Division 11: Shares and other securities

Share Capital

60. Nature of shares and other securities

(a)The shares or other securities of any member in a company shall be moveable property, transferable in the manner provided or permitted by this Law and any other applicable law and subject to the constitution of the company.

(b)A share will not have a nominal or par value.

61. Rights and powers attaching to shares

(a)Subject to sub-section (b), a share in a company confers on the holder of such share:

(i)the right to one vote on a poll at a meeting of the company on any resolution;

(ii)the right to an equal share in dividends; and

(iii)the right to an equal share in the distribution of assets of the company.

(b)The rights specified in sub-section (a) may be negated, altered, or added to by the constitution of the company or in accordance with the terms on which the share is issued.

62. Types of shares and other securities in a company

(a)A company’s power to issue shares and other securities, and determine the terms of such shares and other securities, includes the power to issue:

(i) shares of different classes;

(ii)shares which may be redeemable;

(iii)shares which have preferential or restricted rights to distributions of capital or income;

(iv)shares which have special, limited, or conditional voting rights; and

(v)shares which do not have voting rights,

as provided by and subject to this Law, any other applicable law, the constitution of the company or the terms of issue.

(b)A company may also issue:

(i) options to acquire shares;

(ii)other securities which convert into shares; and

(iii)other interests;

as provided by and subject to this Law, any other applicable law, the constitution of the company or the terms of issue.

Share Issues

63. Issue of shares

(a)Subject to the constitution of the company, this Law and any other applicable law, the board of a company may issue shares or other securities at any time, to any person, on the terms and in any number the board thinks fit.

(b)Subject to the constitution of the company, shares may be issued fully or partly paid. If the shares are issued partly paid, the terms of issue must specify when calls may be made and the shareholder is liable to pay such calls.

(c)A company’s constitution may provide that where the directors decide to increase the capital of the company by the issue of further shares, such shares shall be offered to the members in proportion to the existing shares held by each member (irrespective of class).

64.Consideration for issues of shares

(a)The consideration for which a share is issued may take any form as determined by the board.

(b)If the consideration for the issue is to be other than cash the board must:

(i) record the consideration in sufficient detail to identify it;

(ii)determine the reasonable present cash value of the consideration for the issue and record this and the basis for assessing it; and

(iii)resolve that, in its opinion:

(A)the consideration for and the terms of the issue of shares are fair and reasonable to the company and to all existing members; and

(B)the present cash value of such consideration is not less than the amount to be credited for the issue of the shares.

(c)Any contract entered into in connection with the subscription for an issue of shares for consideration other than cash must be stamped as required under applicable law and maintained with the books and records of the company.

65.The penalty for a director who fails to comply with sub-section 64(b) is a fine of 250,000 kyats.

66.Exceptions regarding non-cash consideration

Sub-section 64(b) shall not apply to:

(a)the exercise of any option to acquire shares in the company;

(b)the conversion of any other securities which convert into shares in the company;

(c)the issue of shares that are fully paid up from the reserves of the company to all members of the same class in proportion to the number of shares held by each member;

(d)the consolidation and division of shares or any class of shares in the company in proportion to those shares or the shares in that class; or

(e)the subdivision of shares or any class of shares in the company in proportion to those shares or the shares in that class.

67. Consideration for issues of convertible securities

(a)The consideration for which an option to acquire shares in a company or other convertible security is issued may take any form as determined by the board.

(b)If the consideration for the issue of these options or other convertible securities, or the shares to be issued on the subsequent exercise or conversion of them, is to be other than cash the board must:

(i) record the consideration in sufficient detail to identify it;

(ii)determine the reasonable present cash value of the consideration for the issue and subsequent exercise or conversion and record this and the basis for assessing it; and

(iii)resolve that, in its opinion:

(A)the consideration for and the terms of the issue of options or other convertible securities, and the shares upon the subsequent exercise or conversion of these securities, is fair and reasonable to the company and to all existing members; and

(B)the present cash value of such consideration is not less than the amount to be credited for the issue of the options, other securities or shares.

(c)Any contract entered into in connection with the subscription for an issue of options or other convertible securities for consideration other than cash must be stamped as required under applicable law and maintained with the books and records of the company.

68.The penalty for a director who fails to comply with sub-section 67(b) is a fine of 250,000 kyats.

69. Consent to issue of shares affecting liability

The issue of a share that either increases the liability of, or imposes a liability on, a person to the company is void if that person does not first consent in writing to becoming the holder of the share.

70. Power of company to arrange for different amounts being paid on shares

A company, subject to its constitution, may do any one or more of the following things, namely:

(a)make arrangements on the issue of shares for a difference between the shareholders in the amounts and times of payment of calls on their shares;

(b)accept from any member who assents to the whole or a part of the amount remaining unpaid on any shares held by him although no part of that amount has been called up;

(c)pay a dividend in proportion to the amount paid up on each share.

71. Recording and timing of issues of securities

(a)Within 28 days of the issue of shares or other securities the company must:

(i) update the relevant register of the company; and

(ii)file a notice in the prescribed form with the Registrar in respect of the issue of shares or other securities. The notice must record the consideration paid for the issue of shares or other securities and whether the shares or other securities are fully or partly paid.

(b)A share or other security is deemed to be issued when the name of the holder is entered on the relevant register of the company.

(c)A failure to comply with this section does not affect the validity of an issue of shares or other securities.

72. If a company fails to comply with section 71, every director of the company knowingly involved is liable to a fine of 250,000 kyats.

Preference Shares

73. Requirements for issue of preference shares

A company may issue preference shares if the rights attached to the preference shares with respect to the following matters are set out in the company’s constitution or have been approved by special resolution of the company in respect of such shares:

(a)repayment of capital;

(b)participation in surplus assets and profits;

(c)cumulative and non-cumulative dividends;

(d)voting;

(e)priority of payment of capital and dividends in relation to other shares or other classes of preference shares; and

(f) whether the shares are redeemable and, if so, the terms of redemption.

