Councils to form local authority companies

Addu City Council | Photo: Sun

Malé, Maldives – Councils can now apply to form local authority companies and conduct business according to a new regulation gazetted today.

The new regulation allows Local Councils to partner with private citizens in businesses, however, the Councils must limit to a maximum of 20% shares in the company.

The regulation states that businesses conducted by the Council itself must be under a local authority company, registered within 9 months of passing of the regulation. Local authority companies is limited to local councils only and can have three directors. Local authority companies can now be registered under the Economic Ministry of Maldives.

Local authority companies must be named after the atoll and island name for an island council, the atoll name for an atoll council and city name for a city council, with “Local Authority Company Limited” added at the end.

This regulation is formed under the Decentralisation of the administration divisions of the Maldives act 7/2010. Under the Act, Councils are encouraged to increase the participation and role of NGOs and the private sector in development efforts and are mandated to share this information with the public if their share of investment exceeds one-third of the total estimated income. Councils may also seek loans from banks, international financial institutions, or other councils. They can also enter into contracts with private parties. In all of these instances the Local Government Authority (LGA) must be informed.