Type: Subordinate legislation
Citation no: 2021/R-44
Publication: Maldivian Government Gazette
Authority: Ministry of Finance
Publication date: 22 March 2021
Effective date: 22 March 2021
Pursuant to: s 5 (g), Tourism Act
Keywords: Sale of shares, Joint Venture Company, Tourist Resorts
Topics: • Joint Venture Companies with the governments’ shares
• Transaction for the sale of government shares in Joint Venture Companies.
JOINT VENTURE COMPANIES WITH THE GOVERNMENTS’ SHARES
(1) Which companies are considered as Joint Venture Companies?
For the purpose of the Regulation on Sale of Shares of the Government in
the Joint Venture Companies Incorporated to Lease Islands, Lands, &
Lagoons for the Development of Tourist Resorts (the “Regulation”), the
company to be regarded as a joint venture company incorporated with the
government shareholding for the lease of islands, lands & lagoons for the
development of tourist resorts (“Joint Venture Company”), the following
requirements must be met:
o The company must have been incorporated before the 10th
amendment to Law no. 2/99 (Tourism Act) came into force;
o The company must have a third-party shareholder who holds any
amount of paid-up shares in the authorised share capital of the
company, apart from the Maldivian government; and
o The Memorandum of Association and the joint venture agreement of
the company must state that the only objective of the company is to
develop and operate tourist resorts.
(2) When is Government obligated to act in accordance with the Regulation?
The government is obligated to follow the Regulation, only when the
shares of the government in the Joint Venture Company are being sold to
the existing shareholders of the Joint Venture Company.
If the Government is selling its shares in the Joint Venture Company to a
third party who is not a shareholder in the Joint Venture Company, then
Government is not obligated to comply with the Regulation.
(3) Decision for the sale of shares
The decision to sell the shares of the government in the Joint Venture
Company to the existing shareholders, will be made by the Ministry of
Finance, in accordance with the direction from the President. This decision
by the Ministry of Finance must be shared with the Board of Privatization
and Corporatization (the “Board”).
TRANSACTION OF THE SALE OF SHARES
(4) Execution of the sale transaction
After the decision for the sale of shares have been made and the same has
been shared with the Board by the Ministry, everything in relation to the
sale transaction will be undertaken and carried out by the Board, pursuant
to the procedures stipulated in Law no. 3/2013 (Privatization,
Corporatization, Monitoring and Evaluation of Government Businesses Act).
(5) Determining the price of shares
To determine the price of the shares of the government in a Joint Venture
Company, a rate of USD 5.00 (United States Dollars Five), per percentage
of the shares of the government in the Joint Venture Company, is to be
multiplied with each square meter of the size of the island, land or lagoon
leased to that Joint Venture Company.
For an example:
if the island, land or lagoon has 1000 square meters and the shares of the
government in the Joint Venture Company is 10%, the price of shares will
be: US$ 5.00 x 10 x 1000 = US$ 50,000.00.
AGREEMENT FOR THE SALE OF SHARES
(6) Requirements of the Sale & Purchase Agreement
Pursuant to the Regulation, the transaction for the sale of shares of the
government in the Joint Venture Company shall be carried out under a
written agreement between the government and the shareholder(s), which
must specify the following details:
o number of shares being sold;
o manner of payment of sale price; and
o duration for repayment of sale price.
(7) Payment for the shares sold
The government is at discretion to allow the buyer of the shares to make
the payment in instalments within a period (not exceeding 18 months)
specified under the agreement or to receive the payment in full.
TRASNFER OF SHARES
The Joint Venture Company must ensure to complete all procedures of
share transfer, pursuant to Law no. 10/96 (Companies Act of Maldives)
within a maximum period of 15 (fifteen) business days, from the date of
receipt of the full payment for the shares.
Disclaimer:
* This material has been prepared for informational purposes only. It is not intended to provide and should not be relied upon or construed as a legal opinion or legal advice regarding any specific issue, nor is this information intended to create, or receipt of it does not create, an attorney-client relationship between the reader and the firm.
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