Mauritius is a preferred jurisdiction for most types of fund structures including Listed Funds, Hedged Funds, Property Funds and Private Equity Funds. Funds registered with the FSC in Mauritius are incorporated under the Companies Act 2001and are licensed under the Financial Services Act 2007 and the Securities Act 2005 as amended (the ‘Securities Act’). Such Funds should also need to hold a Category 1Global Business License (‘GBC1’) besides a CIS license.
Funds can be classified either as an Open Ended (Collective Investment Scheme) or Closed Ended Fund.
A Collective Investment Scheme (“CIS”) is defined under the Securities Act as one:
- 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;
- whose operation is based on the principle of diversification of risk;
- that has the obligation, on request of the holder of the securities, to redeem them at their net assets value, less commission or fees;
- where the participants do not have day to day control over the management of the property, whether or not they have the right to be consulted or to give directions in respect of such management; and
- includes closed-end funds whose shares or units are listed on a securities exchange
A Closed Ended Fund is mostly used for Private Equity or Property / Real Estate Fund. A Closed Ended Fund is defined as an arrangement or a scheme, other than a collective investment scheme whose object is to invest funds, collected from
- subscribers during an offering made or
- from sophisticated investors, in a portfolio of securities, or
- in other financial or non-financial assets, or
- real property, as may be approved.
Special Purpose Fund (“SPF”) was introduced by the FSC under the Financial Services (Special Purpose Fund) Rules in 2013. This type of fund is set up under the domestic law and is tax exempt in Mauritius. The objective of the SPF rules is to attract international fund promoters who want to use Mauritius as an international hub which offers modern securities laws and overall fund logistics. As a tax exempt vehicle, the SPF obviously does not have access to the network of double taxation treaties.
Special Purpose Funds may be established as either a Collective Investment Scheme or Closed End Fund. The FSC may, on application, approve a scheme as a Special Purpose Fund if the criterion, under Rule 3 of Financial Services (SPF) Rules 2013 is satisfied:
- the purpose of the scheme is to conduct investment solely in countries which do not have a tax arrangement with Mauritius;
- the purpose of the scheme is to invest mainly in securities whose returns will be exempted from taxation; or
- all the investors of the schemes are pension schemes or other persons entitled to tax exemption.
The FSC shall not approve a scheme holding a Global Business Licence as a Special Purpose Fund. An approval is sought under the Financial Services (Special Purpose Fund) Rules 2013 and may be subject to such conditions as the FSC may deem necessary.
Depending on the nature of the fund and objectives set by the promoter, a Fund can be set up as the following;
(1) Professional CIS
(2) Specialised CIS
(3) Expert Funds
Mauritius Funds can be structured either a Company or Limited Partnership. It is not common for Fund Promoters to set their Fund Manager Company in Mauritius together with the Fund Investment Vehicle.