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Home └4. RPT Policy (ဆက်စပ်လုပ်ငန်းများ ဆိုင်ရာ မူဝါဒ) └Inter-company Loan Policy

4. RPT Policy (ဆက်စပ်လုပ်ငန်းများ ဆိုင်ရာ မူဝါဒ)

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Inter-company Loan Policy

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📘 Inter-company Loan Policy

(As part of Concordia Public Co Ltd’s RPT Policy – Myanmar Listed Company)

1. Purpose

To ensure that all inter-company loans are conducted transparently, fairly, and in compliance with Myanmar’s legal and regulatory framework for listed companies.

2. Scope

Applies to all loans between Concordia Public Co Ltd and its related parties, including subsidiaries, associates, joint ventures, and entities under common control, as defined by:

  • Myanmar Companies Law (2017)- especially Section 187  and 188 

  • SECM Instruction No. 3/2020 on Material RPTs

3. Definition of Related Parties

Includes:

  • Directors and executive officers of Concordia and its parent/subsidiary entities

  • Substantial shareholders (≥20% voting rights)

  • Family members of the above

  • Related body corporates and joint ventures

  • Any person or entity designated by SECM as a related party

4. Loan Approval Process

  • All inter-company loans must be approved by the Board of Directors.

  • If the loan qualifies as a Material RPT (e.g., exceeds 10% of net assets or MMK 100 million), it must be:

    • Reviewed and approved by the Audit Committee

    • Disclosed to shareholders and SECM

    • Approved by shareholders via special resolution, if required

5. Loan Terms & Documentation

  • Must be on an arm’s length basis: fair interest rate, defined repayment schedule, and collateral (if applicable)

  • Formal loan agreements must be executed and retained

  • Financial impact must be assessed and disclosed in financial statements per MFRS

6. Permitted Use of Loans

  • Working capital, capital expenditure, or strategic investment

  • Loans for speculative, personal, or non-core activities are strictly prohibited

7. Monitoring & Reporting

  • Finance department shall maintain a detailed loan register

  • Quarterly reporting to the Audit Committee

  • Annual disclosure in the Annual Report and SECM filings

8. Compliance & Audit

  • Subject to internal audit and external review

  • Non-compliance will be escalated to the Board and rectified promptly

  • Violations may result in penalties under SECM regulations


Would you like this formatted into a formal policy document or translated into Burmese for internal circulation? I can also help prepare a board resolution template or shareholder disclosure draft if needed.

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FAQs on Inter-company Loan Policy for Listed Companies in Myanmar

  1. What is an inter-company loan? An inter-company loan is a financial transaction where one entity within a group lends money to another entity within the same group.

  2. Why is an inter-company loan policy important for listed companies? It ensures transparency, compliance with regulations, and proper governance, especially for related party transactions.

  3. What laws govern inter-company loans in Myanmar? The Myanmar Companies Law (2017) and SECM Instruction No. 3/2020 regulate inter-company loans and related party transactions for listed companies.

  4. Who qualifies as a related party under Myanmar law? Related parties include directors, executive officers, substantial shareholders (≥20%), their family members, and entities under common control.

  5. What is a Material Related Party Transaction (RPT)? A Material RPT is a transaction that exceeds 10% of the company’s net assets or MMK 100 million, requiring additional approvals and disclosures.

  6. What approvals are required for inter-company loans? Loans must be approved by the Board of Directors, and Material RPTs require Audit Committee review, shareholder approval, and SECM disclosure.

  7. What does “arm’s length basis” mean? It means the loan terms (interest rate, repayment schedule, etc.) must be fair and comparable to those offered to unrelated third parties.

  8. What are the permitted uses of inter-company loans? Loans can be used for working capital, capital expenditure, or strategic investments but not for speculative or personal purposes.

  9. What documentation is required for inter-company loans? Loan agreements, board resolutions, and financial impact assessments must be documented and retained.

  10. How are inter-company loans monitored? The finance department maintains a loan register, and quarterly reports are submitted to the Audit Committee.

  11. What happens if a loan is non-compliant? Non-compliance is escalated to the Board, rectified promptly, and may result in penalties under SECM regulations.