74.Redemption of redeemable preference shares

(a)Redeemable preference shares are preference shares that are issued on the terms that they are liable to be redeemed.

(b)Subject to sub-section (c), a redeemable preference share may be redeemed:

(i) at a fixed time or on the happening of a particular event;

(ii)at the company’s option; or

(iii)at the shareholder’s option.

(c)The company may only redeem redeemable preference shares:

(i) if the shares are fully paid up;

(ii)out of profits or out of the proceeds of a new issue of shares made for the purpose of the redemption; and

(iii)if the directors determine on reasonable grounds that the company would pass the solvency test following the redemption.

(d)Once the resolution is passed under sub-section (c) the amount becomes an amount due and payable on the date fixed for redemption.

(e)The redeemable preference shares are cancelled on redemption.

(f)The company must notify the Registrar of the redemption in the form prescribed within 21 days of the redemption.

(g)A failure to comply with this section does not affect the validity of the redemption.

75. If a company fails to comply with section 74, every director of the company knowingly involved is liable to a fine of 250,000 kyats.

Debentures

76. Perpetual debentures

A condition contained in any debentures or in any deed for securing any debentures, whether issued or executed before or after the passing of this Law, shall not be invalid by reason only that the debentures are made irredeemable or redeemable only on the happening of a contingency, however remote or on the expiration of a period however long.

77.Power to re-issue redeemed debentures in certain cases

(a)Where either before or after the commencement of this Law a company has redeemed any debentures previously issued, the company, unless its constitution or the conditions of issue expressly otherwise provide, shall have power, and shall be deemed always to have had power, to keep the debentures alive for the purposes of reissue. Where a company has purported to exercise such a power the company shall have power, and shall be deemed always to have had power, to re-issue the debentures either by re-issuing the same debentures or by issuing other debentures in their place. Upon such re-issue the person entitled to the debentures shall have, and shall be deemed always to have had, the same rights and priorities as if the debentures had not previously been issued.

(b)Where with the object of keeping debentures alive for the purpose of re-issue they have, either before or after the commencement of this Law, been transferred to a nominee of the company, a transfer from that nominee shall be deemed to be a re-issue for the purposes of this section.

(c)The re-issue of a debenture or the issue of another debenture in its place under the power by this section given to, or deemed to have been possessed by, a company, whether the re-issue or issue was made before or after the commencement of this Law, shall be treated as the issue of a new debenture for the purposes of stamp-duty, but it shall not be so treated for the purposes of any provision limiting the amount or number of debentures to be issued:

Provided that any person lending money on the security of a debenture re-issued under this section which appears to be duly stamped may give the debenture in evidence in any proceedings for enforcing his security without payment of the stamp-duty or any penalty in respect thereof, unless he had notice or, but for his negligence, might have discovered that the debenture was not duly stamped, but in any such case the company shall be liable to pay the proper stamp-duty and penalty.

(d)Nothing in this section shall prejudice any power to issue debentures in the place of any debentures paid off or otherwise satisfied or extinguished, reserved to a company by its debentures or the securities for the same.

78. Specific performance of contract to subscribe for debentures

A contract with a company to take up and pay for any debentures of the company may be enforced by a decree for specific performance.

Transitional provisions regarding share warrants

79.Effect of share-warrants

Subject to sections 81 and 82, a share-warrant in issue as at the commencement of this Law shall entitle the bearer thereof to the shares or securities therein specified, and the shares or securities may be transferred by delivery and cancellation of the warrant.

80.Registration of name of bearer of share-warrant

Subject to sections 81 and 82, the bearer of a share-warrant shall, subject to the constitution of the company, be entitled, on surrendering it for cancellation, to have their name entered as a member in the register of members; and the company shall be responsible for any loss incurred by any person by reason of the company entering in its register the name of a bearer of a share-warrant in respect of the shares therein specified without the warrant being surrendered and cancelled.

81.No further issuance of share warrants following commencement of this Law

Following the commencement of this Law, a company must not issue any share warrants.

82. Deemed phasing out of share warrants

(a)All outstanding share warrants issued prior to the commencement of this Law will, if not previously surrendered, continue to be valid, in accordance with their terms, until the end of the transition period or such other period as determined under sub-section (c), following which they will be deemed to have been surrendered and cancelled.

(b)The company shall not be responsible for any loss incurred by any person by reason of such cancellation of share warrants pursuant to sub-section (a).

(c)On the written application of the relevant company the Registrar may extend the period referred to in sub-section (a) and make incidental arrangements for the phasing out of the relevant warrants if satisfied on reasonable grounds that the deemed cancellation and surrender of the warrants at the end of the transition period would not be in the best interests of the company.

Division 12: Transfers of shares and other securities

83. Transfer requirements

(a)Subject to the constitution of the company and without limiting any other applicable law, shares and other registrable interests in a company may be transferred by entry of the name of the transferee on to the relevant register of the company maintained under Division 13.

(b)An application for the registration of the transfer of shares or other registrable interests in a company may be made either by the transferor or the transferee and, subject to the provisions of sub-sections (c) and (d), the company shall enter in the relevant register the name of the transferee and the other information required under Division 13.

(c)Save as provided under any other applicable law, a company must not register a transfer of shares in or other registrable interests in the company unless an instrument of transfer in the prescribed form, duly stamped and executed by the transferor and the transferee to the company, the transferee, has been delivered to the company along with:

(i)the relevant certificate evidencing the shares or interests proposed to be transferred; and

(ii)a declaration by the transferor or transferee (or both of them) as to whether as a result of the transfer an overseas corporation or other foreign person (or combination of them) will acquire or cease to have an ownership interest in the company’s shares.

