December 09, 2016

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The Rights of Shareholders of a Public Company

Win Sein

Myanmar is now launching a large scale economic development for the whole country so that she may catch up with her neighboring countries, who have had an early start many years ago in their reconstruction endeavor. For Myanmar, she has encountered with the misfortune of hindering her way to improve the improvised newly independent young country by the successive authoritarian regimes for almost 45 years, leaving the country as poor branded as the “least developed country “ in the whole world.
Now, with developed countries and the United Nations promising aids to our country after she has adopted the democratic political ideology for governing the country, a change in all spheres for a much desired social, political and economic reformist government, turning a new leaf to create a better country for her citizens in Myanmar. But the country has been a standstill in progress because of the previous regimes. Lagging behind in infrastructure facilities, resulted in a chaotic condition in which to accommodate all foreign investors scrambling to get a better share of the Myanmar investment opportunity pie.
Myanmar has carefully charted the best area of land for setting up economic zones for development of the country. The favorable conditions have allured Myanmar citizens’ companies as well as foreign companies to start operating in the various industrial, services and food production sectors. Judging from this perspective of a crowded condition of various companies to outdo each other, we can imagine the tremendous task for the Directorate of Companies Management Department to settle the big pile of problems with the only help from the out of date book “Myanmar Companies Act—1914”. Whereas countries like U K, India, Singapore and Malaysia have had their Companies Act revised, amended and rewritten to bring it update already.
A person who has purchased shares of a public company shall be entitled to receive a certificate from such company, where in the certificate held by the member shall be prima-facie evidence of the title of the member to the shares therein specified the name, address, nationality and occupation of the shareholder shall be entered into the Register of Members of the company. As a member of a public company, it is obvious that a shareholder, would like to know all about the activities of the company in which he has invested his money, so that a shareholder shall have the statutory rights conferred on him as a shareholder. He shall have the rights to:
— Appoint directors
— Attend and vote at General Meeting.
— Receive a copy of Memorandum and Articles of Association of the company.
— Inspect the statutory Registers and Minutes books.
— Receive copies of financial statements.
— Initiate winding up of the company.
As a shareholder of a public company, it is most important for each and every shareholder to get hold of a copy of the Memorandum and Articles of Association of the company. [Section 25 {1} of the Myanmar Companies Act] In other words, this book contains the constitution of the company. In which the operation and management of the company is run in accordance with the regulations listed as Articles in such Memorandum and Articles. These Articles are based and derived from the Myanmar Companies Act when first drafted in the manner of serial order during the time of formation of the company. However these regulations can be added and deducted, substituted and deleted and amended from time to time during the operation of the company when they think that needed to change on them. Thereby the company shall have to hold a General Meeting, discussing the matter at first or if required to get the final resolution by show of hands or if otherwise by holding a poll with casting of votes. Once the resolution is settled, a copy of the resolution should be filed with the Registrar of Companies Administration Office for approval. Until and unless the resolution of the company has been approved by the Registrar ,then the rewritten regulations or Articles shall have effect to be enforced as an Article in the Memorandum and Articles of Association of the company finally
Another distinctive aspect for the shareholders to keep in mind is the rights of shareholders to appoint directors in the General Meeting and in rotation of directors [Section 83 B {2} of Myanmar Companies Act] stipulated “not less than two-third of the whole member of directors shall be persons whose period of office is liable to determination at any time by retirement of directors in rotation.” However many companies have constituted this Article with the statement from the First Schedule, Table A of regulation 78 of Myanmar Companies Act, as [At the first ordinary meeting, the whole of the directors shall retire from office and at the ordinary meeting in every subsequent year. One – third of the directors for the time being or if their number is not three or a multiple of three, the number nearest to one –third shall retire from office]
Take for instance, the voting rights of shareholders have been stipulated in Article 60 of the The First Schedule of Table A of Myanmar Companies Act as “On a show of hands every member present in person shall have one vote. On poll. Every member shall have one vote in respect of each share held by him.” Looking from this point, if a company has resorted to polling on a problem, it would surely give an upper hands for the majority shareholders group over the minority shareholders group in contest of the matter concerned. Because more votes would be gathered in the hands of the majority shareholders. We often heard a lot of shareholders of public company came back from their companies’ Annual General Meeting recently reluctantly confided among themselves , that their companies have already nominated and appointed the new Boards of Directors without even a single shareholder casting a single vote at all.
As now, Myanmar has enjoyed the luxury of more foreign investors and local investors establishing private and public companies, that sprout up inside every corner of Myanmar doing all sorts of business in Myanmar would create a difficult situation for the Directorate of Companies Administration Department to keep a tight rein on the crowded companies big and small which hardly can be considered as under control with the old Myanmar Companies Act alone. Until a rewritten Myanmar Companies Act is coming out fast in time to curb the increasing number of companies who are operating daily not in conformity with the old Myanmar Companies Act or otherwise the situation would be flared up with such magnitude beyond control.
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