Set up Mauritius Funds

Set up Mauritius funds

Tetra Consultants assists our international clients to set up Mauritius funds under Companies Act 2001 and Financial Services Act 2007. Mauritius funds are required to hold a Global Business Corporation (GBC) license and an activity license under the CIS regulations.

Why choose to set up funds in Mauritius?

• Over the years, Mauritius has introduced multiple regulations for the setting up of funds in the country. Mauritius has also signed 23 Investment Promotion and Protection Agreements (IPPAs) with African states to date.
• The politically stable and business-friendly environment has projected Mauritius as an investment bridge between Africa and Asia.
• Coupled with low tax rates and the availability of Double Taxation Avoidance Agreements (DTAAs), many investors are choosing Mauritius to set up their funds.
• In Mauritius, the income derived from Collective Investment Scheme (CIS) and closed-end funds enjoy an 80% tax exemption.

What are the advantages of investing in Mauritius funds?

• Low tax, (Partial Exemption Regime – applicable to domestic and global business companies (GBCs) as 80% of foreign-source income from collective investment schemes (CIS), closed-end funds (CEFs), collective investment scheme managers or administrators will be exempted from income tax. And a tax rate of just 3%;
• Recently strengthened Counterfeit Finance Terrorism (CFT) and Anti-money laundering laws (AML);
• No capital gains tax and no withholding tax on dividends and interest;
• No exchange controls and no repatriation fees;
• Politically and economically stable;
• Professionalism;
• Strong, flexible, and effective legislative and Court system;
• Geographic and time zone advantages for the global markets;
• There are some clear advantages to establishing a fund here, the offshore island enjoys a low tax regime bolstered by the safety of double tax treaties (DTAAs) with other jurisdictions;
• Low-cost jurisdiction for services;
• Range of structuring options with varying advantages (Global CIS, Professional CIS, Specialised CIS, and Expert Fund).

What are the core legislation and governing bodies of funds in Mauritius?

• • Mauritius’s investment funds are governed by The Securities Act 2005, the Securities (Disclosure Obligations of Reporting Issuers) Rules 2007, The Securities (Licensing) Rules 2007, the Securities (Public Offers) Rules 2007, and The Securities (Collective Investment Schemes and Close­d ended Funds) Regulations 2008.
  • The regulatory bodies in regulating CIS and closed-end funds are the Financial Service Commission (FSC), the Registrar of Companies, and the Registrar of Limited Partnerships.

Other core Legislation and regulatory bodies in Mauritius:

• • • The Financial Intelligence and Anti-Money Laundering Act 2002
    • The Financial Services (Consolidated Licensing and Fees) Rules 2008
    • The Financial Services (Special Purpose Fund) Rules 2013
    • The Guidelines for Advertising and Marketing of Financial Products 2014
    • The Code of Business Conduct 2015
    • The National Code of Corporate Governance for Mauritius 2016
    • The United Nations (Financial Prohibitions, Arms Embargo, and Travel Ban) Sanctions Act 2019
    • Stock Exchange of Mauritius (SEM)

What are the powers of regulating authority of Mauritius Funds?

The Financial Service Commission (FSC) is responsible for regulating AIFs in Mauritius. The FSC has wide-ranging powers, including the following:

• To make rules, set standards, and provide guidelines;
• To give directions to any person to ensure compliance with relevant laws, guidelines or licensing conditions;
• To issue a private warning;
• To issue a public censure;
• To disqualify a licensee from holding a license or a license of a specified kind for a specified period;
• To disqualify an officer from a specified office or position in a licensee for a specified period;
• To impose administrative penalties; and

To revoke licenses;

• The Financial Service Commission (FSC) also has the power to grant exemptions or partial exemptions from compliance with any rules and guidelines, subject to such conditions as it may impose.

Types of Mauritius funds

There are two types of funds in Mauritius, namely Collective Investment Funds and Closed-End Funds. The funds have to be approved by the Financial Services Commission (FSC). When considering an application, FSC has to be satisfied with the following:

• Promoters’ track record and credentials;
• Fund structure;
• Fund objectives;
• Investors and the market targeted;

• Types of investment the fund will be dealing in;
• Investment manager, custodian, and administrator’s track record;
• Compliance with regulations in third countries, as appropriate (e.g. SEBÍs approval if investment is to be made in India).

It is essential for our international clients to understand the different categories of funds and proceed with the most suitable option. Contact us now for a free consultation. Our team of experts will revert within the next 24 hours.

Set up Mauritius Funds: Collective Investment Funds

Collective Investment Scheme (CIS) is a scheme with the following features:

• • • Whose sole purpose is the collective investment of funds in a portfolio of securities, or other financial assets, real property or non-financial assets as may be approved by the FSC;
  • • Whose operations is based on diversification of risks;
  • • That has the obligation, on request of the holder of securities, to redeem them at their net asset value less commission of fees;
  • • Where the participants do not have day to day control over the management of the assets

Collective Investment Scheme is typically formed as a company, protected cell company (PCC) or a unit trust. For CIS fund, the registration fee is US$ 1,000 and the annual fee is US$ 3,000. There are in total 5 types of Collective Investment Schemes (CIS):

