The Maldives is a unitary state and a sovereign, independent and democratic Republic founded on the principles of Islam.
The fundamental principles and framework for the functioning of the executive, legislative and judicial branches are specified in the Maldivian constitution.
A) EXECUTIVE
Executive power is vested in the President, who is the Head of State, the Head of Government and the Commander in Chief of the Armed Forces.
The Cabinet of Ministers are appointed by the President, and discharges the responsibilities and functions assigned to them by the President.
The current President His Excellency Abdulla Yameen Abdul Gayoom, was elected in November 2013 to serve a term of 5 years between 2013-2018.
B) LEGISLATIVE
The legislative branch of the Maldives is the People’s Majlis, composed of members representing parliamentary constituencies that currently number at 85. The members are directly elected in a vote taken among their respective constituents and serve for a term of 5 years.
C) JUDICIARY
The Judicial power rests with the Supreme Court, the High Court and Lower Courts.
The Supreme Court is the highest authority for the administration of justice in the Maldives. The Chief Justice is the head of the Supreme Court.
2.2 LEGAL SYSTEM:
The Maldives practices a tripartite presidential system of governance ushered in with the enactment of the current Constitution in 2008. The Maldivian legal system is a common law system with the courts having a wide leeway to interpret and apply the law.
Statutes and delegated legislation in the form of Regulations appear on the Attorney General’s Office’s (the AGO) website (http:// www.mvlaw.gov.mv). The AGO has also recently published translations of local statutes as part of a publication titled Consolidated Laws of Maldives. The AGO is also working with LexisNexis Asia Pacific to introduce an online database of laws and court judgments in both the local Divehi language and English.
Maldivian law is a complex admixture of Shariah & English common law. However, trade-related legislation is influenced mostly by similar statutes and common law principles from English and other Western jurisdictions. The judiciary has also embraced foreign case law from jurisdictions as diverse as England, the United States and Australia as a guide to interpretation of local trade-related statutes. Common law principles from Western jurisdictions have also been endorsed and applied in several commercial cases before Maldivian courts. Meanwhile the Contracts Act (Law No.: 4/91) allows contracting parties to agree on the law that should govern their agreement.
The court system is adversarial. There are three tiers of courts. In commercial matters the lowest tier is the Civil Court (in Male’ City – which hears high-value commercial claims) and magistrate courts (in the islands). Appeals are heard by the High Court which has branches in Male’ City as well as the North and South of the country and finally by the Supreme Court which stands at the apex of the judiciary.
With the enactment of the Arbitration Act (Law No.: 10/2013) the Maldives now recognizes arbitration as an alternative means of dispute resolution. Also although Maldives is not a party to the New York Convention, foreign arbitral awards are enforced under Section 72 of the Arbitration Act.
2.3 KEY BUSINESS LEGISLATIONS
The key pieces of legislation relating to registering and operating a business in the Maldives are provided below:
Business Registration Act:
Requires every person carrying on business in the Maldives to register the business entity in one of the following prescribed forms:
• Company
• Partnership
• Cooperative Society
• Sole Proprietor
Companies Act:
Governs the registration as well as the regulatory and operational requirements for public and private companies established in the Maldives.
Partnerships Act:
Governs the formation and regulation of Partnerships in the Maldives.
Cooperative Societies Act:
Governs the formation and regulatory matters on the establishment and operation of Cooperatives in the Maldives. This form of business is confined for Maldivians.
Sole Proprietorship Act:
Governs the registration of sole proprietorships and the specific procedures relevant to operating a sole proprietorship in the Maldives. This form of business is confined for Maldivians.
Import/Export Act:
Governs the regulatory regime relating to import, export and reexport of products, including the import duty regime and provisions relating to duty exemption.
Foreign Investment Act:
Governs all foreign investments that are established and operated in the Maldives, except those foreign investments allowed under the Special Economic Zones Law.
Special Economic Zones Act:
Provides for the principles and processes for the designation of Special Economic Zones in the Maldives, and the incentives and regulatory flexibilities allowed for such investments.
Business Profit Tax Act:
Outlines the provisions for the establishment and implementation of an administrative framework for the purpose of implementing Business Profit Tax in Maldives. It outlines the applicable tax rates, the registration procedures and tax calculation principles.
Goods and Sales Tax Act:
Outlines the provisions for the imposition of “Goods and Services Tax”, on the value of goods and services supplied in the Maldives. The law makes a clear distinction between suppliers of tourism goods and services and suppliers of other (general) goods and services, which are taxed at different rates.
2.4 PRINCIPAL REGULATORS:
Ministry of Economic Development is the authority overseeing the implementation of laws & regulations governing the registration of business entities in the Maldives. The Ministry also has the mandate to implement the legal regime for foreign investments as well as all other laws and regulations pertaining to general trading, consumer and intellectual property rights.
The Maldives Monetary Authority (MMA) acts as the Central Bank of the Maldives and was established on 1st of July 1981, under the mandate provided by the “MMA Act” of 1981. MMA is responsible for supervising and regulating institutions in the financial sector, apart from securities related institutions, which fall under the purview of the Capital Market Development Authority.
The Capital Market Development Authority (CMDA) is the institution responsible for developing and regulating the capital market and the pension industry in the Maldives. It has statutory powers to license securities market intermediaries including brokers, dealers, investment advisers, asset managers, custodians, credit rating agencies as well as the stock exchange and central depositories.
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