  12. Are inter-company loans subject to audit? Yes, they are subject to internal audits and external reviews to ensure compliance.

  13. What is the role of the Audit Committee in inter-company loans? The Audit Committee reviews and approves Material RPTs and monitors compliance with the policy.

  14. What disclosures are required for inter-company loans? Loans must be disclosed in the company’s financial statements, annual report, and SECM filings.

  15. What is the penalty for non-compliance with SECM regulations? Penalties may include fines, reputational damage, and regulatory sanctions.

  16. Can inter-company loans be interest-free? No, loans must be on an arm’s length basis, which typically includes a fair interest rate.

  17. What is the threshold for shareholder approval of loans? Loans exceeding 10% of net assets or MMK 100 million require shareholder approval.

  18. How are inter-company loans reported in financial statements? They are reported as related party transactions in accordance with Myanmar Financial Reporting Standards (MFRS).

  19. Can inter-company loans be used for speculative activities? No, loans for speculative or non-core activities are strictly prohibited.

  20. What is the role of SECM in inter-company loans? SECM oversees compliance with disclosure and approval requirements for Material RPTs.

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1. What is the primary purpose of an inter-company loan policy?
a) To increase company profits b) To avoid paying taxes c) To ensure transparency and compliance with regulations d) To reduce the number of related party transactions
2. Which law governs inter-company loans in Myanmar?
a) SSB (Social Security Board) Regulations b) Companies Act, 2013 c) Myanmar Companies Law (2017) d) International Financial Reporting Standards
3. What is considered a Material Related Party Transaction (RPT) in Myanmar?
a) Any transaction between two companies b) A transaction involving directors only c) A transaction exceeding 10% of net assets or MMK 100 million d) A transaction that does not require documentation
4. Who must approve all inter-company loans?
a) The shareholders only b) The finance department c) The SECM ( Sec Exch Com ) d) The Board of Directors
5. What does ‘arm’s length basis’ mean?
a) Interest-free loans b) Loans without repayment schedules c) Fair terms comparable to third-party transactions d) Loans approved by shareholders only
6. What does the term ‘arm’s length basis’ mean in the context of Related Party Transactions (RPTs)?
A) A transaction where the terms are so favorable they strengthen the relationship between the parties. B) A transaction negotiated and conducted as if the parties were independent and unrelated, ensuring fair and market-standard terms. C) A short-term agreement that can be easily terminated by either party. D) A transaction based on the historical cost of an asset, ignoring its current market value.
7. What is the role of the Audit Committee in inter-company loans?
a) To execute loan agreements b) To monitor shareholder meetings c) To review and approve Material RPTs d) To set interest rates for loans
8. What is the penalty for non-compliance with SECM regulations?
a) Increased profits b) Reduced shareholder meetings c) No penalties d) Fines and regulatory sanctions
9. What is the threshold for shareholder approval of inter-company loans?
a) 5% of net assets b) 10% of net assets or MMK 100 million c) 20% of annual revenue d) No threshold is required
10. What documentation is required for inter-company loans?
a) Only verbal agreements b) No documentation is required c) Shareholder meeting minutes only d) Loan agreements, board resolutions, and financial impact assessments
11. What is the permitted use of inter-company loans?
a) Speculative activities b) Personal expenses c) Non-core activities d) Working capital, capital expenditure, or strategic investment
12. Who qualifies as a related party under Myanmar law?
a) Only directors b) Only shareholders c) Only external auditors d) Directors, executive officers, substantial shareholders, and their family members
13. How are inter-company loans disclosed in financial statements?
a) As general expenses b) As unrelated transactions c) They are not disclosed d) As related party transactions under MFRS
14. What is the role of SECM in inter-company loans?
a) To set interest rates b) To execute loan agreements c) To monitor repayments d) To oversee compliance with disclosure and approval requirements
15. Can inter-company loans be interest-free?
a) Yes, if approved by the Board b) Yes, if approved by shareholders c) Yes, if under MMK 100 million d) No, they must be on an arm’s length basis
16. What happens if a loan is non-compliant?
a) It is ignored b) It is automatically approved c) It is refunded to shareholders d) It is escalated to the Board and rectified promptly