MYANMAR Law and Practice Contributed by: Kana Manabe, Thit Thit Aung, Julian Barendse and Nirmalan Amirthanesan, Myanmar Legal Mori Hamada
5.4 Standstills or Exclusivity Standstill agreements are not usually demanded in Myanmar. However, buyer protections such as exclu - sivity are often negotiated between parties. 5.5 Definitive Agreements Purchase terms are usually documented in definitive agreements. As in other jurisdictions, these typically take the form of: • a sale and purchase agreement for the applicable shares, business or assets; • a shareholders’ agreement (if applicable); and • any other document necessary to effect the transfer of the shares, business or assets (eg, land conveyances). 6. Structuring 6.1 Length of Process for Acquisition/Sale The timeline to process an acquisition or sale is typi - cally several months and depends on the nature and complexity of the transaction, the relationship of the parties, and the period required for due diligence. 6.2 Mandatory Offer Threshold There is no applicable mandatory offer threshold, reflecting the absence of takeover regulations in Myanmar. 6.3 Consideration Consideration is most commonly in the form of cash. Where the consideration is financed through loans, such finance has historically been obtained offshore, given that Myanmar’s banking sector is still develop - ing. However, recent restrictions by the CBM may impact the availability of such financing in future. Spe - cifically, on 13 July 2022, the CBM issued Letter No FE-1/744 (Ka), in which it requested that authorised dealer banks in Myanmar instruct customers who are borrowers under offshore loans to negotiate a sus - pension of the repayment of those loans − including principal repayments and interest under those loans − whether in cash or in kind. In addition, such pay - ments require FESC approval under CBM Notification No 12/2022. These restrictions have significant impli - cations for offshore lenders. In addition, international
are any risks to the transaction under an applicable sanctions programme. • Human rights – as noted in 1.1 M&A Market , busi- nesses intending to operate in Myanmar would be advised to undertake a human rights due diligence review prior to making their investment (and while undertaking their business in Myanmar) to ensure that their operations in Myanmar will be conducted in an ethical and appropriate manner. • The licences and approvals obtained by the target company for its business – thorough due diligence is necessary, especially as there are varying levels of understanding of (and compliance with) applica - ble licensing and approval requirements in Myan - mar. • Interests in land – this can be challenging, owing to the poor quality of official documentation regard - ing land title (Myanmar lacks a comprehensive land titles’ registry), as well as the prevalence of infor - mal arrangements for land use in Myanmar (eg, companies often operate on land belonging to a third person, such as a major shareholder). • Corruption, money laundering and terrorism financ - ing – as noted in 3.1 Significant Court Decisions or Legal Developments , Myanmar remains listed by the FATF among countries subject to a “call for action” for failing to complete its action plan to address strategic Anti-Money Laundering/Combat - ing the Financing of Terrorism (AML/CFT) deficien - cies. To the extent that a target does not have information easily available in electronic format (which is often the case in Myanmar), there may be delays in obtaining relevant information. Generally, due diligence for acquisitions continues to be challenging in Myanmar. This is mainly down to poor record-keeping and compliance by Myanmar companies, lack of familiarity with due diligence pro - cesses, and reluctance to disclose company infor - mation. Prospective acquirers are advised to engage early with potential target companies to explain the purpose and nature of due diligence procedures and build the relationships necessary to ensure an appro - priate quality of disclosure.
890 CHAMBERS.COM
Powered by FlippingBook