On 27 December 2023, President Dr Mohamed Muizzu ratified the Companies Act 2023 (Law No: 07/2023), ushering in a new era of corporate regulation in the Maldives. The Act officially came into force on 1 January 2024, repealing the long-standing Companies Act of 1996, which had governed company operations in the country since its implementation on 1 July 1997.
The Companies Act 2023 provides a modernized legal framework for companies operating in the Maldives, aiming to enhance corporate transparency, governance, accountability, and alignment with international standards. With sweeping updates and new regulatory measures, the Act significantly alters how businesses are formed, managed, and dissolved.
Key Highlights of the New Companies Act
Types of Companies Recognized
The Act continues to permit the registration of:
- Private Companies
- Public Companies
- Government Companies
- Local Authority Companies
It further designates any private or public company with foreign shareholding as a Foreign Investment Company, subject to the Foreign Investment Act and relevant policies. As before, foreign companies may re-register in the Maldives.
Single Shareholder Companies Permitted
A landmark reform allows the formation of private or public companies with a single shareholder, removing the previous requirement of at least two shareholders for private companies. This is expected to facilitate greater ease of doing business, especially for startups and individual investors.
Board of Directors Reforms
- Private companies may now have a single director, instead of the previously mandated minimum of two.
- Directors can be appointed via shareholder resolution or directly by specific shareholders under the Articles of Association (AOA).
- Notably, natural persons who are shareholders can now appoint representative directors—a right previously reserved for entity shareholders.
- Companies must continue to have at least one director resident in the Maldives.
- Only Maldivians can be directors of locally-owned private companies (100% Maldivian ownership).
- For the first time, the Act codifies fiduciary duties of directors, enhancing director accountability.
Company Seal Optional
While no longer mandatory, companies opting not to register a seal must follow stricter procedures when executing official documents. Options include:
- Two authorised signatories
- A single director signing in the presence of a witness
- Execution by the Managing Director
If a company seal is registered, a sole authorised signatory may execute documents with the seal affixed.
Board Meetings Requirement
All companies are now required to hold a minimum of four board meetings annually, doubling the previous requirement. A quorum is set at more than 50% of directors, although Articles of Association may require a higher quorum.
Company Secretary No Longer Mandatory
Private companies are no longer required to appoint a Company Secretary. However, if appointed:
- They must be at least 18 years old.
- Must be resident in the Maldives.
- Cannot simultaneously serve as a director.
- May include law firms, audit firms, or accountancy firms registered in the Maldives.
Disclosure of Significant Beneficial Owners (SBOs)
The Act introduces a new requirement for companies to register Significant Beneficial Owners (SBOs)—those with:
- 25% or more control over shares, voting rights, or dividends.
- Significant influence or control over the company.
Companies must maintain an SBO register and submit this information to the Registrar of Companies (ROC). Non-compliance may result in penalties for directors.
Requirements for Foreign Entities
Foreign companies re-registering in the Maldives must now appoint a local agent, who will be personally accountable to the ROC for any compliance failures or legal issues involving the re-registered entity.
Enhanced Director’s Declarations and Compliance Statement
Annual Director’s Reports must now include a declaration affirming the accuracy of company information in the Business Register.
In certain corporate actions—such as converting between private and public company status or amending corporate documents—a compliance statement signed by an attorney or Company Secretary must be submitted to the ROC to confirm legal compliance.
Service Address and Business Objectives
- Companies may now register a service address, which the ROC and other parties will use for official correspondence.
- Locally-owned companies now have unrestricted business objectives by default, offering greater flexibility unless otherwise limited in the MOA.
- Foreign-owned companies remain restricted to business scopes approved under foreign investment regulations.
Inactive Companies and Winding Up Procedures
The Act empowers the ROC to classify companies as inactive under conditions such as:
- Not meeting minimum board requirements for 3 months.
- Failing to file the Director’s declaration for over a year.
- Not submitting financials for 2 years.
- Non-payment of penalties for 1 year.
Companies that remain inactive for 2 years may be subject to winding-up proceedings initiated by the ROC.
Abolition of Annual Fees
The annual fee of MVR 2,000 for private companies has been abolished. However, new service fees have been introduced for applications to the ROC.
Transition Period for Existing Companies
Companies already incorporated or re-registered prior to 1 January 2024 are required to bring their operations into full compliance with the new Act by the end of 2024.
A New Chapter in Corporate Regulation
The ratification of the Companies Act 2023 marks a transformational step in the evolution of corporate governance in the Maldives. By reducing regulatory burdens in some areas and tightening controls in others, the Act aims to create a more transparent, accountable, and business-friendly environment that aligns with global best practices. For companies operating in the Maldives, now is the time to review governance structures and ensure timely compliance to avoid penalties and maintain good standing.
For legal professionals, company directors, and foreign investors alike, the new law represents both a challenge and an opportunity—ushering in a more structured and internationally-aligned corporate ecosystem in the Maldives.