Ministry begins taking action against non-compliant companies with foreign shares

The Ministry of Economic Development and Trade has warned that enforcement action will be taken against foreign-owned wholesale, retail and logistics businesses that fail to comply with the newly introduced operational regulations.

The warning was issued in a statement following the expiration of the transitional period granted to foreign-invested businesses to bring their operations into compliance with the new requirements.

According to the Ministry, wholesale and retail businesses with foreign shareholding, along with logistics businesses operating as Cargo Sales Agents (CSA), General Sales Agents (GSA) and Passenger Sales Agents (PSA), must now meet the Foreign Investment Entry Requirements (FIER) to continue operating. The Ministry stressed that businesses continuing to operate without fulfilling these requirements after the deadline will be deemed to be in violation of the Foreign Investment Act.

The Ministry further stated that businesses seeking to continue operations by transferring shares to Maldivian citizens will undergo a comprehensive assessment to verify that local participation is genuine. The assessment will examine the extent of the share transfers, payment arrangements, sources of funding, and the identities of the ultimate beneficial owners and parties exercising control. Authorities will also investigate whether foreign sellers or their associates retain any residual rights or interests in the businesses, and whether the participation of newly introduced Maldivian shareholders is merely nominal. Detailed guidelines outlining the assessment process will be issued separately.

The Ministry noted that applications submitted before the deadline to bring businesses into compliance are currently under review, with additional time to be granted to the applicants to complete the required documentation. However, businesses that failed to submit any compliance proposal before the deadline will be issued official notices directing them to cease all unauthorized activities.

The Ministry has urged all businesses that remain non-compliant to engage with the government without delay. The warning follows the recent issuance of directives on Foreign Investment Entry Requirements aimed at regulating the sector.