The People’s Majlis has commenced public consultation on the proposed amendments to the Decentralisation Act, which seeks to enhance the financial management frameworks of local councils.

The People’s Majlis announced on Monday that observations and feedback will be accepted until 1:00 p.m. on August 5, 2025.

The amendment bill, submitted by South Fuvahmulah MP Ibrahim Hussain on behalf of the Government, outlines changes to the scope of business activities permitted for local authority companies established by councils. It also proposes revisions to policies on the allocation of State funding and introduces new rules for council decision-making in the final year of their term.

Under the proposed changes, local authority companies may only engage in business activities that are not already carried out by private individuals in the island or islands under the company’s jurisdiction, are essential for the infrastructural development of those islands, and require an investment or capital exceeding MVR 10 million.

If a registered company’s business activities do not meet these criteria, they must be discontinued within 90 days of the amendment coming into force.

The bill also specifies that councils cannot charge rent for land or buildings allocated to parties providing essential public services. Furthermore, State funding for councils will be calculated after deducting any overdue taxes or payments owed to the State for more than six months.

In addition, all council bank accounts must be maintained in accordance with regulations set by the Ministry of Finance and Planning, and councils must provide account statements to the Ministry upon request.

The proposed amendments further set conditions on certain actions by councils within 365 days of the end of their term, unless these actions are carried out in accordance with regulations set by the Ministry of Finance and the Local Government Authority (LGA). These conditions cover:

Finally, the bill requires that any amendments to rules and regulations under the Act, as well as new regulations, be published in the Government Gazette within 30 days of the bill’s passage, ratification, and enforcement.