the announcement by the Ministry of Foreign Affairs on 28 September 2020, all temporary entry restrictions, including the suspension of all types of visa and visa exemption services, have been extended until 31 October 2020. Further extension of these restrictions may be announced by the relevant authorities depending on the COVID-19 situation in the country. Businesses are encouraged to monitor any such announcements on a regular basis and monitor their resident director's residency status in accordance.
Resident Director Requirement
Pursuant to the MCL, a private company must have at least one director who is ordinarily resident in Myanmar. Similarly, an overseas corporation registered with DICA must have an authorised officer who is ordinarily resident in Myanmar. To qualify as "ordinarily resident", the person must reside in Myanmar for at least 183 days in each 12-month period commencing from (a) 1 August 2018 (for companies incorporated prior to the commencement of the MCL); or (b) the date of incorporation of the company incorporated under the MCL.
Notification 92 effectively provides a temporary relief for companies from having to satisfy the resident director requirement by excluding the period from 29 March 2020 onwards until such a date where the temporary entry restrictions are lifted by the Myanmar authorities from the computation of the 12-month period to determine the director's residency status. While Notification 92 states that the directive only applies exclusively to company directors, we believe that similar relief would also be granted to authorised officers of registered overseas corporations even though there is no official announcement on this point
Conclusion
The temporary relief announced by DICA via Notification 92 is a positive development and encouraging sign for investors that the authorities are attuned to some of the practical difficulties faced by businesses amid the COVID-19 situation.
