In an effort to increase foreign investment in Myanmar and allow foreigners to directly invest in the companies listed with the Yangon Stock Exchange (“YSX”), the YSX recently published a framework and schedule (“FS”) on 6 September 2019. The FS permits foreigners to invest in the shares of companies listed on the YSX and would be effective from November 2019[1].
The FS states that foreigners would be permitted to invest in up to 35 percent of the shares of the companies listed on YSX. The listed companies would, therefore, retain their status as Myanmar companies, to be in line with the definition of ‘Myanmar Company’ under the Myanmar Companies Law 2017 (“MCL”).
As per the FS, a listed company will need to set an upper limit for foreign shareholding to the YSX. After all the transactions on a business day are completed, securities companies (“SCs”) will have to report the foreign shareholding amount for each issue (the number of shares that reflects the settlement of all transactions on that business day) to the YSX.
YSX will announce the volume of shares held by foreigners for each company, the percentage of overall shares they represent and the foreign buy orders that have been accepted. The relevant information will be available at the end of every trading day or the following day for the previous day’s trading. In the event, the foreign shareholding of the specific listed company exceeds the specified foreign buy order limit, YSX will suspend foreign buy orders for such listed company from the following business day.
Once the foreign demand falls to a level where aggregate daily orders would not breach the specified limit, the YSX will restart foreign trading from the following business day.
Non-resident foreign corporations are allowed to hold shares via a designated proxy, which will be treated as a foreign account. Listed companies will be charged MMK[2] 100,000 each month to “announce the foreign shareholding ratio”, a single fee equivalent to MMK 20 for every foreign account and MMK 10,000 commission to open foreign accounts by the YSX.
YSX will start developing a system for SCs after briefings and meetings and make decisions on foreign shareholding limits by listed companies. Operation manuals and required forms will be published on the YSX’s website for business development purposes.
In November, the YSX will begin the testing phase of the above requiring the SCs and listed companies to submit foreign shareholding limits to the YSX. At the end of November, the FS will be enforced and foreign investors can start trading.
[1] Specific date to be determined on receiving approval of the Securities and Exchange Commission of Myanmar.
[2] Myanmar Kyat, the legal currency of Myanmar.
For further information on the FS, please click here.
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
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