The People’s Majlis has passed the third amendment to the Maldives Securities Act 2/2006, marking a significant step towards enhancing foreign investment opportunities in the country’s capital market. The amendment was passed on 13th August 2024 during the 27th sitting of the 20th session of the Majlis and was ratified by the President on 3rd September 2024.
This key amendment introduces provisions allowing the Capital Market Development Authority (CMDA) to create a regulatory framework specifically tailored for foreign investors looking to engage in securities investments in the Maldives. The primary objective is to simplify and streamline the process for foreign investors, enabling them to obtain regulatory approvals more efficiently and conduct their financial transactions with greater ease.
A notable aspect of the amendment is the distinction made between Foreign Portfolio Investors (FPIs) and Foreign Direct Investors (FDIs). FPIs are now exempt from the requirements that FDIs must adhere to under the Foreign Investment Law 25/79 and the Business Registration Act 18/14. This move aims to make the Maldives’ capital market more attractive to foreign investors interested in cross-border investments.
In addition to changes in the Securities Act, amendments were also made to the Business Registration Act 18/14 to facilitate the new framework. Both amendments were passed by the Majlis on the same day.
The CMDA has expressed optimism about these regulatory changes, anticipating that they will create a more favourable environment for foreign investment in the Maldivian capital market. The authority has already initiated efforts to draft a regulation that outlines the roles and responsibilities of key stakeholders, such as the Ministry of Economic Development, the CMDA itself, and market intermediaries, in the registration process of foreign investors.
The forthcoming regulation will detail the eligibility criteria and requirements for establishing a Securities Account with the Maldives Securities Depository and a Securities Inward Investment Account with local banks. It will also define the national thresholds and limits that apply to specific industries or sectors, as stipulated by the Ministry of Economic Development. A robust process for monitoring compliance with these thresholds is also in the pipeline, along with plans for a centralised digital system to administer the new framework.
The CMDA, supported by the Ministry of Economic Development and various stakeholders, has committed to ensuring that the anticipated outcomes of this development are realised. The authority has acknowledged the contributions of all stakeholders involved in this significant milestone and expressed hope for further advancements that will benefit the market and the country as a whole.
These amendments signal a strong commitment from the Maldivian government to create a more dynamic and open capital market, aligning with global investment trends and standards.
