Econ Ministry publicizes rules on formation of council companies

Regulations have been made to facilitate the formation of companies by local councils.

On Thursday, the Ministry of Economic Development issued amendments to the regulations on establishing local authority companies by local councils and doing business with the private sector.

According to the amendment, councils will be permitted to carry out business activities after considering the number of private businesses that carry out the same activity on the island and after measuring the impact on business competition and the benefits to the people. The qualifications of the directors of the company will be determined by the Registrar of Companies in consultation with the Local Government Authority.

“Prior to appointment, every person appointed as a member of the Board of Directors must complete a training program prescribed by the Registrar to familiarize himself or herself with the duties and responsibilities of members of the Board of Directors,” the regulation states.

The Economic Ministry’s regulation requires a company to register the permitted business activities included in its articles of association with the ministry. The regulations also outline the measures that would be taken if the company partakes in business activities other than the permitted business for that company. A fine of MVR 10,000 will be imposed if any business activity is carried out other than that permitted under these rules.