(d)The company may, if expressly authorised by its constitution or the terms of the relevant security, or if otherwise permitted under this Law or other applicable law, or if required to ensure compliance with this Law or other applicable law, refuse to register a transfer if the board, within 21 days of receipt of the application for transfer and other documents required by this section, passes a resolution to this effect setting out the reason for refusing the transfer and sends to the transferee and the transferor notice of the refusal, including the reasons for such refusal, within a further 7 days of passing the resolution.

(e)Nothing in sub-section (c) shall prejudice any power of the company to register as shareholder or holder of any registrable interest in the company any person to whom any shares or interest in the company has been transmitted by operation of law.

84.If default is made in complying with sub-sections 83(c) or 83(d), every director, knowingly involved is liable to a fine of 150,000 kyats.

85. If a transferee or transferor knowingly or recklessly makes an incorrect statement to the company in a declaration made under sub-section 83(c)(ii), then they will be liable to a fine of 750,000 kyats.

86. Notification of transfer

(a)Within 21 days of the registration of the transfer of shares or other registrable securities the company must file notice of the transfer in the prescribed form with the Registrar.

(b)If as a result of the transfer the company has either become or ceased to be a foreign company, the notice must state this.

(c)A failure to comply with this section does not affect the validity of a transfer of shares or other registrable securities.

87. If a company fails to comply with section 86, every director of the company knowingly involved is liable to a fine of 750,000 kyats.

88. Transfer by legal representative

A transfer of the share or other interest of a deceased member or holder of another interest in a company made by his legal representative shall, although the legal representative is not himself a member or holder of an interest, be as valid as if he had been a member or holder of an interest at the time of the execution of the instrument of transfer.

Division 13: Registers and certification of interests in a company

89. Certificate of shares to be evidence of title

(a)A certificate, under the common seal of the company or otherwise executed by the company in accordance with section 29, specifying any shares or security held by any member, shall be prima facie evidence of the title of the member to the shares or security therein specified.

(b)Subject to any other applicable law, every company shall, within 28 days after the allotment of any of its shares, debentures, debenture stock or other registrable interests, and within 28 days after the registration of the transfer of any such shares, debentures, debenture stock or other registrable interests, complete and have ready for delivery the certificates of all shares, the debentures, and the certificates of all debenture stock or other registrable interests allotted or transferred, unless the conditions of issue of the shares, debentures, debenture stock or other registrable interests otherwise provide.

(c)Every certificate issued in accordance with sub-section (b) must state:

(i) the name of the company;

(ii)the address of the registered office of the company;

(iii)in the case of a share certificate, the number of shares, class of the shares, the amount paid on the shares, the amount (if any) unpaid on the shares and the extent to which the shares are paid up; and

(iv)in the case of a certificate for other registrable interests, the number, type, and amount paid for such securities and, if the securities are convertible, the number of shares or other interests they convert into.

(d)Failure to comply with this section shall not affect the rights of any holder of shares or registrable interests.

90. Register of members

(a)The persons named as members in the application for incorporation of a company shall be deemed to have agreed to become members of the company, and on its registration shall be entered as members in its register of members.

(b)Every other person who agrees to become a member of a company, and whose name is entered in its register of members, shall be a member of the company.

(c)Subject to any other applicable law, every company must keep an up to date register of its members, and enter therein the following particulars:

(i)the names, father’s names, occupation, addresses and nationalities of the members;

(ii)the date at which each person was entered in the register as a member; and

(iii)the date at which any person ceased to be a member.

(d)Subject to any other applicable law, if the company has a share capital, then the company’s register of members must also show:

(i) the date on which every allotment of shares takes place;

(ii)the number of shares in each allotment;

(iii)the shares held by each member;

(iv)the class of shares;

(v)the share numbers and share certificate numbers of the shares;

(vi)the amount paid on the shares;

(vii)whether or not the shares are fully paid; and

(viii)the amount unpaid on the shares (if any).

91. Index of members of company

(a)Subject to any other applicable law, every company having more than fifty members must, unless the register of members is in such a form as to constitute in itself an index, keep an up to date index of the names of the members of the company, and must within 14 days after the date on which any alteration is made in the register of members make any necessary alteration in the index.

(b)The index must in respect of each member contain a sufficient indication to enable the account of that member in the register to be readily found.

92. Register of option holders

(a)Subject to any other applicable law, every company that grants options over unissued shares or other interests in it must keep a register of option holders which records the following particulars:

(i)the names, father’s names, occupation, addresses and nationalities of the option holders and a statement of the number and description of the shares or other interests in the company over which the options were granted;

(ii)the date at which each person was entered in the register as a holder of options over shares in the company;

(iii)the period during which the options may be exercised or the time at which the options may be exercised;

(iv)any event that must happen before the options can be exercised;

(v)any consideration paid for the grant of the options;

(vi)any consideration to be paid for the exercise of the options or the method by which that consideration is to be determined; and

(vii)the date at which any person ceased to be a holder of options over shares in the company.

(b)The register of option holders must be updated whenever options are exercised or expire.

(c)A company shall only be required to update the register of option holders in respect of any transfer of an option if the person transferring the option gives the company notice of the transfer. A failure of a company to register the transfer of the option shall not affect the validity of the transfer of the option.

93. Register of debenture holders

Subject to any other applicable law, every company that issues debentures must keep a register of debenture holders which records the following particulars:

(a)the names, father’s names, occupation, addresses and nationalities of the debenture holders and a statement of the amount, identification number and description of the debentures that were issued to or held by them;

(b)the date at which each person was entered in the register as a debenture holder; and

(c)the date at which any person ceased to be a debenture holder.

94. Registers of other interests

(a)Subject to any other applicable law, a company shall maintain a register in respect of any other interest in its share capital, or security giving a right to acquire such an interest, that it has issued, which records the following particulars:

(i)the names, father’s names, occupation, addresses and nationalities of the interest holders and a statement of the amount, identification number and description of the interests that were issued to or held by them;

(ii)the date at which each person was entered in the register as the holder of the interest;

(iii)the date at which any person ceased to be a holder of the interest; and

(iv)if applicable, details relevant to the expiry, exercise or conversion of the interest.

