The Ministry of Economic Development, Transport and Trade has warned that foreign-owned businesses seeking to transfer ownership to Maldivian citizens must undergo strict verification to establish whether the changes reflect genuine local ownership and control.
The move follows the introduction of new Foreign Investment Entry Requirements under the Foreign Investment Act, which reserve wholesale, retail and sales agent services exclusively for Maldivian-owned businesses, with the restrictions taking effect on 8 October.
Foreign businesses operating in these sectors were granted a one-year grace period to comply with the revised requirements. They were required either to discontinue their operations or bring their businesses into compliance by changing their commercial activities or transferring full ownership to Maldivian citizens.
With the deadline for winding down non-compliant operations now expired, a number of businesses have submitted applications proposing changes to their business activities or the transfer of their shares to local owners. The ministry said the applications and supporting documents are currently under review before final decisions are made.
The ministry stressed that businesses seeking approval for ownership transfers must prove that the arrangements result in “genuine and meaningful Maldivian equity ownership and participation.”
As part of the assessment process, authorities are examining the details of each proposed transaction, including the source of funds used to finance the transfer, the identities of the ultimate beneficial owners and the extent of any continuing influence or decision-making power retained by foreign shareholders.
Applicants are required to provide comprehensive documentation to demonstrate that the proposed changes satisfy the legal requirements, the ministry said.
The verification process is intended to ensure that ownership transfers result in substantive changes to business ownership and operational control, rather than merely formal restructuring designed to bypass the restrictions.
Businesses that failed to comply with the requirements during the prescribed grace period will be issued formal notices ordering them to immediately stop conducting unauthorised commercial activities, officials warned.
