Jurisdiction - Myanmar
Reports and Analysis
Myanmar – Comments On The Upcoming YSE.

7 January, 2015


Legal News & Analysis – Asia Pacific – Myanmar – Banking & Finance


The recent opening of Myanmar’s economy has generated strong investor interest in Asia’s last untapped frontier market. Myanmar is currently in the process of establishing the Yangon Stock Exchange (YSE), a modern stock market intended to replace the underutilized Myanmar Securities Exchange Centre. While the YSE is likely to represent a significant improvement over the existing exchange, it remains to be seen whether Myanmar can support a viable exchange.


Conventus Law spoke to Krishna Ramachandra, Partner at Selvam & Partners about the establishment of the YSE.


1.   Give us some background of the up coming YSE.


The YSE is not Myanmar’s first go at a securities market.


In the 1930s, during the colonial era, Myanmar established the Rangoon Stock Exchange, which offered a market for shares in several American and British companies.  The Rangoon exchange closed in the 1960s, after the military government nationalized the listed companies.


In the ‘90s, Myanmar opened another market, Myanmar Securities Exchange Centre. This exchange, however, has not been very successful.  No companies have signed up for listing apart from the original two, and there is very little activity on this market.


The YSE is a modern stock market intended to replace the under-utilized Myanmar Securities Exchange Centre.  Myanmar recently passed a new securities law in an effort to support the establishment of the YSE, including the creation of a Securities and Exchange Commission.  It is hoped that government support and regulation will provide transparency and stability to the new market, and increase investor confidence.


2.   Is the launch date of 2015 realistic? Please elaborate on why.


The 2015 launch date is certainly ambitious but not impossible.  The Securities and Exchange Commission took a long time to get up and running; the commissioners were finally appointed only in October 2014. Regulations to implement the new securities law have still not been issued.  The companies applying for listing face challenges in preparing their IPOs, as final regulations have not yet been released. There are a lot of moving parts that need to settle into place if the exchange is going to meet its target opening date.


3.   What legal challenges does the formation of the upcoming YSE face?


There are several legal issues facing the YSE.


First of all, as mentioned before, the securities regulations still have not been released.  It is hard for companies to prepare their prospectuses when they do not have the regulations on-hand.


Also, it is believed that only a small number of Myanmar’s 200 public companies are currently capable of meeting the requirements for listing on the exchange.  Only six companies have applied to be listed so far, of which two have been approved for listing by the Ministry of Finance (the Ministry hopes to approve between 3 to 5 companies for listing at the October 2015 launch).  Since few companies in Myanmar are capable of complying with securities regulations, this will limit the membership of the exchange.


Another issue is the legal limits on foreign ownership imposed by the Myanmar Companies Act. In order to comply with the MCA, the exchange will allow only Myanmar citizens to purchase stock.  With the exchange limited to local investors, it is conceivable that companies will have less incentive to join.




For further information, please contact:


Krishna Ramachandra, Partner, Selvam & Partners

[email protected]

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