Due diligence and disclosureScope of due diligence
What is the typical scope of due diligence in your jurisdiction? Do sellers usually provide due diligence reports to prospective buyers? Can buyers usually rely on due diligence reports produced for the seller?
As in other jurisdictions, the scope of legal due diligence in Myanmar is comprehensive and covers, for example, the corporate information of the company, compliance with Myanmar law, verification of its licences and assets (including intellectual property) and contracts, labour and environmental compliance, and outstanding financial obligations and securities of the company.
It is particularly important in Myanmar to undertake thorough due diligence of the licences and approvals obtained by the target company for its business, and verifying the nature of any interests it has in immovable property. Verifying compliance with licensing requirements is important as there are varying levels of understanding of, and compliance with, applicable licensing and approval requirements in Myanmar. Verifying the property rights of a target company can also be challenging due to the poor quality of official documentation of land rights (Myanmar lacks a comprehensive land titles registry), and the prevalence of informal arrangements for land use in Myanmar (eg, companies often operate on land belonging to a third person such as a major shareholder as noted in question 7).
Another issue to be mindful of in carrying out due diligence is evidence of corruption. Given the poor record-keeping of Myanmar companies, this is generally difficult to ascertain other than through interviewing the target company’s management.
Sellers typically do not produce due diligence reports in Myanmar.Liability for statements
Can a seller be liable for pre-contractual or misleading statements? Can any such liability be excluded by agreement between the parties?
Under the Myanmar Contracts Act, if a contract is caused by coercion, fraud or misrepresentation, at the option of the person whose consent was so caused, the contract may be voidable, or such person may be entitled to insist on the performance of the contract and the provision of a remedy to put him or her in the place he or she would have been in if the misrepresentation had been true.
The Contract Act’s protections regarding misleading statements cannot be excluded by contract.Publicly available information
What information is publicly available on private companies and their assets? What searches of such information might a buyer customarily carry out before entering into an agreement?
Under the MCL, private companies registered in Myanmar are required to maintain registers, among others, of shareholders, at their registered office or principal place of business and make them available to shareholders. However, few companies currently comply with this requirement and, in general, limited information is publicly available about unlisted companies registered in Myanmar.
Under the MCL, any person may obtain an extract of the corporate information of a registered company from DICA’s electronic register, called MyCo, on payment of the prescribed fee. DICA published Notification No. 57/2018 on 9 July 2018 setting out its fees for filings. The filing fees include fees for requesting extracts of the corporate information of a company.
Apart from the companies’ registry under the MCL, Myanmar does not maintain computerised records of ownership of property, or security taken on such property. For example, while it is possible to register a declaration of ownership of intellectual property rights such as trademarks under the 2018 Registration Law, such records are filed in paper format and are not easily searchable.Impact of deemed or actual knowledge
What impact might a buyer’s actual or deemed knowledge have on claims it may seek to bring against a seller relating to a transaction?
Under the Contracts Act, a contract caused by misrepresentation (including silent misrepresentation) or fraud will not be voidable if the party whose consent was so caused had the means of discovering the truth with ordinary diligence.