(b)If the register of an interest under this section is a register of the holders of securities which convert into shares in the company, the register must be updated whenever the interests are converted or expire.

(c)A company shall only be required to update a register of the type referred to in sub-section (b) in respect of any transfer of the registered interest if the person transferring the interest gives the company notice of the transfer. A failure of a company to register the transfer of the interest shall not affect the validity of the transfer of the interest.

95. Registers and indexes to be maintained at the company’s registered office

(a)Subject to sub-sections (b) and (c), all registers and indexes in respect of a company maintained under this Division must be kept at the registered office or principal place of business of the company.

(b)A company may appoint some other person within the Union to maintain the company’s registers and indexes. In such cases, the company’s registers and indexes may be maintained on the company’s behalf at the office of that other person.

(c)Every company must, within 21 days of the company’s registers and indexes being maintained at a place other than the company’s registered office or principal place of business, file with the Registrar a notice in the prescribed form of the place where the company’s registers and indexes, as applicable, are maintained and must, within 21 days of any change in the place at which the company’s registers and indexes, as applicable, are maintained, file with the Registrar a notice in the prescribed form of the change.

96. Notification of changes to a register

(a)A company must file with the Registrar a notice in the prescribed form detailing any changes it makes to a register of members in accordance with section 90.

(b)The filing must be made within 21 days of the relevant change.

97. Annual return, list of members and summary

(a)Every company must within 6 months from its incorporation and thereafter once at least in every year (but no later than 1 month after the anniversary of its incorporation) file a return of its particulars with the Registrar in the prescribed form.

(b)Save as may be excepted under any applicable law, the return must include the following information:

(i) the registered name of the company;

(ii)the registration number of the company;

(iii)the address of the registered office of the company and, if different, the address of the place where the register of members is kept;

(iv)in the case of a public company, a list of the 50 members (or such other number of members if the company has less than 50 members) holding the largest number of shares in the company and their respective names, addresses and nationalities and shareholdings;

(v)in any other case, a list of all members of the company and their respective names, addresses and nationalities and shareholdings and a list of persons who ceased to be members since the date of the last filing;

(vi)the date of the last annual general meeting of the company (if applicable);

(vii)particulars of the company’s principal activity or activities at the date to which the accounts of the company are made up and at the date of the annual return;

(viii)a summary distinguishing between shares issued for cash and shares issued as fully or partly paid up otherwise than in cash;

(ix)the amount of the share capital of the company, and the number of the shares into which it is divided;

(x)the amount called up on each share;

(xi)the total number of shares forfeited or cancelled since the date of the last return;

(xii)whether the company has either become or ceased to be a foreign company since the date of the last return and the date on which such change occurred;

(xiii)the names of the company’s subsidiaries, holding companies and ultimate holding company, if any;

(xiv)the names, addresses, gender and nationalities of the persons who at the date of the return are the directors of the company and of the persons (if any) who at the said date are the secretaries of the company, and the changes in the personnel of the directors and secretaries since the last return together with the dates on which they took place;

(xv)confirmation that the mortgages and charges which are required to be registered with the Registrar under this Law have been registered; and

(xvi)such other items as may be prescribed from time to time.

(c)In addition to filing such particulars with the Registrar, the above list and summary must be contained in a separate part of the register of members. The return and copy maintained with the register must be signed by a director or by a secretary of the company and state that the list and summary state the facts as they stood on the day aforesaid.

(d)A private company must send together with the annual return required by sub-section (a) a certificate signed by a director, secretary or other officer of the company that the company has not, since the date of the last return or, in the case of a first return, since the date of the incorporation of the company, issued any invitation to the public to subscribe for any shares or debentures of the company.

98. Trusts not to be entered on register

(a)No notice of any trust, expressed, implied or constructive, shall be entered on the register, or be receivable by the Registrar.

(b)Notwithstanding sub-section (a), the legal representative of a deceased person who is registered as holding a share or interest in a register of a company is, with the consent of the company, entitled to be registered as the holder of that share or interest as personal representative of the deceased person.

(c)Notwithstanding sub-section (a), the trustee, executor, administrator or assignee of the property of a bankrupt person who is registered as holding a share or interest in a register of a company is, with the consent of the company, entitled to be registered as the holder of that share or interest as trustee, executor, administrator or assignee of the property of the bankrupt person.

99. Inspection of registers

(a)All registers and indexes in respect of a company maintained under this Law must, during business hours (subject to such reasonable restrictions, as the company in general meeting may impose), be open to the inspection of any member gratis, and, in the case of a public company, to the inspection of any other person on payment of a reasonable sum specified by the directors for each inspection. Any such member or other person may make extracts therefrom.

(b)Any member or, in the case of a public company, other person may require a copy of a register, index, or of any part thereof, or of the list and summary required by this Law, or any part thereof, on payment of a reasonable sum specified by the directors and the company must cause any copy so required by the member or person to be sent to that member or person within a period of 10 days commencing on the day next after the day on which the requirement is received by the company with the applicable payment.

100.If any inspection required under sub-section 99(a) is refused, or if any copy required under sub-section 99(b) is not sent within the proper period, the company and every director and other officer of the company who is in default shall be liable in respect of each offence to a fine of 250,000 kyats and the Registrar may by an order compel an immediate inspection of the register and index or direct that copies required must be sent to the persons requiring them.

101. Power of Court to rectify register

(a)A person aggrieved, or any member of the company, or the company, may apply to the Court for rectification of the register if:

(i)the name of any person is wrongly entered in or omitted from a register maintained by a company under this Law; or

(ii)default is made or unnecessary delay takes place in entering on the register the fact of any person having ceased to be a member.

