Winding Up in Myanmar
The rules and procedures relating to winding up in Myanmar are set out in the Myanmar Companies Act 1914 (as amended). A new companies act is due to be introduced in Myanmar by the end of 2014.
Section 162 of the Myanmar Companies Act sets out the grounds whereby the court can order the winding up of a company (sometimes also referred to as the winding down a company). There are three methods of winding up a company in Myanmar:-
- Compulsory winding up by court;
- Voluntary winding up; or
- A winding up subject to the supervision of the court.
Compulsory court winding up in Myanmar
A company may be wound up by the court:
- if the company has by special resolution resolved that the company be wound up by the court;
- if default is made in filing the statutory report or in holding the statutory meeting;
- if the company does not commence its business within a year from its incorporation or suspends its business for a whole year;
- if the minimum number of members is not met (2 for private companies, 7 for any other company);
- if the company is unable to pay its debts;
- if its licence is withdrawn in accordance with the provisions of s.55 of the Union Bank of Myanmar Act 1952; or
- if the court is of the opinion that it is just and equitable that the company should be wound up.
A company is deemed to be unable to pay its debts in three circumstances:
- if a creditor serves a demand on the company to pay a sum due, exceeding 500 kyats (or as stipulated in the Companies Act from time to time) and the company fails to pay the sum within three weeks, or fails to secure or compound for it to the reasonable satisfaction of the creditor;
- if execution or other process issued on a decree or order of any court in favour of a creditor of the company is returned unsatisfied in whole or in part; or
- if it is proved to the satisfaction of the court that the company is unable to pay its debts and, in determining whether a company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the company.
Petition to apply for court winding up in Myanmar
A court petition to wind up a company is usually made by the company itself or a creditor (or creditors). In some circumstances, the petition may be made by a contributory (or contributories) or by the Registrar of Companies of Myanmar (Registrar). Any one of these parties can make the petition separately, or together with the other parties.
An order for winding up shall operate in favour of all creditors and of all contributories of the company as if made on the joint petition of a creditor and of a contributory. The winding up is deemed to commence at the time of the presentation of the petition.
When either a winding up order has been made or a provisional liquidator has been appointed, no other proceedings can be commenced against the company without the leave of court.
On the making of a winding up order, it is the duty of the company and the petitioner in the winding up proceedings to file a copy of the order to the Registrar within one month of the date that the order is made. The Registrar will then place a notification in the Gazette that such an order has been made.
The court may have regard to the wishes of the creditors or contributories in relation to all matters, which they can prove with sufficient evidence. For example, the court may at any time after an order for winding up and on the application of any creditor or contributory make an order staying the proceedings on any terms that the court sees fit.
Official Liquidators in Myanmar
For the purpose of conducting the proceedings in winding up a company and performing such duties as the court may impose, the court may appoint a person or persons other than the official receiver to be called an official liquidator. The appointment can be made at any time after a petition has been presented and before the making of an order for winding up. The liquidator will receive a salary or remuneration as the court directs. The liquidator shall be described by the style of the official liquidator of the particular company in respect of which he is appointed and not by his individual name.
Statement of the affairs of a Myanmar company
Where the court has made a winding up order or appointed an official liquidator, the company will provide to the official liquidator a statement as to the affairs of the company verified by an affidavit and containing the following information:
- the assets of the company;
- the debts and liabilities;
- the names, residences and occupations of the creditors, stating separately the amount of secured debts and unsecured debts (and details of securities if applicable); and
- the debts due to the company and the amount likely to be realised from them.
The statement needs to be submitted and verified by one or more of the directors and the secretary, manager or chief officer of the company within 21 days of the appointment of the provisional liquidator or the date that the court order was made. If any person, without reasonable excuse, knowingly and wilfully makes default in complying with any of these requirements, he shall be liable to a fine. Any creditor shall be entitled to inspect and obtain a copy of the statement.
Dissolution of Myanmar company
When the affairs of the company have been completely wound up, the court shall make an order that the company be dissolved from the date of the order and the company shall be dissolved accordingly. The official liquidator must report this to the Registrar within 15 days of the date of the order.
Voluntary winding up in Myanmar
A company may be wound up voluntarily in three ways:
- when the period (if any) fixed for the duration of the company by the articles expires, or the event (if any) occurs on the occurrence of which the articles provide that the company is to be dissolved and the company in general meeting has passed a resolution requiring the company be wound up voluntarily;
- if the company resolves by special resolution that the company be wound up voluntarily; or
- if the company resolves by extraordinary resolution that the company cannot continue its business due to its liabilities .
A voluntary winding up is deemed to commence at the time of the passing of the resolution for voluntarily winding up and the company shall cease to carry on its business. The company shall give notice of the resolution within 10 days of the passing of the resolution by advertisement in the Gazette and also in newspapers (if any) circulating in the district where the registered office of the company is located. If there is any default in compliance, the company and every officer who knowingly and wilfully authorises or permits the default shall be liable to a fine.
Members’ voluntary winding up in Myanmar
A members’ voluntary winding up is one in which the directors make a declaration verified by an affidavit to the effect that they have made a full inquiry into the affairs of the company and that, having done so, they have formed the opinion that the company will be able to pay its debts in full within a period, not exceeding three years, from the commencement of the winding up. The declaration shall be supported by a report of the company’s auditors on the company’s affairs but has no effect, unless it is delivered to the Registrar for registration before the date of a resolution for winding up being passed.
The directors appoint a liquidator, at which point, the powers of the directors shall cease. As soon as the affairs of the company are wound up, the liquidator makes up an account of the winding up and then calls a general meeting for the purpose of laying before it the account. Within one week after the meeting, the liquidator shall send to the Registrar a copy of the account and shall make a return to him of the holding of the meeting. After three months of receiving this notice, the Registrar shall deem the company to be dissolved.
Creditors’ voluntary winding up in Myanmar
The company calls a meeting of the creditors (either on the same day as the members meeting, or the following day). The creditors nominate a liquidator. As soon as the affairs of the company are wound up, the liquidator makes up an account of the winding up and then calls a general meeting in a similar way to a members’ voluntary winding up. Within one week after the meetings, the liquidator shall send to the Registrar a copy of the account and particulars in relation to the holding of the meeting. Three months from the receipt of this notice, the Registrar shall deem the company to be dissolved.
Winding up subject to the supervision of the court
When a company has by special or extraordinary resolution resolved to wind up voluntarily, the court may make an order that the voluntary winding up shall continue, but subject to such supervision of the court, and with such liberty for creditors, contributories or others to apply to the court and generally on such terms and conditions as the court thinks just.
On a winding up in Myanmar, every present and past member (who left within the year prior to the winding up) shall be liable to contribute to the assets of the company, however, a past member shall not be liable to contribute in respect of any debt, or liability contracted after he ceased to be a member and unless it appears to the court that the existing members are unable to satisfy the contributions required. When a company limited by shares wishes to commence winding up in Myanmar, members are only liable up to the amount of any unpaid shares.