Maung Bo (Myan Aung) - Share about the company

About the company, about the shares,

Chapter (1)

Formation and company type

Since the market economy was reintroduced in Myanmar in 1989-90, many companies have been formed to carry out private business activities, and now there are hundreds of thousands of companies operating in Myanmar. Many people deal with companies, but few know exactly what a company is. In particular, they do not know well how companies are formed, what are the two types of companies, how a company is managed, how company shares are transferred and traded, etc. Therefore, I would like to present some useful information about companies and shares.

Formation of companies

Companies in Myanmar are formed by registering with the Companies Registration Office under the Myanmar Companies Act, enacted in 1914. The Myanmar Companies Act has been amended several times, including Act No. 23/55 of 1955, Act No. 48/59 of 1959, Act No. 2/89 of 1989, and Act No. 2/91 of 1991.

When forming a company, two documents signed by the initial capital contributors to form the company must be signed by a lawyer and submitted to the Companies Registration Office for registration. These two documents are the Memorandum of Association and the Articles of Association.

The Memorandum of Association must state the name and address of the company, the purpose of the company, the business to be carried out, the limitation of liability of the shares (so the company name is written as Limited), the share capital and how the value of the shares is determined, and the number of shares owned by each shareholder, along with the name of each shareholder, and must be signed by the shareholders.

The Articles of Association, if it is a private company, is a document that describes the number of shareholders and restrictions on shares, the company's capital, share value, the list of the company's first directors, the powers and duties of the directors, the conditions for holding a general meeting, matters relating to the distribution of dividends, matters relating to the appointment of office staff, matters relating to the maintenance of accounts, matters relating to the appointment of auditors, the use of the company seal, and the rules and regulations governing the dissolution of the company.

Company type

There are two types of companies. The first type is a private company and the second type is a public company. A private company is defined as a company that has “limited the transfer of shares of the company by its articles of association, limited the number of shareholders who are allowed to participate in the company to (50) and prohibited the public from soliciting for the contribution of shares.” In other words, a private company is a company that has limited the participation of up to (50) shareholders, does not have the right to transfer shares, and does not have the right to announce the contribution of shares to the public.

Public Company is defined in Section 2, Sub-section (13)(a) of the Myanmar Companies Act as a company incorporated under the Myanmar Companies Act and not a private company. This means that there is no limit on the number of shareholders, which means that more than (50) shareholders can participate, shares are transferable, and the company has the right to invite the public to subscribe for shares.

Most of the companies formed in Myanmar are private companies. The number of public companies formed in Myanmar is very low. The joint venture companies that have emerged in the past, such as Joint Venture-1 and Joint Venture-2, are companies formed in the form of Public Companies. Now, these joint venture companies have been dissolved. Only one Forestry Joint Venture Company remains. Other Public Companies are ( FMI) Company, National Development Company, First Private Bank, etc.

A company that has access to the stock market

In countries with a developed market economy, companies' shares are traded on stock exchanges , such as the New York Stock Exchange, London Stock Exchange, and Tokyo Stock Exchange. Such shares are called Public Company op:03 clozę and are called Listed Companies on that stock exchange .

Myanmar stock market situation

Since there are still few public companies in Myanmar, a stock exchange has not yet emerged. After the establishment of nine joint ventures, including Joint Venture-1 and Joint Venture-2, there were more than ten public companies , including forestry joint ventures and FMI companies. It is learned that the Daiwa Institute of Research of Japan visited and examined public companies in Myanmar regarding share trading issues and the establishment of a share market . Then, in collaboration with individuals from Daiwa Institute and officials from Myanmar Economic Bank, Myanmar Securities Exchange Centre Co., Ltd (MSEC) was established. It is known that MSEC is now handling share trading issues of public companies. Since many public companies have not yet emerged, the stock market has not yet been opened.

In countries with developed market economies , many public companies are emerging and trading shares in the stock market. When the company needs financial capital to expand its business, public companies can raise funds by advertising and selling shares and debentures in the stock market . Therefore, these activities are called raising funds in the capital market.

Family-owned company ·

When the market economy or market oriented economy was adopted, companies emerged to conduct private business activities. The companies that have recently emerged in Myanmar are only private companies. A private company is a company established by a rich man (or a rich man’s family) and has shares. In other words, a company in which the rich man, his wife and children have shares. Some private companies are family-owned companies established by the rich man and a group of friends (or relatives) who have contributed shares. Specifically, it is a company in which only (2) to (50) shareholders are allowed to enter, and the shares are not allowed to be transferred or sold. In addition, it is a company that is not allowed to participate in the stock exchange.

Public company

Public Company is not like that. It has unlimited number of shareholders. Shares are transferable. The company has the right to issue shares to the public. It is a type of company that is allowed to participate in the stock exchange. Joint venture companies such as Joint Venture-1, Joint Venture-2, Joint Venture-3 that emerged in Myanmar at one time are public companies or public companies . The current Forest Products Joint Venture Corporation, First Myanmar Investment Company, National Deployment Company Group Ltd , Myanmar Information and Technology Development Corporation ( MICTDC ), First Private Bank Limited, Myanmar Citizens Bank, etc. are currently well-known public companies.

In countries with developed market economies and extensive business operations, such as the United States, England, Japan, and South Korea, well-known companies are public companies. For example, Microsoft , British Airways , Hong Kong and Shanghai Banking Corporation (HSBC) , British banks, Toyota, Nissan, Honda, and Toshiba , and electrical companies such as Sony, Daewoo, and Samsung are public companies. The world-famous football team Manchester United in England is a public company. In England, where stock trading is booming, many shares of Manchester United have been purchased in the stock market, and the American Glazer family now owns a majority of Manchester United shares. Similarly, Chelsea Football Club in England is also a public company, and Russian billionaire Avramovich owns a majority of the shares.