(b)The Court may either refuse the application, or may order rectification of the register and payment by the company of any damages sustained by any party aggrieved, and may make such order as to costs as it in its discretion thinks fit.

(c)On any application under this section the Court may decide any question relating to the title of any person who is a party to the application to have his name entered in or omitted from the register, and generally may decide any question necessary or expedient to be decided for rectification of the register:

Provided that the Court may direct an issue to be tried in which any question of law may be raised; and an appeal from the decision on such an issue shall lie in the manner directed by the Code of Civil Procedure on the grounds mentioned in section 100 of that Code.

102. Notice to Registrar of rectification of register

The Court, when making an order for rectification of the register, shall, by its order, direct notice of the rectification to be filed with the Registrar within 14 days from the date of the completion of the order.

103. Register of members to be evidence

(a)Without prejudice to any other provision of this Law or other applicable law, the register of members shall be prima facie evidence of any matters by this Law directed or authorized to be inserted therein, including the title to the shares of the registered member.

(b)A company may treat the registered holder of a share as the only person entitled to:

(i) exercise the right to vote attaching the share;

(ii)receive notices;

(iii)receive distributions in respect of the share; and

(iv)exercise all rights and powers attaching to the share.

104. Defaults in relation to registers and filings

It shall be the duty of every director and officer of a company to take reasonable steps to ensure that the registers and indexes are maintained and made available, that relevant filings are made in accordance with this Division and that all other obligations of the company under this Division are met.

105. If a default is made in complying with section 104, the company and every director and other officer of the company who is knowingly and wilfully involved in the default shall be liable to a fine of 500,000 kyats.

Division 14: Dividends

106.Making of dividends

(a)Subject to sections 107 and 109 and its constitution, the board of a company, other than a company limited by guarantee, may determine that a dividend is payable to its shareholders and fix the amount, the time for payment and the method of payment.

(b)The methods of payment may include cash, the issue of shares, the grant of options and the transfer of assets.

(c)Subject to the constitution, the determination of a dividend does not cause the company to incur a debt and the determination may be revoked at any time before payment. A debt only arises when the time fixed for payments arrives.

107. Requirements for dividends

(a)The company may not pay a dividend unless:

(i)the company will, immediately after the payment of the dividend, satisfy the solvency test;

(ii)the making of the dividend is fair and reasonable to the company’s shareholders as a whole; and

(iii)the payment of the dividend does not materially prejudice the company’s ability to pay its creditors.

(b)If, after a dividend is determined and before it is paid, the board ceases to be satisfied that the requirements of sub-section (a) will be met, the dividend may not be paid and if such dividend is paid by the company it shall be deemed not to have been authorised.

108. Default in complying with section 107

(a)If a company makes default in complying with the requirements of section 107 it shall be liable to a fine of 500,000 kyats, and every director or other officer of the company who knowingly and wilfully permits the default shall be liable to the same penalty.

(b)In addition to sub-section (a), if the company becomes insolvent following and in connection with the payment of a dividend, every director of the company who knowingly and wilfully permitted the payment of the dividend in default of section 107 shall also be liable to the creditors of the company to the extent of the dividend where the debts due by the company to the respective creditors exceed the recoverable assets of the company and such amount may be recovered from them by the creditors or the liquidator suing on behalf of the creditors.

109. Further matters affecting the payment of dividends

(a)The board of a company must not determine a dividend:

(i) in respect of some but not all of the shares in a class; or

(ii)that is of a greater value per share in respect of some shares of a class than it is in respect of other shares of the same class,

unless, in respect of partly paid shares, the amount of the dividend in respect of a share of that class is in proportion to the amount paid on those shares.

(b)A company may, subject to its constitution, issue shares to any shareholders who have agreed to accept the issue of shares, wholly or partly, in lieu of a proposed dividend, provided that:

(i)the right to receive shares, wholly or partly, in lieu of the proposed dividend has been offered to all shareholders of the same class on the same terms;

(ii)all shareholders’ agreeing to receive shares relative voting rights and distribution rights would be maintained;

(iii)the offer must remain open for acceptance for a period of at least 21 days;

(iv)the shares issued to each shareholder are issued on the same terms and subject to the same rights as the shares issued to all shareholders in that class who agree to receive the shares; and

(v)the provisions of section 63 and section 71 have, insofar as applicable, been complied with.

110. If a company makes default in complying with the requirements of section 109, it shall be liable to a fine of 1,000,000 kyats, and every director or other officer of the company who knowingly and wilfully permits the default shall be liable to the same penalty.

111. Capitalisation of profits

Without limiting section 109, a company may capitalise profits. The capitalisation need not be accompanied by the issue of shares.

Division 15: Transactions and matters affecting share capital

Alteration of share capital

112. Power of company limited by shares to alter its share capital

(a)A company limited by shares, subject to its constitution, may alter its share capital as follows, it may:

(i)increase its capital by the issue of new shares of such amount as it thinks expedient in accordance with Division 11;

(ii)by ordinary resolution passed at a general meeting, consolidate and divide all or any of its share capital into shares of larger amount than its existing shares, with any amount unpaid on the shares being divided equally among the replacement shares;

(iii)by ordinary resolution passed at a general meeting, sub-divide its shares, or any of them, into shares of smaller amount than originally issued, so, however, that in the sub-division the proportion between the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived;

(iv)by special resolution passed at a general meeting convert an ordinary share into a preference share;

(v)by special resolution passed at a general meeting convert a preference share to an ordinary share;

(vi)redeem any redeemable preference shares in accordance with in accordance with Division 11;

(vii)reduce its share capital in the manner set out in this Division;

(viii)buy-back shares in the manner set out in this Division; and

(ix)provide financial assistance in connection with the purchase of its shares in the manner set out in this Division.

(b)Sub-section (a) does not limit any other right to alter share capital which may be permitted under this or other applicable law, nor prejudice the application of any other part of this law.

