Every so often a client sends us an executed agreement and asks us to confirm it is binding. Occasionally we have to write back and explain that it may be worthless, because somebody signed it on a Sunday.
Clause 6 of the Constitution provides that the Sabbath shall be kept holy in Tonga, that no person shall practise his trade or profession or conduct any commercial undertaking on that day except according to law, and that any agreement made or witnessed on that day shall be null and void and of no legal effect. The provision has sat in the Declaration of Rights since 1875 and took its current form by amendment in 1971.
Then remember where Tonga sits on the map. We are among the first places on earth to see Sunday arrive. A Saturday afternoon closing in Sydney or Los Angeles can be a Tongan Sunday, and so can an electronic signature timestamp. Check the Tongan date before anyone signs.
The rest of Tongan commercial law will feel broadly familiar to anyone trained in a common law system. The difficulties arise in a small number of areas where the Kingdom takes its own path, and those areas tend to be the ones with money attached.
Land is not for sale here
The Constitution declares that all land is the property of the King, and that it shall not be lawful for anyone at any time, whether the King, the chiefs or the people, to sell any land whatever in the Kingdom. Land may be leased, and mortgaged under the Land Act, but it cannot be sold to anybody, Tongan or foreign.
What a foreign investor can obtain is a lease, and every lease requires the consent of Cabinet, granted through the Minister of Lands. Terms beyond 99 years require the King in Council. The beach frontage belongs to the Crown from 15.24 metres above the high water mark, which is worth knowing before you commit to a waterfront site.
Two practical points follow. Cabinet consent should be built into your conditions precedent with a realistic timeline attached, because it takes time and it is discretionary. And you should be sceptical of any arrangement an allotment holder offers privately without Ministerial and Cabinet approval. A landholder's interest is generally personal and successional, so an unapproved arrangement can be challenged by his heirs after his death, which tends to be the worst possible moment for a thirty year hotel lease.
Anyone offering to sell you land in the Kingdom either misunderstands the law or is relying on you to misunderstand it.
One foreign share is enough to change your legal character
This is the structuring error we see most often, and it is an expensive one.
Under section 6 of the Foreign Investment Act 2020, a company is an overseas person if a foreign person holds a beneficial interest in even one of its securities, or controls even one vote at a meeting, or can determine the composition of its board. There is no percentage threshold anywhere in the section. The 25 per cent control test people remember from the repealed 2002 Act no longer exists.
So a locally incorporated vehicle with a single foreign shareholder requires a foreign investment registration certificate like any other overseas investor. If the activity it proposes to carry on happens to be reserved, it cannot carry that activity on at all, however Tongan the remaining shareholders may be. The section catches partnerships, unincorporated joint ventures and trusts on similarly wide terms, including any trust with one overseas trustee.
Three lists, and you need to know which one applies
Schedule 1 to the Business Licences Act sets out the prohibited activities, which are closed to everyone. They cover toxic and nuclear waste, pornography, prostitution, endangered species and weapons of warfare.
The Foreign Investment Regulations 2021 then reserve a further set of activities to domestic investors. Taxis and buses, guesthouses and youth hostels, used car sales, bread manufacture, traditional Tongan cultural performance, the export of green and mature coconuts, inshore fishing and fish processing.
There is a trap in that list for tourism investors. Guesthouses and youth hostels are reserved, while hotels and larger resort operations are not. Where a particular project falls on that line deserves attention at concept stage rather than after the lease has been signed.
Three approvals, in one workable order
Investors usually budget for a single approval. There are three, and they interlock.
The foreign investment registration certificate comes first, since section 12(1) prohibits an overseas person from commencing any business activity without one. It costs TOP 500 and the Registrar has five working days to determine a complete application, so most of the delay we see comes from applications that were incomplete on filing.
The business licence follows, because section 5(d) of the Business Licences Act prevents the Registrar from issuing one to a foreign investor who has no certificate. Under the Business Licences Regulations 2025, made in November last year, the application fee is TOP 100 with an annual renewal of TOP 50, exclusive of consumption tax, and the process now runs through an online register.
The business visa comes last and is not something to improvise. A visitor's visa does not permit business activity, the business visa must be applied for before entry into the Kingdom, and operating without one is an express statutory ground for cancelling the licence.
One deadline catches people out. A foreign investment certificate expires if the business activity has not commenced within one year of issue. Investors who register early and then spend eighteen months negotiating a lease sometimes discover the certificate lapsed while they were doing it.
What the statute book leaves out
Tonga has no Partnership Act. There is no default law on authority, profit sharing, retirement, dissolution, or the liability of one partner for the acts of another. A partnership deed drafted in Auckland or Sydney assumes a background statute that does not exist here, and will arrive full of gaps nobody intended. Deeds for Tonga have to be exhaustive.
There is also no company limited by guarantee, because section 13 of the Companies Act requires every company to have at least one share. Foreign membership and not for profit structures cannot simply be translated across.
Nor is there a general employment statute for the private sector. The Employment Relations Bill 2020 has not been enacted, so your contracts of employment will carry considerably more weight than they would at home.
The part that decides whether any of it works
Registration is the easy half. Operating here depends on relationships.
Tongan commercial life runs on anga fakatonga, the Tongan way, and its central values carry straight into the boardroom. Faka'apa'apa is respect, particularly for rank and age. Tauhi vā is the active maintenance of relationships over time. Fatongia is obligation to family, church and community. Your first meeting is likely to be about who you are and who you know rather than the term sheet, and treating that stage as an obstacle tends to end the conversation early.
You will also need to learn to hear a soft refusal. Direct disagreement is often avoided in order to preserve harmony, so silence, deflection or a warm "we will see" may well be your answer. Generous hospitality should not be read as commitment. Punctuality is more elastic than you are used to. Church and family obligations are genuine, recurring and expensive for your staff, and employers who plan around them keep people longer.
Kava and reciprocal gift giving are how trust gets built here, which puts them in tension with the Foreign Corrupt Practices Act, the UK Bribery Act and their Australian and New Zealand equivalents. A written gifts and hospitality policy calibrated to local custom is worth having in place before your team arrives. Take care, too, about admiring a particular object in someone's home, since your host may feel obliged to give it to you.
Modest dress is expected, especially near churches and government offices, and it comes from the same idea of respect that governs the rest.
Build in Tonga with the right legal foundation
Doing business in Tonga rewards preparation, local knowledge and careful sequencing. The strongest investors do not treat incorporation, foreign investment approval, business licensing, land access, immigration and commercial contracts as separate tasks. They build them into one coherent market-entry plan before capital is committed.
The essential lesson is simple: Tonga is open to serious business, but its legal and cultural foundations must be respected. Sunday trading rules are enforceable law. Land is governed by a distinctive constitutional system. Foreign ownership can change the regulatory character of a company. Relationships matter, but they work best when supported by clear contracts, sound governance and properly obtained approvals.
Semper Fidelis Pacific Law & Advisory assists founders, investors, companies and institutions with business establishment in Tonga, foreign investment structuring, company registration, licensing, land and lease due diligence, employment documentation, regulatory compliance and commercial agreements.
If you are planning to establish a company, invest, contract, lease land or operate a business in Tonga, obtain advice before you sign. An early legal review can protect your investment, shorten the approval process and give your Tonga business a stronger foundation from the beginning.
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