Shareholder Agreement in Myanmar

Shareholder Agreement in Myanmar – Understanding the Basics

Myanmar, also known as Burma, is a country located in Southeast Asia with a growing economy. With its strategic location, rich natural resources, and growing number of foreign investors, Myanmar has become an attractive destination for businesses looking to expand their operations in the region. However, with the growth of businesses and investments, it is essential for shareholders to enter into a shareholder agreement to ensure a harmonious and profitable relationship.

A shareholder agreement is a legal document that outlines the rights and obligations of shareholders in a company. The agreement sets out the terms and conditions under which the shareholders will operate and how the company will be managed. It is a crucial document that serves as a guiding document for the relationship between shareholders and helps to minimize the risk of disputes.

In Myanmar, the legal framework for shareholder agreements is governed by the Myanmar Companies Law, which regulates the formation, management, and dissolution of companies. The Companies Law provides that a shareholder agreement is legally binding on the parties that sign it and that it may contain provisions that are not expressly provided for in the Companies Law.

The key elements of a shareholder agreement in Myanmar include:

1. Shareholding Structure – A shareholder agreement should clearly state the number of shares held by each shareholder and their respective voting rights.

2. Rights and Obligations – The agreement should outline the rights and obligations of each shareholder, including restrictions on transfer of shares, pre-emptive rights, and obligations to contribute capital.

3. Management of the Company – The agreement should specify the management structure of the company, including the appointment and removal of directors and the decision-making process.

4. Dispute Resolution – The agreement should contain provisions for resolving disputes between shareholders, including arbitration or mediation.

It is important to note that a shareholder agreement in Myanmar cannot override the provisions of the Companies Law, and any provision in the agreement that conflicts with the law is void.

In conclusion, a shareholder agreement is an essential document that provides clarity and certainty to shareholders in a company. It helps to prevent disputes, minimize risk, and serve as a tool for effective management. As such, it is recommended for all shareholders in Myanmar to enter into a shareholder agreement that complies with the Companies Law and is tailored to the specific needs of the company.