Myanmar has recently seen what is believed to be the first registration of mortgage over leasehold interest of an immovable property in favour of a foreign lender. Registration of deeds evidencing rights or interests in land is mandated under the Registration Law of 2018 (“Registration Law”) and prior to 2018 was required under the Registration Act of 2018 (“Registration Act”). Failure to comply with the requirement renders such documents inadmissible in a court of law as evidence and strips any transfer contemplated thereunder of legal affect. This is significant because in spite of the legal requirements, previous transactions involving non-Myanmar entities (either a lender or a borrower), faced serious challenges in perfecting the securities. This was due to the previous practice of the Office of Registration of Deeds (“ORD”) which considered such “foreign” mortgages to be non-compliant with the law prohibiting foreign ownership of land. It was a major roadblock to the financing of large projects, particularly non-recourse financings.
The successful registration of mortgage is in respect of the USD 650 million Yoma Central mixed-use real estate development in downtown Yangon where Meeyahta Development Ltd, a joint-venture between Yoma Strategic Holdings Ltd, First Myanmar Investment Company, and several companies in the Mitsubishi group, is being financed in part by loans and equity provided by the International Finance Corporation (“IFC”) and the Asian Development Bank (“ADB”). DFDL Myanmar, led by Nick Towle (Senior International Consultant) is acting as a local counsel to the IFC and ADB on the financing of this project.
In 2018, ADB led by its Principal Counsel, Nick Moller, initiated a project to assist the ORD in modernising the deeds registration system to streamline the registration of leases and mortgages (“ADB Technical Assistance”). The objective has been to ensure that leases and mortgages over immovable property are duly registered for all applicants in accordance with the provisions of the Myanmar Investment Law and the Myanmar Companies Law. Throughout the process, the authorities were made aware of the prevailing practice at the ORD with respect to transactions involving non-Myanmar entities, the legal consequences and the solutions. Nishant Choudhary (Deputy Managing Director, DFDL) played a pivotal role in the ADB’s Technical Project, including the delivery of presentations to the authorities in Yangon and Nay Pyi Taw, resulting in significant and far-reaching developments.
The Registration Law has a limitation period of four months (without fine) and an additional four months (with fine), for the ORD to accept documents for registration. Due to the ORD’s previous practice, there have been numerous financial transactions in Myanmar where ORD registration was not secured and the limitation period expired. A much desired and salutary result of these reforms would be for the authorities to grant a stipulated amnesty period to foreign investors for all previously created mortgages due to be registered without such fines for late registration.
Deputy Managing Director
Head of Banking & Finance Practice
Senior International Consultant
The information provided in this email is for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.