Transition Period Ends for Foreign-Owned Retail, Wholesale, Logistics Firms Under 2024 Investment Law

Businesses with foreign shareholding in wholesale, retail and logistics (CSA/GSA/PSA) must fulfil the applicable Foreign Investment Entry Requirements (FIER) to continue operating, following the end of their transition period on 8 October 2026.

The Ministry of Economic Development, Transport and Trade said the deadline marks the start of the applicable compliance and enforcement process. Conducting activities in these sectors without meeting the requirements may constitute a contravention of the Foreign Investment Act (Law No. 11/2024).

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The Ministry is reviewing applications from businesses seeking to regularise their operations through localisation, restructuring or other compliance measures. Companies that have formally engaged with the Ministry and begun the process must complete their outstanding requirements within the timeframes set by the Ministry and follow any directions issued.

Businesses that had not submitted a transition application or engaged with the Ministry by 8 October will receive formal notices under the Act. These will specify the period within which companies must take the necessary steps, including ceasing activities that are not permitted under the FIER where required.

For companies seeking to remain in these sectors through localisation, transferring shares to Maldivian shareholders must result in meaningful local ownership and participation in the business. The Ministry said a nominal or formal change in shareholding would not meet the policy’s objectives.

These companies will need to provide additional information and supporting documents alongside the standard share transfer requirements. Assessments may examine payment arrangements, sources of funds and financing, beneficial ownership, effective control and any continuing rights or interests held by the foreign shareholder transferring the shares or a related party. The role and participation of incoming Maldivian shareholders will also be considered.

Detailed requirements and procedures for these transfers will be issued separately by the Ministry.

Failure to comply with the requirements or Ministry directions may constitute a contravention under section 23 of the Act and lead to enforcement action under sections 24 and 25. The Ministry said non-compliant companies may face enforcement measures whether or not they have previously engaged with it, and urged affected businesses that have yet to begin the process to do so without delay.