DICA Insolvency Law forms and members voluntary windings up

Background

Following the belated implementation of the winding up provisions of the Myanmar Insolvency Law (MIL) and Myanmar Insolvency Rules (MIR) in November 2021, Calibre undertook a detailed analysis of the gaps between the requirements of the MIL and those of the superseded winding up provisions of the Myanmar Companies Law (MCL) – and how to complete a liquidation by way of members’ voluntary winding up (MVWU) despite those gaps. That analysis can be found here. The gaps in question principally relate to documentary requirements.

Although full implementation of the MIL is still a ‘work in progress’, the Directorate of Investment and Company Administration (DICA) has started to address the documentary gaps for liquidations by introducing two new forms in the Myanmar Companies Online (MyCO) electronic registry system. Those forms are:

• W-01: Notice of appointment of liquidator for company/body corporate

• W-09: Liquidator’s final account of winding up of a company/body corporate
  

Double-ups and authority issues

While it’s pleasing to see MIL implementation items being tidied up, there remain some potential issues on this front. The MIR actually prescribes a form for notifying DICA of the appointment of a liquidator, being Form-3 under the MIR. No form is prescribed in the MIR for a liquidator’s final account of the winding up (which appears to be an oversight). The MIL delegates authority to the Supreme Court of Myanmar (SCM) to make regulations and procedures for the implementation of the MIL. The two new MyCO forms are in fact forms under the MIL/MIR. We are not aware of any indication that the SCM created or approved these forms. The double-up between MIR Form-3 and MyCO Form W-01 is at best somewhat confusing. At worst, if the SCM has not approved the new MIR MyCO forms, then DICA is acting beyond its authority in purporting to unilaterally implement new MIR forms.

However, there is no practical likelihood of any challenge to DICA’s actions on the basis that they may be ‘ultra vires’ and we recommend that companies seeking to liquidate nevertheless go ahead with using the new MyCO forms.

IRD and Gazette Office issues

Under the MCL, commencement of a MVWU required both a directors’ declaration of solvency (of the company to be liquidated) and an affidavit further confirming solvency, sworn by a director. Under the MIL, the affidavit is no longer required – only a declaration. Also, the MCL required commencement of a MVWU to be advertised in both a national newspaper and the Myanmar Government Gazette. But under the MIL, only a newspaper advertisement is required.

Unfortunately, the benefits of the reduction in documentary requirements under the MIL continue to be generally unavailable in practice due to other government departments and offices continuing to decline to review their processes and requirements in light of the MIL.

The Myanmar Internal Revenue Department is still requiring that advertisement of the commencement of a MVWU be published in the Gazette as a condition of proceeding with processing a tax assessment/clearance for liquidation purposes. Gazette staff still require that an affidavit of solvency be presented as one of the requirements for publication of an advertisement of commencement of a MVWU.

Consequently, in order to obtain a final tax assessment/clearance it will generally still be necessary in practice to both have an affidavit sworn and publish a Gazette advertisement. This circumstance removes most of the practical benefit of the reduced MVWU requirements under the MIL (as compared with the MCL). 

Conclusion

Despite these issues and impracticalities, it remains very much possible to undertake a liquidation by way of MVWU in practice. If you would like any further information on, or assistance with, MVWU processes please feel free to contact us.