The Maldivian corporate landscape stands on the brink of a significant transformation as the new Companies Act, ratified by President Mohamed Muizzu on Wednesday, is set to take effect on 1 January 2024.

This legislation replaces the previous Companies Act, enacted on 1 July 1997, and ushers in a new era of corporate governance in the Maldives. The bill, initially proposed by the opposition Maldivian Democratic Party (MDP) during its tenure in the administration, was passed by Parliament on 5 December.

The legislation, submitted on behalf of the then government by Member of Parliament (MP) for Dhuvaafaru, Ismail Ahmed, received overwhelming support, with 53 members voting in favour and only one against. The new Act comprises 248 articles, substantially increasing from the 101 articles in the 1996 Act.

The Act provides comprehensive guidelines for the incorporation, registration, operation, and dissolution of companies in the Maldives. A substantial feature of the new law is the provision that allows a single individual to register and operate a company, a significant departure from the previous requirement of multiple individuals for company registration and operation.

Under the previous law, only sole proprietors could register under a single person. The new Act also mandates the re-registration of foreign companies operating in the Maldives.

The Act introduces a revised fee structure, stipulating a fee of MVR 2,000 for company registration and eliminating the annual fees. Each service, including amendments to the company charter, changes to the registered address, asset changes, and changes to the company seal, will incur a fee of MVR 100.

The enactment of the new Companies Act signifies a monumental step towards fostering individual entrepreneurship and streamlining the corporate environment in the Maldives.