113.Notice to Registrar of alteration of share capital

Where a company having a share capital has altered its share capital in the manner provided by sub-sections 112(a)(ii) to (vii) it shall within 21 days of the relevant alteration file a notice with the Registrar in the prescribed form of the same, specifying the shares consolidated and divided or sub-divided.

114. If a company makes default in complying with the requirements of section 113, it shall be liable to a fine of 1,000,000 kyats, and every director or other officer of the company who knowingly and wilfully authorizes or permits the default shall be liable to the same penalty.

Reduction of Share Capital

115.Reduction of share capital

(a)A company limited by shares, subject to its constitution, may reduce its share capital in any of the following ways (without limiting any other way which may be permitted by this Law or another applicable law):

(i)extinguish or reduce the liability on any of its shares in respect of share capital not paid up;

(ii)either with or without extinguishing or reducing liability on any of its shares, cancel any paid-up share capital which is lost or unrepresented by available assets; or

(iii)either with or without extinguishing or reducing liability on any of its shares, return any paid-up share capital which is in excess of the wants of the company.

(b)The reduction must not be undertaken unless:

(i) the company will, immediately after the reduction, satisfy the solvency test;

(ii)the reduction is fair and reasonable to the company’s shareholders as a whole;

(iii)the reduction does not materially prejudice the company’s ability to pay its creditors; and

(iv)it is approved by shareholders under section 116.

(c)The reduction by a company under this section may be equal or selective.

(d)An equal reduction is a reduction that satisfies the following conditions:

(i) it relates only to ordinary shares;

(ii)it applies to each holder of ordinary shares in proportion to the number of ordinary shares they hold; and

(iii)it is made on the same terms for each ordinary shareholder.

(e)All other reductions under this section, except as set out in sub-section (d), are selective.

116. Shareholder approval

(a)If the reduction is an equal reduction, it must be approved by an ordinary resolution passed at a general meeting of the company.

(b)If the reduction is a selective reduction, it must be approved by either:

(i)a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates; or

(ii)a resolution agreed to, at a general meeting, by all ordinary shareholders.

(c)If the reduction involves the cancellation of shares, the reduction must also be approved by a special resolution passed at a meeting of the shareholders whose shares are to be cancelled.

(d)The company must include with the notice of the meeting a statement setting out all information known to the company that is material to the decision on how to vote on the resolution, including confirmation that the requirements of sub-sections 115(b)(i) to (iii) will be met.

(e)Before the notice of the meeting is sent to shareholders, the company must lodge with the Registrar a copy of:

(i) the notice of the meeting; and

(ii)any document relating to the reduction that will accompany the notice of the meeting sent to shareholders.

The company must also publish in a daily newspaper circulating generally in the Union a notice of its intention to call a meeting to approve a reduction and advising that the notice of meeting and associated documents have been filed with the Registrar.

(f)The Registrar will have 28 days following receipt of the documents referred to in sub-section 116(e) to determine if the company may release the notice of meeting to shareholders. If the Registrar determines that the notice may be sent, or a determination is not issued within this period, then the company may send the notice of meeting.

(g)In making a determination under sub-section (f) the Registrar may direct the company to clarify or vary any document submitted under sub-section (e) where this is considered reasonably necessary for the protection of shareholders or creditors.

(h)The Registrar may determine that the company must not release of the notice of meeting within the time provided by sub-section (f) if satisfied on reasonable grounds that the requirements of sub-section (d) of this section have not been met or for similarly significant cause.

(i)The company must lodge with the Registrar a copy of any resolution under sub-section (b) within 21 days after it is passed and publish a notice of the passing of such resolution and the summary details of the reduction in a daily newspaper circulating generally in the Union. The company must not make the reduction until 28 days after publication of such notice in the newspaper.

(j)The Registrar does not assume and shall not owe any obligations to a company, a company’s members or to any other person in connection with the performance of its functions under sub-sections (f) to (h) of this section, including in circumstances where a notice of determination is given or deemed to be given or the company becomes insolvent following the capital reduction.

(k)Sub-section (j) does not limit the right which a company may have under section 428 to appeal a relevant decision of the Registrar under this section.

117. Consequences of failure to comply with reduction requirements

(a)The company must not make the reduction under section 115 unless it complies with that section 115 and section 116.

(b)A contravention of any provisions of section 115 and section 116 does not affect the validity of the reduction or of any contract or transaction connected with it.

118.If a company makes default in complying with the requirements of sub-section 117(a) it shall be liable to a fine of 5,000,000 kyats, and every director or other officer of the company who knowingly and wilfully permits the default shall be liable to the same penalty.

119.In addition to section 118, if the company becomes insolvent following and in connection with such reduction, every director of the company who knowingly and wilfully permitted a reduction in default of sub-section 117(a) shall also be liable to the creditors of the company to the extent of the reduction where the debts due by the company to the respective creditors exceeded the recoverable assets of the company and such amount may be recovered from them by the creditors or the liquidator suing on behalf of the creditors.

Share Buy-Backs

120. Share buy-backs

(a)A company may buy back its own shares if:

(i)the company will, immediately after the buy-back, satisfy the solvency test;

(ii)the buy-back is fair and reasonable to the company’s shareholders as a whole;

(iii)the buy-back does not materially prejudice the company’s ability to pay its creditors; and

(iv)it is approved by shareholders under section 121 and the procedures in section 122 are followed.

(b)The buy-back may be equal or selective.

(c)An equal buy-back is one that satisfies the following conditions:

(i)the buy-back offers relate only to ordinary shares;

(ii)the offers are to be made to every person who holds ordinary shares to buy back the same percentage of their ordinary shares;

(iii)all of those persons have a reasonable opportunity to accept the offers made to them;

(iv)buy-back agreements are not entered into until a specified time for acceptances of offers has closed; and

(v)the terms of all the offers are the same.

(d)All other buy-backs under this section, except as set out in sub-section (c), are selective buy-backs.

