Joint ventures between local and foreign companies will not be permitted to list on the Yangon Stock Exchange at first, the chairman of the Securities Exchange Commission of Myanmar says.
Maung Maung Thein said the first stage of the exchange’s evolution will see it limited to local companies, with the second stage allowing foreign-local joint ventures to list and the third stage opening the door to state-owned enterprises.
“The permissions for listed firms are being conducted in stages, so joint ventures will be allowed in the future,” the Myanmar Times on Thursday quoted him as saying.
While the rules will eventually be changed to allow for foreign-local joint ventures to sell shares, that may be some time off.
The main hurdle is the existing Companies Act, which defines any foreign ownership in an otherwise local company – even as little as one share – as making the company foreign.
The law has been targeted for revision for at least two years, though so far no new draft has passed. The Directorate of Investment and Company Administration had sought public input on a new draft earlier this year, which is expected to ease the rule on what constitutes a foreign versus a local company.
Besides being unable to list, foreign companies are also barred from a number of business areas in the country.
Maung Maung Thein also sought to rebut some criticism of the listing criteria, which was released earlier this month.
The criteria requires listing companies have a minimum capital investment of 500 million kyat (US$400,000), as well as at least 100 shareholders. Some criticism had surrounded the lack of a requirement that minority shareholders hold a certain stake in the company, as well as concern the company disclosure rules were not as open as they should be and a lack of clarity on joint ventures.
Maung Maung Thein said the capital investment had been chosen as an amount that would suit the public. There were no rules on percentage of shares that must be sold on the exchange, and instead defined a minimum number of shareholders as otherwise giant entrepreneurs could launch quick takeovers.
“We also didn’t include shareholder meeting rules as it is contained in other laws already,” he said.
“Information has already been released to the public in the Security Exchange Law [of 2013].”