Investing in the Maldives: Foreign Investment Act 2024

Mar 5

The Foreign Investment Act 2024 (Act No. 11/2024) came into force on 3 December 2024. This comprehensive legislation affects foreign investors operating or seeking to establish operations in the Maldives, particularly regarding foreign investment eligibility, investment approval processes, sectoral classifications, and investor protections. This article highlights five key aspects that investors should be aware of.

1. Who Can Apply for Foreign Investment Approval?

The Act specifies which categories of parties are eligible to apply for foreign investment approval.

The following parties may submit applications:

Foreign citizens
Foreign companies:
- Companies wholly owned by foreigners
- Companies jointly owned by Maldivians and foreigners
- Companies established abroad but wholly owned by Maldivians (directly or indirectly)
Businesses established in Maldives:
- Partnerships with foreign shareholding
- Companies with foreign shareholding
- Companies re-registered in the Maldives under the Companies Act
Joint venture arrangements between Maldivians and foreigners
Foreign associations
Other legal entities established in foreign countries

Additionally, if shares in a Maldivian company or partnership are being transferred to a foreign party, foreign investment approval must be obtained before the transfer. However, this requirement only applies if the business sector is one where foreign investment is permitted under the Act.

This broad applicability ensures that various structures, from individual investors to corporate entities, can participate in the Maldivian economy, provided they meet the eligibility and sectoral requirements.

2. Foreign Investment Sectors in Maldives: Open, Restricted, and Closed

The Act categorises all business activities into open, restricted, and closed sectors for foreign investment purposes.

Open sectors permit 100% foreign ownership in the Maldives, subject to minimum investment thresholds. These include:

Construction of resorts (Projects above 10 million USD),
Banking and financial services, except insurance and pension funding,
Operation of tourist resorts, etc.

Restricted sectors impose limitations on foreign ownership percentages, typically requiring joint ventures with Maldivian partners. For example, dive centres and dive schools permit a maximum of 65% foreign ownership.

Closed sectors are reserved exclusively for Maldivian nationals and entities. Foreign investment is prohibited in:

Wholesale and general retail trade,
Travel agencies and tour operators,
Construction of buildings (Projects below 15 million USD), etc.

3. Foreign Investment Approval Stages

The Act establishes a structured approval process consisting of four stages that foreign investors must complete to obtain authorisation for their investment.

The approval stages are:

Stage 1 - Issuance of No Objection Letter: Foreign investors who meet the eligibility requirements submit their application to the Ministry of Economic Development and Trade. Upon review, the Ministry issues a No Objection Letter, which constitutes preliminary approval to proceed with the investment.
Stage 2 - Fulfilment of Obligations and Procedures by the Investor: After receiving the No Objection Letter, investors must fulfil specific obligations and complete required procedures. This includes registering a legal entity with the Registrar of Companies.
Stage 3 - Issuance of Foreign Investment Licence: Once the entity registration and other procedural requirements are completed, the Ministry issues the Foreign Investment Licence.
Stage 4 - Signing the Investment Agreement: The final stage requires executing a Foreign Investment Agreement between the investor and the Ministry.

Investors must commence operations within six months of signing the investment agreement and receiving their investment licence.

4. Foreign Investor Rights and Protections in Maldives

The Act provides legal protections for foreign investments.

Key protections include:

Fair and Equitable Treatment: Foreign investments receive full protection and security in accordance with transparent policies.
Repatriation of Capital and Profits: Investors can freely transfer capital and profits from their investment in Maldives back to their home country, except in limited circumstances specified in the Act.
Protection Against Expropriation: Investments cannot be expropriated except under specific conditions outlined in the Act, which require due process and adequate compensation.
Multi-Tiered Dispute Resolution: Investors may lodge complaints with the Ministry for administrative review, and if unsatisfied, may pursue remedies through Maldivian courts or as provided in the Investment Agreement.

These protections provide legal recourse if issues arise with regulatory authorities.

5. Transitional Arrangements for Existing Foreign Investments

Foreign investments that were established and operating under a Foreign Investment Licence issued under the previous Foreign Investment Act (Act No. 25/79) are deemed to be authorised investments under the new Act.

Businesses in newly restricted or closed sectors have been granted transition periods to restructure or exit.

Conclusion

The Foreign Investment Act 2024 establishes a comprehensive legal framework for foreign investment in the Maldives. We assist investors in understanding these requirements and ensuring full compliance, from initial approval applications through ongoing regulatory obligations.

This article provides a general overview and does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. This information is based on the Foreign Investment Act 2024 (Act No. 11/2024), the Ministry of Economic Development and Trade's Gazette Announcement No. (IUL)101-IM/PRIV/2025/2 (Annexes 1 and 2), and the Foreign Investment Application Form. Businesses should seek professional legal advice regarding their specific circumstances. For further information, kindly contact contact@nadhanazeer.com.