1. Corporate and Legal Structure
An investment fund in Mauritius is commonly structured as a public company registered under the provision of the Companies Act 2001 and licensed as a Category 1 Global Business Licence company under the Financial Services Act 2007. The investment business of the company is regulated under the Securities Act 2005 (as amended in 2007) and by the "best industry practices" rules set out by the Financial Services Commission (FSC).
Such a structure, referred to as an investment company, is defined as one where the company's business consists of investing its funds mainly in securities with the aim of spreading investment risks and giving members of the company the benefit of the results of the management of its funds.
An investment company can take the form of:
- A close-ended company which has a fixed share capital. Investors do not have the right to call for their shares to be redeemed at net asset value by the company. A close-ended company can be listed on the stock exchange, thus enabling investors to buy and sell shares on the public market and thereby preventing any lock in.
Such a company may be formed with a limited life after which the assets are distributed to investors upon winding up.
- An open-ended company which has a variable share capital. Investors are allowed to redeem their shares at net asset value at pre-determined times in accordance with the Constitution (M&A) of the company.
- A private equity fund which invests in shares or stakes of private companies. It is not allowed to invest in public companies or securities.
- A mutual fund which invests in units of funds which is already investing in portfolio companies.
It is also possible to constitute the foregoing structures as multi-class or umbrella funds. The umbrella fund will comprise of two or more sub funds and investors subscribe for shares or units in specific sub funds, each of which has its own investment policy with segregated assets and accounting records.
Investors can switch their investments from one sub fund to another without redeeming their shares or units. An investment company in Mauritius can also be set up as one of the sub funds of an umbrella fund established outside Mauritius.
The share capital of the investment company is represented by registered shares, although share warrants may also be issued. The shares should have a par value and no bearer shares or debentures are allowed.
2. Registration Requirements
In order to operate as an investment company in Mauritius, prior approval of the FSC must be sought. In considering an application, the FSC needs to be satisfied of the following:
- the track record and credentials of the promoters;
- the fund's structure and objectives;
- the investors and the market targeted;
- the types of investments the fund will be dealing in;
- the track record of the investment manager, independent custodian and administrator; and
- proof of compliance with regulations in third countries, as appropriate (e.g. the Stock Exchange Board of India's approval, if investment is to be made in India).
Once the FSC is satisfied with the above, it may give an approval in principle so as to enable all constitutive documents to be prepared and the company to be incorporated.
The FSC generally wishes to satisfy itself that, as far as possible, substance and central administration are in Mauritius. To this end, the investment company must have a local administrator, a local independent custodian and a local auditor.
The requirement that central administration is situated in Mauritius implies that:
- the accounts are kept and the accounting documents are available in Mauritius;
- the principal office of the investment company is situated in Mauritius;
- issues and redemptions of shares are carried out in Mauritius; and
- the calculation of the Net Asset Value (NAV) is carried out in Mauritius.
The above does not exclude the possibility of the investment company obtaining assistance for the management of its assets from an investment adviser established overseas, nor does it prevent management decisions in relation to investments and disinvestments being executed overseas. Also, the requirement for the location of the issuance and redemption of shares to be in Mauritius does not preclude foreign intermediaries from participating in the placing and redemption operations, as distributors or nominees.
In appropriate circumstances, it is also possible to establish a management or advisory company in Mauritius in order to take advantage of the beneficial tax regime.
An investment company registered in Mauritius is liable to taxation on its income at the rate of 15%. The laws of Mauritius allow an underlying foreign tax credit, equal to the amount of foreign taxes paid, up to the amount of tax due in Mauritius.
In the absence of proof, the amount of foreign tax paid is presumed to be 80% of the Mauritius tax. The effective tax rate can thereby be reduced to a maximum of 3%.
Investment funds which are centrally controlled and managed in Mauritius can, with the approval of the Director General of the Mauritius Revenue Authority, accede to the benefits of Double Taxation Agreements. Furthermore it should be noted that there is no withholding tax on dividends, capital gains and interests.
All investment funds must entrust the custody of their assets to an approved local independent custodian – generally, a banking institution. The custodian carries out operations concerning the day-to-day administration of the assets of the investment fund and is responsible for ensuring that the sale, issue, redemption, and cancellation of shares are done in accordance with the investment management regulations of the investment company.
The custodian can delegate some of its activities to an approved third party, but remains principally liable.
Investment funds are required to file with FSC an audited annual report in accordance with the International Financial Reporting Standards (or other applicable standards). These reports must include, at least, the following:
- a statement of assets and liabilities, including the NAV;
- the number of shares outstanding;
- the NAV per share; and
- details of the investment portfolio and the movements in the period, disclosed by types of securities and type of market analyzed as a percentage of the investment fund's net assets.
The FSC can request other information in addition to the published reports and reporting requirements. It also has the right to inspect or to cause inspection of the books and records of the investment fund.
Investment funds can be listed on the Stock Exchange of Mauritius Ltd.
8. Fees payable for the Listing of Investment Funds
In the case of a "multi-class fund" or an "umbrella fund", the following will apply in respect of the initial and annual listing fees payable:
No. of different classes
Initial Fee / Annual Fee (Rs)
US$ 1,500 (per sub-fund)
US$ 5,000 (fixed)
US$ 7,500 (fixed)
9. Incorporation Procedures
The application for the incorporation of an investment fund as a Global Business Licence (Category 1) company must be made through AAMIL Ltd.
The main documents that are required for such are as follows:
- Constitution (2 copies);
- Consent forms of directors, shareholders and the secretary;
- Letters of reference from the bankers of the directors, promoters and authorised signatories;
- Legal certificate from local law practitioner;
- Set of constitutive documents of the fund, including:
- Custodian Agreements
- Sub-custodian Agreements (if any)
- Investment Management Agreements
- Administration Agreements
- Investment Advisory Agreements
10. Prospectus or Private Placement Memorandum
Investment funds in Mauritius must lodge a prospectus (or a private placement memorandum) with the FSC. The draft or highlights of the main clauses of the private placement memorandum or any offer document should contain relevant details, including, but not limited to the following:
- General information regarding the fund, namely its objectives, size of the fund and minimum subscription;
- Investment objective/policy/ restrictions;
- Investment process (if known at that stage);
- Target sector(s) of investment and investment instruments;
- Country/region of investments;
- Exit strategies for investors;
- Details of risks involved in the scheme (if known at that stage);
- An indication of the profile and location of the investors;
- Capital structure, classes of shares, rights and obligations attached to each class of shares and indication of the holder(s) of each class of shares;
- Compliance requirements of other regulatory bodies (if any);
- Track records, duties and obligations of the investment managers, advisors, custodians, administrators, etc.); and
- Details on the core investment management team.
In addition to the prospectus of the fund, the usual due diligence documents on the promoter(s) of the fund should also be submitted.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.