MYANMAR Law and Practice Contributed by: Kana Manabe, Thit Thit Aung, Julian Barendse and Nirmalan Amirthanesan, Myanmar Legal Mori Hamada
lenders may also face challenges when providing new loans for transactions in Myanmar while it remains listed by the FATF among countries subject to a “Call for Action”. If an M&A transaction is in the form of a joint ven - ture between a foreign and local Myanmar partner, the Myanmar joint venture partner would typically make its contribution to the project company in kind by contributing assets (such as immovable property). The foreign joint venture partner would provide cash. In terms of valuation certainty, obtaining accurate financial information on a target company in Myan - mar is often challenging, owing to the poor account - ing practices and record-keeping of companies in the country. However, although tools to mitigate this uncertainty (such as closing accounts) are available, the purchase price is generally not adjusted in prac - tice − reflecting, in part, the difficulty of obtaining rel - evant financial information. It is generally understood that, in practice, all trans - fers of funds into or from Myanmar are governed by the Foreign Exchange Management Law (Law No 12/2012) (FEML). Prior approval from the CBM is likely to be required for loans, whereas equity fund transfers need only be declared to the CBM under the FEML. In addition, remittances offshore for any loan repay - ments (or payments of interest), distributions or return of capital can be expected to require a further FESC approval. 6.4 Common Conditions for a Takeover Offer The terms of M&A offers are negotiated between the parties. However, schemes of arrangement are sub - ject to court supervision − although these are seldom used in practice. 6.5 Minimum Acceptance Conditions For schemes of arrangement, which are available as a matter of law (albeit not used in Myanmar in practice), schemes approved by 75% of shareholders (or credi - tors) are binding on all shareholders (or creditors). A court can make provisions for the transfer of a com - pany’s undertaking or its shares, pursuant to such a scheme, either by the order sanctioning that scheme or a subsequent order.
In addition, the approval of an offer to acquire the shares of a public company by 75% of shareholders within four months of that offer will give rise to a right on the part of the acquirer to acquire compulsorily the shares of dissenting shareholders upon notice within two months, subject to any objection proceedings. 6.6 Requirement to Obtain Financing There are, in principle, no restrictions on including conditions (such as for obtaining finance) as part of business combinations. Schemes of arrangement could be conditional, subject to the court’s supervi - sion. 6.7 Types of Deal Security Measures Deal protection and cost-coverage mechanisms typi - cal to M&A (such as confidentiality or non-disclosure agreements, non-solicitation agreements, and break- up fees or reverse break-up fees) are not prohibited in Myanmar and may be used to protect deals from third-party bidders, as in other jurisdictions. Given the changing situation and the potential for further downside risk, it is expected that acquirers and investors would seek to include material adverse change clauses as a condition to transactions. There have been no regulatory changes that have impacted the length of interim periods. However, disruptions to governmental services may have an impact on the ability to meet closing conditions for an investment. 6.8 Additional Governance Rights A bidder that does not seek 100% ownership of a tar - get may be able to negotiate governance rights such as board representation and other protections typi - cally found in a shareholders’ agreement (eg, reserved matters and pre-emptive rights). 6.9 Voting by Proxy Under the MCL, individual shareholders may approve a proxy and corporate shareholders may approve a corporate representative to represent them at general meetings.
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