The Maldives is to modernise its commercial laws in a bid to attract sophisticated foreign investment outside the tourism sector.
Most of the Maldives commercial laws were passed in the late 1980s and early 1990s amidst an influx of foreign investment. Subsequent amendments have often been stymied by the Majlis (Parliament), but despite recent political unrest in the country, the government has reiterated its commitment to encouraging investment.
A new Arbitration Bill was debated in Parliament on April 9. Subject to revision, it is expected to incorporate United Nations Commission on International Trade Law (UNCITRAL) rules. It is a direct result of the Maldives recent accedence to the New York Convention to enforce awards from international arbitration.
According to Mohamed Shahdy Anwar, senior partner at Suood Anwar & Co, the bill outlines the framework of a body in the Maldives similar to the Singapore International Arbitration Centre (SIAC) and the Kuala Lumpur International Arbitration Centre (KLIAC).
Practitioners say that the Arbitration Bill has broad support and will encourage the arrival of investors who have been reluctant to resolve disputes in Maldivian courts.
Additionally, the countrys 1996 Companies Act will undergo broad revisions. The Act currently lacks provisions for public disclosure, terms and conditions for company directors and establishing a company with only one shareholder or director. A draft was debated in Parliament last October, and a revised version will return sometime this year.
Lawyers hope that the amendments will also establish a clearer means to register foreign investment companies, currently regulated by the 1979 Foreign Investment Act.
Mohamed Fizan, a partner at Shah, Hussain & Co said this iteration of the Act has been a major complaint for lawyers and investors. It requires foreign companies to register with the Ministry of Trade and Industries, long considered an unpredictable regulatory body. A proposed solution is for foreign companies to register with the relevant sectors government authority.
The countrys tax laws, introduced last year, are also subject to changes. The proposed Corporate Tax Act and the Personal Income Tax Act, if passed, will repeal and replace the 2011 Business Profit Tax Act, the first to levy taxes on business profits.
Further legislation that will be debated by Parliament this year includes the Trust Act to provide for the establishment and regulation of trusts, and the Central Securities Depository Bill to further expand the Maldives Stock Exchange.