Bank of Mauritius issues a banking licence to Bank of China
The Bank of Mauritius has, on 18 March 2016, issued a banking licence to Bank of China (Mauritius) Limited, a locallyincorporated wholly-owned subsidiary of Bank of China.
The establishment of Bank of China (Mauritius) Limited is in line with the Bank of Mauritius's objective of attracting international banks to Mauritius to strengthen the position of Mauritius as an international financial centre.
National Assembly passes the Build Operate Transfer Projects Act 2016
As part of the Government's strategy to deliver large scale infrastructure projects, the National Assembly passed the Build Operate Transfer Projects Act 2016 (the Act) on 29 March 2016. The Act came into force on 05 April 2016.
The Act seeks to encourage active participation of the private sector to finance the country's infrastructure needs and governs the regulatory and contractual framework to be put into place where a Ministry, governmental department, statutory body or any other Government-owned or controlled entity enters into an agreement with a private party for the implementation of a BOT project1.
The Act disapplies the Public-Private Partnership Act 2004 and the Public Procurement Act 2006 in relation to BOT projects.
IMF concludes 2015 Article IV consultation with Mauritius and warns of spillover risks to the Mauritian banking sector
The International Monetary Fund's (the IMF) has, in its report of 11 March 2016, sounded the alarm in relation to various risks to the Mauritian banking sector. Pursuant to Article IV of the IMF's Articles of Agreement, the IMF produced its staff report to its executive board which informed discussion by the executive board and concluded the consultation with Mauritius.
Amongst the various issues flagged by the IMF, the staff report identified as risky, the strategy on Mauritian banks to increase their Segment B activities (foreign-sourced income, including from Global Business Companies and non-residents) in light of the challenges the IMF associated with assessing the funding risk from Global Business Companies and non-resident sources. Moreover, the IMF identified potential spillover risks into the Mauritian banking sector triggered, for instance, by a significant revision to the DTAA treaty with India or by an intensification of initiatives against tax base erosion and avoidance. Such events, the IMF forewarned, could lead to a decline in Segment B deposits in domestic banks which would be particularly felt at medium-sized banks unable to expeditiously mobilise foreign currency assets to insulate their balance sheets from liquidity pressures. The resulting funding shortfall, the IMF warned, could potentially result in a cutback of foreign and domestic credit.
The IMF press release, staff report and a statement by the executive director of the IMF for Mauritius are available on the website of the IMF:
http://www.imf.org/external/pubs/ft/scr/2016/cr1689.pdf
Captive Insurance Act 2015
The Captive Insurance Act 2015 (the Act) was passed by the National Assembly in December 2015 and came into force on 29 January 2016.
The Act applies to pure captive insurance business where a subsidiary insurance company is formed to insure or reinsure the risks of its parent company and its associates.
Up until the entry into force of the Act, captive insurance fell within the scope of the Insurance Act 2005. The Financial Services Commission of Mauritius will remain the regulator of captive insurers.
A Captive insurer holding a licence issued under the Act will be able to apply for a category 1 Global Business Licence, allowing the captive insurer to benefit from the network of double taxation agreements entered into by Mauritius. The Act also amends the Income Tax Act 1995 allowing income derived by captive insurers for a period not exceeding 10 years to be except from tax.
The Financial Services Commission consults on draft Captive Insurance (Pure Captive Insurance Business) Rules 2016
The Financial Services Commission launched a consultation on 5 February 2016 in relation to the draft Captive Insurance (Pure Captive Insurance Business) Rules 2016 (the Rules). The consultation closed on 20 February 2016 and we await the publication of its outcome by the Financial Services Commission. The draft Rules set out the solvency requirements of captive insurers including:
(a) Capital and solvency requirements.
(b) Solvency ratio.
(c) Calculation of the minimum capital requirement.
(d) Valuation of assets.
(e) Criteria for inclusion of capital.
(f) Technical reserves.
In addition, the draft Rules set out the principles which must be applied by captive insurers where they invest the assets covering the technical provisions. The draft Rules also set out the criteria to be met where captive insurers provide loans to related entities.
The draft Rules can be found on the website of the FSC:
Memoranda of understanding with the Financial Services Authority of the Seychelles and the Financial Services Regulatory Authority of Swaziland
The Financial Services Commission of Mauritius and the Financial Services Authority of the Seychelles have entered into a memorandum of understanding on 3 March 2016. The parties intend that the memorandum will strengthen mutual assistance and the exchange of information for the purpose of enforcing and securing compliance with the respective laws and regulations of their jurisdictions. The Financial Services Commission also entered into a memorandum of understanding with the Financial Services Regulatory Authority of Swaziland on 31 March 2016 with the intention of strengthening cooperation and collaboration with regard to exchange of information and mutual assistance.
Mauritius enters into an investment promotion and protection agreement (IPPA) with Ivory Coast
The Government of Mauritius and that of the Ivory Coast entered into an IPPA on 20 April 2016. The parties view the signature as a stepping stone for the countries to enter into a double taxation agreement.
Footnote
1. A BOT project as defined under the Act includes projects based on the following delivery mechanisms:
- build, operate and transfer;
- build, own, operate and transfer;
- design, build, finance, operate and transfer; and
- modernise, own/operate, and transfer.
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