Local Councils Permitted To Form Local Authority Companies & Conduct Business Alongside Private Parties

According to a new regulation publicized by the Ministry of Economic Development on Sunday, Local Councils now have the discretion to form ‘local authority companies’ and conduct business alongside private parties. This regulation has been formed under the Decentralization Act.

Whilst business conducted by a Local Council must be directly through a local authority company. If any existing council wish to form such a company, they must do so within 9 months from the publication of the regulation through the Ministry of Economic Development. Accordingly, local authority companies formed under regulation shall only be limited to local councils whereas it can only consist of three.

Even though local authority companies can partner up with private parties to form joint ventures their shares must limit to 20% in such a company. 

The new regulation publicized also states that local authority companies must be names after the toll and island name for an island council, the atoll name for an atoll council and city name for a city council – all of which must be followed by “Local Authority Company Limited” at the end.