Overview of resident director requirement

Here we provide an explanation of the ‘resident director’ requirement for a public company incorporated in the Maldives and how this requirement can be satisfied.

Resident director requirement

The Companies Act (Law No. 10/96) requires that a private company incorporated in the Maldives must have at least two directors, at least one of whom must be a resident of the Republic of Maldives.Many foreign investors wrongly assume that the resident director requirement means that a company must appoint at least one Maldivian national as a director of their company.  The residency test is satisfied if all directors of the company are foreign, provided that one of the directors holds a valid work permit / visa.A foreign national who is a director of a company can be nominated as the resident director of that company, whether or not they hold the required permit / visa at the time of nomination.  If such nominated person does not hold the required permit / visa at the time of nomination, then the Ministry of Economic Development will assist that person to obtain the required permit/ visa to hold that position.  The role of the resident director simply requires this person to be the first point of contact for Ministry of Economic Development for any queries in relation to the company.

Role of resident director

In the event of any legal proceedings against the company, the resident director will be the company representative and will be served with notice of such proceedings.  The resident director will also receive notices issued by the government to the company, except notices in respect of tax which will be issued to the person nominated as the ‘tax responsible person’.The tax responsible person is the person who is nominated by the company as the primary point of contact for MIRA in respect of tax matters related to the company.  A company may nominate the resident director as the tax responsible person.

Directors’ liability

Directors of companies registered in the Maldives have fiduciary duties and there are circumstances in which a director will be held personally liable (for example, the finance director may be personally liable for a failure to submit tax returns if the failure to submit was the responsibility of the finance director).  However, there is little literature to suggest that a director has been held personally liable in the Maldives except in matters of criminal law where the corporate veil is lifted.

DISCLAIMER

The contents here are general in nature and are provided for information purposes only. Its contents do not constitute professional legal advice. Every user is requested to seek independent professional advice in specific matters.