#1 Professional CIS

• • • Professional CIS is exempted from most ongoing obligations provided that the shares acquired are not resold to the public and is not listed for trading on a securities exchange.
  • • You are required to notify FSC of its offering at least 15 days before the offering is made. At the same, you must file a copy of the prospectus. After the offering is concluded, you must advise FSC of the total amount and the value of shares sold. Professional CIS is required to notify FSC of any bankruptcy petitions.
  • • Professional CIS Fund Legal Requirements:
  • • Corporate vehicle permitted: Category 1 Global Business Company
  • • License application fee of US$ 1,000
  • • Annual license fee of US$ 2,500
  • • Estimated license processing duration of 3 months
  • • No need for a physical office in Mauritius
  • • No minimum share capital
  • • No minimum number of investors
  • • Minimum of 2 corporate directors/partners/trustees with local residency
  • • Require custodian, fund manager/investment manager, and fund administrator. They need not have local residency.
  • • Require external auditor with local residency.
  • • Prospectus/Offering Memorandum required to be filed

#2 Expert Fund

• • • Expert Fund is only available to expect investors. Expert investors are defined as investors who make an initial investment of at least US$ 100,000 from their own account or is a sophisticated investor (e.g statutory authority established by investment advisor or CIS manager).
  • • International clients can choose to appoint a licensed CIS in Mauritius or other regulated jurisdictions to manage the funds. It is not mandatory for the CIS manager to be a resident in Mauritius.
  • • Expert funds are exempted from many obligatory obligations from FSC.
  • • Expert CIS Fund Legal Requirements:
  • • Corporate vehicle permitted: Category 1 Global Business Company.
  • • License application fee of US$ 1,000.
  • • Annual license fee of US$ 2,500.
  • • Estimated license processing duration of 3 months.
  • • No need for a physical office in Mauritius.
  • • Minimum subscription of US$ 100,000.
  • • No minimum number of investors.
  • • Minimum of 2 corporate directors/partners/trustees with local residency.
  • • Require local custodian and local external auditor.
  • • Required fund manager/investment manager and fund administrator. They need not have local residency.
  • • Prospectus/Offering Memorandum required to be filed.

#3 Specialized Fund

• • • Specialized fund is specifically used to target high-risk or illiquid assets such as commodities, derivatives and real estate. Before applying specialized fund, you are required to obtain FSC’s approval on whether such scheme would be authorized.
  • • Specialised CIS Fund Legal Requirements:
  • • Corporate vehicle permitted: Category 1 Global Business Company.
  • • License application fee of U$ 1,000.
  • • Annual license fee of US$ 2,500.
  • • Estimated license processing duration of 3 months.
  • • Limitation on size of the fund or total assets under management: US$ 100,000.
  • • No need for a physical office in Mauritius.
  • • Minimum subscription of US$ 100,000.
  • • No minimum number of investors.
  • • Minimum of 2 corporate directors/partners/trustees with local residency.
  • • Require custodian, fund manager/investment manager and fund administrator. They need not have local residency.
  • • Require local external auditor.
  • • Prospectus/Offering Memorandum required to be filed.

#4 Retail scheme

• • • Retail scheme targets retail investors and is subject to Investment Restrictions and Practices under CIS. It is mandatory for an open-ended retail fund to appoint a custodian licensed by FSC to safeguard assets in the retail fund. Custodians are required to maintain a minimum stated “unimpaired” capital of MUR10 million.

#5 Global scheme

• • • Global scheme is allowed to carry out the activities of a CIS but does not fall into specific categories such as Professional CIS, Expert Fund or Specialized Fund.
  • • Upon approval of FSC, a global scheme can appoint a CIS Manager from other regulated jurisdictions. Unlike the more specific categories, global scheme is required to adhere to most of the regulations set by FSC.
  • • Global CIS Fund Legal Requirements:
  • • Corporate vehicle permitted: Category 1 Global Business Company.
  • • License application fee of US$ 1,000.
  • • Annual license fee of US$ 2,500.
  • • Estimated license processing duration of 3 months.
  • • No need for a physical office in Mauritius.
  • • No minimum share capital.
  • • No minimum number of investors.
  • • Minimum of 2 corporate directors/partners/trustees with local residency.
  • • Require custodian, fund manager/investment manager and fund administrator. They need not have local residency.
  • • Require local external auditor.
  • • Prospectus/Offering Memorandum required to be filed.

Set up Mauritius Funds: Closed-end Funds (CFE)

A Closed-end Fund (CFE) is commonly used for:

• • • Purchasing or subscribing to securities that have never been issued;
  • • Entering into agreements for the underwriting of securities;
  • • Distributing securities previously offered without a prospectus;
  • • Purchasing securities previously issued and held by a person, including an issuer, and where the offer or distribution is made from Mauritius or received in Mauritius.

Closed-end fund is a CIS with a fixed number of shares. They are usually structured as a company or limited partnership. A limited partnership must have at least one general partner with unlimited liability and at least one limited partner. For people wishing to set up private equity funds in Mauritius, closed-end funds (CFE) is the preferred type of vehicle.

Hedge Funds in Mauritius

• • • Although hedge funds do not have a specific regime which applies and is not an official terminology, it can be categorized as CIS Professional fund or CIS Expert funds. These funds’ operations are similar to that of hedge funds as they are exempted from substantial part of the regulations.

How to set up Mauritius funds?

To set up Mauritius funds, you are required to:

• • • Complete the incorporation of either a company, limited partnership, PPC or trust.
  • • Obtain a Global Business Corporation (GBC) license.
  • • Apply for authorisation with FSC to operate as a fund (either open-ended fund or closed-end fund).
  • • Obtain an activity license under the Collective Investment Scheme (CIS) regulations with FSC.

It is ideal for a management company that is licensed in Mauritius by FSC to process the application for authorisation to establish Mauritius funds. Tetra Consultants has more than a decade of experience in advising our global clients on setting up funds in Mauritius. Contact us now for a free consultation. Our team of experts will revert within the next 24 hours.

Contact us to find out more about how to set up business in Mauritius. Our team of experts will revert within the next 24 hours.