121. Shareholder approval

(a)An agreement for an equal buy-back must be approved by an ordinary resolution passed at a general meeting of the company or must be made conditional to such approval.

(b)An agreement for a selective buy-back must be approved, or be made subject to approval, by either:

(i)a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the buy-back, or by their associates; or

(ii)a resolution agreed to, at a general meeting, by all ordinary shareholders.

(c)The company must include with the notice of the meeting a statement setting out all information known to the company that is material to the decision on how to vote on the resolution, including confirmation that the requirements of sub-sections 120(a)(i) to (iii) will be met.

(d)Before the notice of the meeting is sent to shareholders and before any buy-back offer is executed, the company must lodge with the Registrar a copy of:

(i) the notice of the meeting;

(ii)a document setting out the terms of the buy-back offer; and

(iii)any document relating to the buy-back that will accompany the offer or the notice of the meeting sent to shareholders.

The company must also publish in a daily newspaper circulating generally in the Union a notice of its intention to call a meeting to approve a buy-back offer and advising that the notice of meeting and associated documents have been filed with the Registrar.

(e)The Registrar will have 28 days following receipt of the documents referred to in sub-section 121(d) to determine if the company may release the notice of meeting to shareholders. If the Registrar determines that the notice may be sent, or a determination is not issued within this period, then the company may send the notice of meeting and, if desired, and subject to shareholder approval, execute the buy-back offer.

(f)In making a determination under sub-section (e) the Registrar may direct the company to clarify or vary any document submitted under sub-section (d) where this is considered reasonably necessary for the protection of shareholders or creditors.

(g)The Registrar may determine that the company must not enter into the buy-back offer and release the notice of meeting within the time provided by sub-section (e) if satisfied on reasonable grounds that the requirements of sub-section (c) of this section have not been met or for similarly significant cause.

(h)The company must lodge with the Registrar a copy of any resolution under sub-section (b) within 21 days after it is passed and publish a notice of the passing of such resolution and the summary details of the buy-back in a daily newspaper circulating generally in the Union. The company must not complete the buy-back until 28 days after publication of such notice in the newspaper.

(i)The Registrar does not assume and shall not owe any obligations to a company, a company’s members or to any other person in connection with the performance of its functions under sub-sections (e) to (g) of this section, including in circumstances where a notice of determination is given or deemed to be given or the company becomes insolvent following the buy-back.

(j)Sub-section (i) does not limit the right which a company may have under section 428 to appeal a relevant decision of the Registrar under this section.

122.Matters relevant to the buy-back offer

(a)The company must include with any offer to buy back shares a statement setting out all information known to the company that is material to the decision whether to accept the offer.

(b)Once a company has entered into an agreement to buy back shares, all rights attaching to the shares are suspended. The suspension is lifted if the agreement is terminated.

(c)A company must not dispose of shares it buys back. An agreement entered into in contravention of this sub-section is void.

(d)Immediately after the registration of the transfer to the company of the shares bought back, the shares are cancelled.

123.Consequences of failure to comply with buy-back requirements

(a)The company must not complete the buy-back under section 120 unless it complies with that section and sections 121 and 122.

(b)A contravention of any provision of sections 121 and 122 does not affect the validity of the buy-back or of any contract or transaction connected with it.

124.If a company makes default in complying with the requirements of sub-section 123(a) it shall be liable to a fine of 5,000,000 kyats, and every director or other officer of the company who knowingly and wilfully permits the default shall be liable to the same penalty.

125.In addition to section 124, if the company becomes insolvent following and in connection with such buy-back, every director of the company who knowingly and wilfully permitted the buy-back in default of sub-section 123(a) shall also be liable to the creditors of the company to the extent of the consideration paid for the buy-back where the debts due by the company to the respective creditors exceeded the recoverable assets of the company and such amount may be recovered from them by the creditors or the liquidator suing on behalf of the creditors.

Variation of Shareholders’ Rights

126. Varying rights of holders of classes of shares

(a)If a company’s constitution sets out the procedure for varying or cancelling rights attached to shares in a class of shares or, for a company without a share capital, rights of members in a class of members, those rights may be varied or cancelled only in accordance with the procedure. The procedure may be changed only if the procedure itself is complied with.

(b)If a company’s constitution does not include a procedure referred to in sub-section (a), those same rights may be varied or cancelled only by special resolution of the company and:

(i) by special resolution passed at a meeting:

(A)for a company with a share capital, of the class of members holding shares in the class; or

(B)for a company without a share capital, of the class of members whose rights are being varied or cancelled; or

(ii)with the written consent of members with at least 75% of the votes in the class.

(c)The company must give written notice of the variation or cancellation to the members of the class within 7 days after the variation or cancellation is made.

(d)Subject to any application having been made under sub-section (e), within 21 days of the passing of the relevant resolutions or receipt of the relevant consents the company must file with the Registrar a notice in the prescribed form of the variations made pursuant to this section and any resulting changes to its share capital structure.

(e)If the holders of not less in the aggregate than ten per cent of the issued shares of a class that has been varied pursuant to this section, being persons who did not consent to or vote in favour of the resolution for the variation, continue to oppose the variation, they may apply to the Court to have the variation cancelled, and where any such application is made the variation shall not have effect unless and until it is confirmed by the Court.

(f)An application under sub- section (e) must be made within 21 days after the date on which the consent was given or the resolution was passed, as the case may be, and may be made on behalf of the shareholders entitled to make the application by such one or more of their number as they may appoint in writing for the purpose.

(g)On any such application the Court, after hearing the applicant and any other persons who apply to the Court to be heard and appear to the Court to be interested in the application, may, if it is satisfied having regard to all the circumstances of the case that the variation would unfairly prejudice the members of the class represented by the applicant, disallow the variation and shall, if not so satisfied, confirm the variation.

(h)The decision of the Court on any such application shall be final.

