- October 21, 2020
- Posted by: Editor
- Category: Law
Mauritius is one of the most financial centers in the African region and it attracts investors from all over the world. Even if it is mainly known as an offshore destination, the government’s implication in complying with international regulations and best practices has slowly but surely transformed the insular state into a business-friendly country.
While entrepreneurs can open various type of offshore companies, professional investors can set up several types of investment funds. The mutual fund in Mauritius is one of the most attractive types of funds in the country.
If you want to create a mutual fund and need assistance, our company formation specialists in Mauritius are at your service. We can also help you set up a business in Mauritius.
The mutual fund in Mauritius – main characteristics
The Financial Services Commission (FSC) is the main authority in charge of issuing authorizations and supervising investment funds and financial service providers in Mauritius.
Mutual funds in Mauritius can be set up under the Financial Services Act and the Securities Law, while the structure under which the fund can be operated is a Category 1 Global Business Company, one of the most popular types of offshore companies in this country.
A mutual fund in Mauritius can be set up as:
- a company;
- a trust;
- a limited partnership;
- a foundation.
The mutual fund can be created as an open-ended fund with variable share capital or as a private equity fund with fixed capital.
Investment funds in Mauritius can also be divided into collective investment schemes (CIS), open-ended and closed-ended funds, professional, specialized and expert funds.
Our Mauritius company formation consultants can offer more information on the legislation governing investment funds in this country.
The procedure for setting up a mutual fund in Mauritius
In order to open a mutual fund in Mauritius, there are several steps to complete. The first one is to choose the business form under which it will operate and register it with the Companies House. Then, the company must file for authorization with the Financial Services Commission. The authorization from the FSC depends on whether the fund will operate in Mauritius or outside it.
In the case of funds operating outside Mauritius, a Global Business License must be obtained aside from the authorization that needs to be sought with the FSC.
A mandatory requirement when creating a mutual fund in Mauritius is to appoint a fund manager. There are specific requirements to be met by the fund administrator which can be a management company incorporated under the Financial Services Act.
The management company can be appointed as a secretary of the Mauritius mutual fund.
If you have any questions related to the creation of a mutual fund in Mauritius, our local specialists are at your service with detailed information about the steps to follow and documents to prepare.
We can also assist those who want to apply for a Forex license in order to trade on international markets.
The main business forms used for setting up a mutual fund in Mauritius
The creation of a mutual fund in Mauritius must comply with the regulations imposed by the investment funds laws, as well as those related to the incorporation of companies. The latter is very important as they imply choosing a business form under which the fund will operate.
There are several types of structures that can be used for this purpose, and among them are:
- limited partnerships,
- protected cell companies.
The main aspect considered for the creation of a Mauritius fund is if it is a closed-ended or open-ended one. Based on this aspect, the type of legal structure is chosen. From this point of view, limited partnerships and companies are used for closed-ended funds and the other legal forms are used for mutual funds created as open-ended investment schemes.
Each legal structure is subject to specific requirements when used for the creation of an investment fund in Mauritius, including a mutual one.
Our company formation specialists in Mauritius are at your service with detailed information on the legislation governing investment funds and companies.
You can also rely on us if you want to create a limited liability company in Mauritius.
Corporate business forms when setting up a mutual fund in Mauritius
Companies and limited partnerships are the main and most advantageous types of legal corporate forms when opening a mutual fund in Mauritius.
Companies can be registered, just like in any other jurisdiction as private or public businesses, and must comply with the requirements imposed by the Companies Law. The participants will be issued shares in the company, however, there are several aspects to consider when using these two forms.
In the case of a private company, the maximum number of participants is limited to 50 and the following aspects need to be considered:
- the company must have a board which will have a fiduciary duty towards the participants,
- the company will have a separate legal personality than the shareholders’,
- from a taxation point of view, the company will be treated as a taxable unit.
The protected cell company implies the creation of a company in which the investors are issued shares in specific cells they will inject capital into. These are called cell shares. This type of company is usually employed for:
- making a clear separation on the investors’ returns from each cell,
- making a distinction between the cell and non-cell assets.
If you want to open a mutual fund in Mauritius, our local advisors can offer detailed information on the legislation governing both investment funds and legal structures under which they can operate.
Using non-corporate entities when creating a Mauritius mutual fund
The limited partnership, on the other hand, can have a legal personality or not, as established in the partnership agreement. When set up in order to host a Mauritius mutual fund, this business form must have at least one general manager who will also be the fund’s manager and more limited partners who will be the investors whose assets’ are administered.
The trust can also be used for the creation of a mutual fund, apart from its main use for asset protection. In the first case, the trust is used for the issuance of units in it with the trustee in charge of the management of these assets.
A Mauritius trust can have a maximum number of four trustees, and at least one of them must obtain authorization from the FSC when it comes to being used for investment purposes.
The main advantage of using a trust for the establishment of a mutual fund is that it can be set up as a non-resident trust which leads to the lack of taxes in Mauritius.
If you need more information on the legal requirements imposed for the creation of a mutual fund, our Mauritius company formation agents can answer them.
Documents required when registering a business form for a Mauritius mutual fund
Before applying for authorization with the FSC, the legal structure of the mutual fund must be incorporated with the Companies Register in the case of corporate forms. In the case of non-corporate ones, the documents will be filed directly with the FSC.
The following documents attest to the use of a specific business form for a mutual fund:
- the company’s Certificate of Registration,
- the limited partnership deed and investment management contract,
- the trust deed which must be accompanied by the subscription and advisory contracts.
You can rely on our business registration agents in Mauritius for assistance in drafting the documents need to create any type of investment fund, including a mutual one.
Documents required for the authorization of a mutual fund in Mauritius
In order to register and obtain authorization of a mutual fund with the Mauritius Financial Services Commission, the following documents must be prepared:
- the application forms released by the Companies Register and the FSC;
- the documents associated with the type of business entity used for the fund;
- a draft of the fund’s memorandum and/or prospectus;
- the consent of the shareholders and managers for the creation of the fund;
- the know-your-customer (KYC) documents in accordance with the type of entity used for the fund;
- various certificates and confirmation papers as required to the Mauritius legislation;
- proof of payment of the registration and licensing fees.
With respect to the documents that need to be prepared when it comes to the incorporation of the entity under which a mutual fund in Mauritius can operate, the following are needed:
- the Articles of Association in the case of a company registered under the Company Law;
- the limited partnership agreement and the investment management contract for a limited partnership;
- the trust deed and the subscription agreement in case of the creation of a Mauritius trust.
If you want to open a mutual fund in Mauritius, you can rely on our local consultants for registering the selected business form.
The investment funds sector in Mauritius
The creation of an investment fund in Mauritius takes around 60 days when it comes to authorization with the Financial Services Commission.
With respect to the investment funds sector, the following should be noted:
- at the end of 2018, there were 991 funds registered in Mauritius;
- the maximum tax rate applied to Mauritius-based funds is 3%;
- Mauritius has a network of 44 double tax treaties under which investors can benefit from various tax benefits;
- other 23 double tax treaties are currently under negotiations.
If you want to open a mutual fund in Mauritius, please contact us.