Fifth Amendment to the Grant of Rights Regulation

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The Fifth Amendment to the Grant of Rights Regulation was gazetted on 28 March 2022. The Amendment introduces revisions to the regulatory fees charged by the Ministry of Tourism (MOT) in relation to transfer of rights of tourist resorts. A new chapter covering the rules pertaining to the operation of separate resorts on separate islands formed or reclaimed in a lagoon located within a zone leased for the development of a tourist resort has also been included under the new Amendment.

Changes to the Regulatory Fees

  • Lease Transfer Fee

The Amendment reduces the Lease Transfer Fee payable where the leaseholder wishes to transfer the head lease of the island prior to construction/development completion of the resort from USD 100,000 to USD 10,000.

The Lease Transfer Fee applicable to transfer the head lease of developed resorts has now been set at USD 50,000. The Lease Transfer Fee is exempted where the leasehold rights of the island is sold due to a bank loan default of the leaseholder.

  • Share Transfer Fee

The Amendment abolishes the requirement to pay USD 100,000 as a Share Transfer Fee where shares in the leaseholding company or partnership are transferred prior to construction/development completion of the resort.

  • Head Lease Separation Fee

Under the new changes, the MOT has now introduced a Head Lease Separation Fee of USD 500,000 to enter into separate Head Lease Agreements for islands within a single lagoon (please refer to “Separation of Head Leases” below for additional details).  

Summary of the changes to the regulatory fees are as follows:

Description of Fee Previous Fee Revised Fee under the Fifth Amendment
1. Lease Transfer Fee – for developed Resorts – $ 50,000
2. Lease Transfer Fee – for Resorts under development $ 100,000 $ 10,000
3. Share Transfer Fee $ 100,000* Not Applicable
4. Head Lease Separation Fee – $ 500,000**

*Fee charged for applications where the share transfers were made, prior to construction/development completion of the resort, to third parties (who previously did not hold shares in the company).

**The Fee is applicable per island for which a separate Head Lease Agreement is to be entered into.

Operation of Separate Resorts within the same Lagoon under One Head Lease

The Amendment provides that where a zone leased for the development of a tourist resort contains more than one island within a single lagoon, the leaseholder has the right to sublease and/or enter into management agreements separately for each island in accordance with the Regulation. Previously the Regulation left the matters to the Head Lease Agreement and provided that leaseholders may sublease and/or enter into management agreements if the Head Lease Agreement provided such rights.

Pursuant to the Amendment, the leaseholder is now required to register the boundaries of the separate islands within the lagoon with the MOT prior to entering into the sublease and management agreements.

Separation of Head Leases 

The Amendment makes provisions for lessees to apply to the MOT to separate the Head Lease Agreement for each island formed or reclaimed within the area leased out under the Head Lease Agreement for tourism purposes. The procedure and requirements to be fulfilled for such applications has been detailed in the Amendment. The requirements that needs to be fulfilled for the separation of the Head Lease are as follows:

  1. If the islands have been reclaimed, such reclamations must have been carried out with the approval of MOT.
  2. All due payments to the government must have been duly settled.
  3. Payment of a Head Lease Separation Fee of USD 500,000 per island.
  4. Boundary charts must be prepared by a permitted surveyor in accordance with the Tourism Boundary Regulation.
  5. Charts denoting the lagoon boundaries of the islands must be prepared in accordance with the Regulation.
  6. The lagoon area must have been leased prior to the effective date of the 10th Amendment to the Tourism Act (i.e. before 27 December 2020). 
  7. A minimum of 200 metres must be present between the separated island(s).
  8. Obtaining no objection for the separation of the Head Lease from the Mortgagee, where the leasehold rights of the Head Lease Agreement signed to lease the area has been mortgaged.

The Amendment provides that the term of the separated Head Lease Agreement(s) will begin on the same date as the initial Head Lease Agreement. Similarly, the construction period under the Separated Head Lease Agreement would remain the same as the initial Head Lease Agreement.

Determination of the Boundary for Separated Islands within the Lagoon

The boundary determined for the islands within the Lagoon must not exceed the boundary of the leased area. The island boundary must consist of a minimum of 100 metres and separate access arrangements must be available for separated islands.

Effective Date

The Amendment became effective on 28 March 2022.