(i)The company shall within 21 days after the service on the company of any order made on any such application forward a copy of the order to the Registrar.

(j)It shall be the duty of every officer of a company to take reasonable steps to ensure that the procedures of this section are followed and that all relevant filings are made.

(k)The expression “variation” in this section includes “abrogation” and the expression “varied” shall be construed accordingly.

127.If a default is made in complying with sub-section 126(j), the company and every director or other officer of the company who is knowingly and wilfully involved in the default shall be liable to a fine of 1,000,000 kyats.

Financial Assistance

128.Restrictions on a company providing financial assistance for purchase of its own shares

(a)Save as provided in this section or section 130, a company limited by shares, other than a private company which is not a subsidiary of a public company, shall not give, whether directly or indirectly, any financial assistance for the purpose of or in connection with a purchase made or to be made by any person of any shares in the company or a holding company of the company:

Provided that nothing in this section shall be taken to prohibit, where the lending of money is part of the ordinary business of a company, the lending of money by the company in the ordinary course of its business.

(b)Nothing in this section shall affect the right of a company to redeem any shares, reduce its share capital or undertake any transaction or procedure affecting its share capital as provided in this Division 15.

129. If a company acts in contravention of section 128, the company and every director or other officer of the company who is knowingly and wilfully in default shall be liable to a fine of 2,500,000 kyats.

130.Where a company is permitted to provide financial assistance

(a)A company to which section 128 applies may financially assist a person to acquire shares in the company or a holding company of the company only if:

(i) the board is satisfied on reasonable grounds and resolves that:

(A)the company should give the financial assistance;

(B)the giving of the financial assistance is in the best interests of the company;

(C)the giving of the financial assistance is fair and reasonable to the company’s shareholders as a whole;

(D)the financial assistance does not materially prejudice the company’s ability to pay its creditors; and

(E)the company will, immediately after giving the financial assistance, satisfy the solvency test; or

(ii)the assistance is approved by shareholders under section 133 below.

(b)If, after the giving of financial assistance is authorized by the board under sub-section (a)(i) and before it is made, the board ceases to be satisfied on reasonable grounds that the company will, immediately after the financial assistance is given, satisfy the

requirements of sub-section (a)(i), any financial assistance made by the company shall be deemed not to have been authorised,

131.If a company makes default in complying with the requirements of section 130 it shall be liable to a fine of 2,500,000 kyats, and every director or other officer of the company who knowingly and wilfully permits the default shall be liable to the same penalty.

132.In addition to section 131, if the company becomes insolvent following and in connection with the giving of such financial assistance, every director of the company who knowingly and wilfully permitted the giving of financial assistance in default of sub-section 130(a) shall also be liable to the creditors of the company to the extent of the amount of financial assistance provided where the debts due by the company to the respective creditors exceeded the recoverable assets of the company and such amount may be recovered from them by the creditors or the liquidator suing on behalf of the creditors.

133.Shareholder approval

(a)Shareholder approval for financial assistance by a company must be given by:

(i)a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by the person acquiring the shares or by their associates; or

(ii)a resolution agreed to, at a general meeting, by all ordinary shareholders.

(b)If the company will be a subsidiary of a public company listed in the Union immediately after the acquisition referred to in section 130 occurs, the financial assistance must also be approved by a special resolution passed at a general meeting of that company.

(c)If, immediately after the acquisition, the company will have a holding company that:

(i)is a company incorporated under this Law but not listed in the Union; and

(ii)is not itself a subsidiary of another company incorporated under this Law;

the financial assistance must also be approved by a special resolution passed at a general meeting of the company that will be the holding company.

(d)A company that calls a meeting for the purpose of sub-section (a), (b) or (c) must:

(i)include with the notice of the meeting sent to members of the company a statement setting out all the information known to the company that is material to the decision on how to vote on the resolution; and

(ii)before the notice of a meeting is sent to members of the company, lodge with the Registrar a copy of:

(A)the notice of the meeting; and

(B)any other document that will accompany the notice of the meeting sent to the members.

(e)The company must file with the Registrar, at least 21 days before giving the financial assistance, a notice in the prescribed form stating that the assistance has been approved under this section.

(f)A special resolution passed for the purpose of sub-section (a), (b) or (c) must be lodged with the Registrar by the company, public company listed in the Union or holding company within 14 days after it is passed.

(g)It shall be the duty of every director and other officer of a company to take reasonable steps to ensure that the procedures of this section are followed and that all relevant filings are made.

134.If a default is made in complying with sub-section 133(g), the company and every director or other officer of the company who is knowingly and wilfully involved in the default shall be liable to a fine of 2,500,000 kyats.

135.Effect of contravention

If a company provides financial assistance in contravention of section 128 the contravention does not affect the validity of the financial assistance or of any contract or transaction connected with it.

Prohibition on self-acquisition of shares

136. Directly acquiring shares

A company must not acquire shares in itself except:

(a)as a result of a buy-back made under this Division; or

(b)as a result of an order by the Court.

137. Taking security over shares

A company must not take security over shares in itself or a holding company that controls it.

138. Issuing or transferring shares to a subsidiary

The issue of shares by a company or the transfer of shares in a company to a subsidiary is void unless:

(a)the subsidiary transferee holds the shares as a trustee only and without any beneficial interest in the shares; or

(b)the transfer is by a holding company of the company and the subsidiary transferee is also a subsidiary of that holding company.

139. Exemptions

Without limiting any power outside of this section, the Union Minister may prescribe circumstances where any of the matters prohibited or made void by sections 136 to 138 may be permitted and effective.

Continuing Duties

140. Other duties continue to apply

A director is not relieved from any of their duties under this Law (including under Part IV), or their fiduciary duties, in connection with a transaction or matter affecting share capital referred to in this Division merely because the transaction or matter is authorised by a provision of this

Division or the constitution or is approved by a resolution of members under a provision of this Division.

 
 

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