Invest in the Maldives
Form of business
Foreigners can conduct business in the Maldives in the form of a company or partnership. A foreign investor may also choose to acquire shares of a local company. However, foreign individuals cannot register in the Maldives as a sole proprietor.
A foreign investment company may be established in the Maldives as a new incorporation or as a re-registration of a foreign company (a branch).
For the incorporation of a private limited company in the Maldives, a minimum of 2 shareholders and a minimum startup capital of MVR 2,000 or USD 130 is required. There is no share ownership restriction, nor is there a limit on the number of shares held by a foreign individual or company that intends to invest in areas that are fully open for foreign investors. The share ownership is restricted to certain sectors or industries (read the government’s policy on restricted areas here). However, any company incorporated in the Maldives must have at least 1 board director who is resident in the Maldives.
The Companies Act does not yet provide for the incorporation of single-shareholder companies in the Maldives.
Re-registration of companies
A foreign company may re-register their branch in the Maldives, regardless of the number of its shareholders or size of share capital. Re-registration of a foreign company requires, among other things, a locally appointed representative and a representative office or address. For the purpose of the Companies Act, a re-registered company is treated the same as an incorporated company, although there are some implications in terms of taxation.
The Partnership Act of Maldives allows for the creation of two distinct types of partnerships: general partnerships and limited liability partnerships.
General Partnerships and Limited Liability Partnerships
General partnerships comprises two or more partners who have unlimited liability and are jointly and severally liable for the debts and obligations of the partnership. In contrast, Partners of a Limited Liability Partnership have their liability capped up to their capital contribution to the partnership. The rules governing the partnership and its business objectives are to be indicated in a partnership agreement.
Foreign individuals can become partners of both general and limited liability partnerships and no restrictions are imposed on the number of foreign partners in either type. Managing partner of a partnership must be an individual that is habitually residing in the Maldives. Partnerships that fulfil the criteria specified in law may change from a general partnership to limited liability partnership, and vice versa upon approval from the Registrar of Companies.
Foreign Business Registration Process
The registration requirements and documentation required will vary depending on the form of business chosen by the investor. Regardless of the form chosen, the foreign investment registration process will require the investor to undergo 3 main steps before the business set-up is complete.
- Step 1 – Foreign Investment Approval
- An approval from the Ministry of Economic Development is required for a foreign investor to proceed with the registration of their business in the Maldives.
- Upon application for approval, the Ministry of Economic Development will check whether the investment sector is in automatic or government approval route. Under the automatic route, provided the foreign investment entry requirements are met, approval will be automatic/guaranteed. However, under the government route, approval will not be automatic/guaranteed and will be at the Ministry’s discretion.
- Step 2 – Business Registration
- Once the foreign investment approval is granted, the business registration form and other necessary documents will need to be submitted for endorsement by the Ministry of Economic Development.
- The set of documents required depends on the form of business. There may also be additional requirements depending on the sector or nature of business.
- Step 3 – Signing a Foreign Investment Agreement with the Government of Maldives
- For all other sectors except the tourism sector, a foreign investment agreement will have to be entered into with the Ministry of Economic Development.
- Where it is a tourism related foreign investment, the foreign investment agreement will need to be entered into with the Ministry of Tourism.
Winding up Foreign Businesses
The foreign investment agreement will state the period for which the investment approval is granted. If the business is established for a particular project, the period of approval will be the term of the project.
Upon cessation of business or termination of the foreign investment agreement, a foreign investment company or partnership may be dissolved. In the case of re-registered companies, a deregistration process will need to be followed, both with the Ministry of Economic Development and with the tax authority.
Procedures in winding up companies
Our blogpost on winding up companies covers procedures and important considerations when winding up a company.