CORPORATE
& BUSINESS
In the context of modern commerce, business and law goes hand in hand. In modern day, running a successful and sustainable business demands a lot more than doing business as usual. With increased need for businesses to stay on top of foreseeable risks, short to long term and, enduring that things are done in par with regulations in place puts businesses, of all scales, in increased need for legal support and assistance.
To bridge this gap, businesses doesn’t just need lawyers. Businesses need lawyers that understand businesses—including the most intricate aspects that maybe unique to each business.
How we help clients
As part of our Corporate and Business portfolio, we at Atoll Chambers provide you with just that—lawyers that understand you as a business. In this sense, we offer our clients robust and tailor-made solutions to their problems and risks.
Our experience and expertise extends to all aspects of corporate and business law ranging from business and corporate incorporation and registration, corporate mergers, acquisitions and restructuring as well as advising on capital and equity maintenance and in winding up and liquidation of businesses.
Frequently Asked Questions
BUSINESS REGISTRATION
What are the types of business organizations recognized in the Maldives?
In Maldives, there are three basic business organization models recognized. They are: Sole Proprietorships, Partnerships and Companies. Additionally, community-led businesses can be operated through Cooperative Societies formed under Cooperative Societies Act (Law No: 3/2007).
Sole Proprietorships are governed under the Sole Proprietorship Act (Law No: 19/2014) while Partnerships are governed by the Partnerships Act (Law No: 13/2011) and Companies are governed by the Companies Act (Law No: 10/96).
Do I need to register before commencing any business in Maldives?
Yes. Under the Business Registration Act 2014 (Law No: 18/2014), any business activity carried out in Maldives be carried out under a registered business organization.
Do I need to start paying tax immediately after I register a business?
You are not immediately required to start paying tax upon registration/incorporation of a business. However, regardless of the type of business organization, you will be required to register for Income Tax the Income Tax Act (Law No: 25/2019) with the Maldives Inland Revenue Authority (MIRA).
In the event if your business meets the requirement for mandatory Goods and Services Tax (GST) under the Goods and Services Tax Act (Law No: 10/2011) you will also be required to register for Goods and Service Tax as well. In this case, once registered, you will be required to pay Goods and Service Tax from all the goods sold or services rendered by your business.
Additionally, if the net income of your business exceeds the tax bracket under the Income Tax Act, you will also be required to pay the Income Tax as well.
Can a Non-Maldivian register a business in Maldives?
Yes. A Non-Maldivian or foreign entity may register a business as a Foreign Direct Investment (FDI), subject to satisfying the registration requirements which also involves a government approval. You can learn more about FDIs from our Foreign Investments Portfolio Page by clicking this link.
SOLE PROPRIETORSHIPS
A Sole Proprietorship is a form of business organization that is suited for individuals who want to start/carryout a business activity in Maldives. Registration of Sole Proprietorships are exclusively for Maldivians and non-Maldivians residing in Maldives are not eligible to register Sole Proprietorships.
A Sole Proprietorship is registered for an initial period of 5 (five) years renewable for separate five year periods. A Sole Proprietorship is not a separate legal entity and therefore, the owner of the Sole Proprietorship must fully bear the liability of the business.
No. Unlike limited liability Companies, Sole Proprietorships are not separate legal entities. This means that the Sole Proprietorship and its owner are considered as one person when it comes to liabilities and the owner of the Sole Proprietorship shall be wholly liable to any and all liabilities of the Sole Proprietorship.
Under Section 24 of the Sole Proprietorship Act, if an owner of a Sole Proprietorship passes away, the Business will come to an end. However, until the court makes a determination on the estate of the deceased owner, the Business Name of the Sole Proprietorship in concern will not be available for re-registration by a third party.
There is no formal procedure to convert a Sole Proprietorship to another form of business organization such as a Company. However, if you would like to use a Business Name that has been used in your Sole Proprietorship but would like to use it under a Company that you wish to form, you may do so by revoking the Business Name registration under your Sole Proprietorship and reacquiring the same name under the Company you wish to incorporate.
Under the Sole Proprietorship Act, if you wish to cease the business activities carried under a Sole Proprietorship and deregister the Sole Proprietorship, you may do so by notifying the Registrar of Businesses within 14 (fourteen) days after ceasing all business activities. Upon cancellation of the business permits, you will also be required to deregister as a tax payer for GST (if you are already registered) and Income Tax by filing an application to Maldives Inland Revenue Authority.
COMPANIES
A company can be registered by filing the relevant application with the Ministry of Economic Development. Currently, all business registrations are carried out under the online business portal of the Ministry.
To register a Company, in addition to the application, you will be required to submit copies of the Articles of Association, the Memorandum of Association, Copies of National ID Cards of all shareholders (Certificate of Registration for Corporate Shareholders), and Acceptance letters of persons nominated as the Managing Director and Company Secretary.
Under the Maldives Companies Act, only Shareholders in a Private Limited Company may sit on the Board of Directors. However, in case of a corporate shareholder, any person (including a person not holding any shares in the Company) may be nominated to the Board of Directors as a nominee of the corporate shareholder.
Yes. Every Company, whether a Private Limited Company or a Public Limited Company, is required to have a Company Secretary.
Yes. A foreign party can acquire shares in a Maldivian company after obtaining Foreign Direct Investment Approval. You can learn more about FDIs from our Foreign Investments Portfolio Page by clicking this link.
At least a minimum of 2 (two) members/shareholders are required to form a Private Limited Company and may have a maximum of 50 (fifty) members/shareholders.
Shares in a Private Limited Company can be transferred by filing the relevant Share Transfer Form along with a Resolution of the Board of Directors and Copies of National Identity Card (or Certificate of Registration in case of a body corporate). As for sale of Shares in a Company, selling party can file for share transfer upon the buying party fulfilling its obligations (for e.g. payment of share sale price).
Additionally, the Companies Act does not restrict a Company to have entrenchment provisions (i.e. restrictions on share sale) included in its Articles of Association or enter into separate Shareholder Agreements amongst Shareholders.
Unless there are specific provisions provided in the Articles of Association of a Company, if a member/shareholder of a company passes away, the shares will be transmitted to the heirs of the deceased shareholder as determined by the court in the estate proceedings of the deceased person.
If a shareholder fails to pay for the shares in which he/she has subscribed to in the Company after a Call Notice is sent to him/her, and if the provisions in the Articles of Association grants the right for the Company to forfeit unpaid shares, the Company may directly make a written submission to the Registrar of Companies to forfeit the shares of the said Shareholder.
A Company in Maldives could be wound up in three ways. They are: (1) when a company decides to wind up (voluntary winding up); (2) when a court of law orders the winding up of the company; and (3) the Registrar of Companies determines to wind up the company.
If a Company wish to wind up, the Board of Directors must pass a resolution to wind up the Company. The said resolution must then be endorsed by the Shareholders in a General Meeting. The Shareholders must then appoint a liquidator to carry out the liquidation process of the Company. Once the liquidator is appointed, a Company must cease all its business activities to allow the liquidation/winding up process to take place.