Companies Act 7/2023 introduced significant changes to how companies adopt Articles of Association (AoA). These changes aim to enhance corporate governance, ensure transparency, and standardize the internal management practices of companies. This article provides an overview of the key requirements for AoA.

1. General Requirement:
   • Clause 43 mandates that every company must have an AoA that does not contradict the provisions of the Act.
2. Information to be Included:
   • Clause 44 specifies the essential elements that must be included in the AoA for private companies:
     • Registered securities, including shares and bonds, cannot be sold to the public.
     • The number of members must not exceed 50.
     • Detailed procedures for conducting meetings, issuing notices, voting procedures, decision-making processes, and methods of passing resolutions.
     • The composition of the Board of Directors, including appointment, election, and dismissal procedures, and the manner of holding meetings.
     • Powers and responsibilities of the Directors.
     • Procedures for distributing company profits.
     • Protocols for maintaining financial accounts and records.
     • Appointment and dismissal procedures for the auditor, including their powers and responsibilities and
     • Procedures for winding up the company.
3. Amendment to the Articles of Association:
   • Clause 45 states that amendments to the AoA can only be made through a Special Resolution passed by the members of the company.
4. Model Articles of Association:
   • Clause 46 empowers the Registrar to formulate Model Articles of Association for private companies. Private companies can adopt these model articles either at the time of registration or later through a Special Resolution.
   • Clause 47 explains that companies adopting the Model Articles will be governed by them unless the company choose to formulate their own AoA, which also requires a Special Resolution, Statement of Compliance and registration with the Registrar.
   • Compliance statement referred herein, is a signed declaration issued by a lawyer assuring compliance with the requirements specified in the Companies Act and regulations.
5. Amendments to the Model Articles of Association:
   • Clause 48 allows the Registrar to amend the Model Articles and publish the changes in the Government Gazette.
6. Submission of Amendments to the Registrar:
   • Clause 50 mandates that amendments to the AoA or Memorandum of Association must be notified to the Registrar within 30 days, along with the required documents and fee.
7. Application to Court for Amendments:
   • Clause 51 allows a member or director to apply to the court for an amendment to the Constitution if it cannot be amended according to the Act or its Articles.
8. Obligation to Comply:
   • Clause 52 specifies that the AoA and the Memorandum of Association are binding on the company, its members, and its directors. All company operations must comply with these documents.
9. Access to the Constitution:
   • Clause 53 grants members the right to request a copy of the AoA. If the company does not provide it, members can apply to the Registrar for a copy, subject to a fee.

Important deadline for private companies registered prior to 1st January 2024

Private companies registered before the enactment of the new Act must ensure their AoA complies with the new requirements before 31 December 2024. Provisions that contradict the new Act will be considered null and void. Existing companies are encouraged to adopt the Model Articles formulated by the Registrar or amend their current articles to ensure compliance.

The Companies Act 7/2023 brings about essential reforms to the corporate governance landscape in the Maldives. By standardizing the Articles of Association, the Act aims to provide a clear and consistent framework for the operation of companies, fostering a stable and transparent business environment. Companies are urged to familiarize themselves with these new requirements and ensure timely compliance.

About this guide: This guide offers a general overview Model Articles of Association of Private Companies. It’s for information purpose only and shouldn’t replace legal advice. We may update this guide periodically to reflect changes in the regulation.