A Guideline to Mauritius CIS Manager License

Introduction

The Republic of Mauritius is an island nation in the Indian Ocean about 2,000 kilometers (1,200 mi) off the southeast coast of the African continent. Financial services is one of the growing sectors of the economy. Mauritius has an outsize offshore sector which it built on a low tax regime and extensive treaty network.

Mauritius as a destination for Collective Investment Schemes Business Setup

Mauritius is a globally recognized jurisdiction that has modern laws and regulations in a wide range of financial subsectors but especially so in Collective Investment Schemes industry. You can acquire a Mauritian CIS Manager License in as little as 3 months if the application and documents are in order and satisfy the requirements of the FSC.

Some of the key jurisdictional advantages include the following;

• A dynamic economy expected to grow around 4.5 % per year
• A robust Services industry currently accounting for 75% of GDP
• A rapidly developing financial services sector expected to grow at 6% per year
• There are No exchange controls
• Mauritius is part of the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA) and the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC).
• Stable democratic political system and sustained economic growth
• Developed infrastructure, high-tech ICT connections
• Large pool of qualified lawyers and accountants, university graduates and other professionals. Accountants are mostly trained in the U.K., whilst most Mauritian barristers have been called to the Bar both in the U.K. and in Mauritius
• OECD White List jurisdiction which has never been on the Financial Action Task Force (FATF) list of uncooperative jurisdictions
• Confidentiality is guaranteed by law in respect of all information submitted to the Financial Services Company and to the Registrar of Companies
• Mauritius has concluded Investment Promotion and Protection Agreements with a number of its tax treaty partners
• Banks licensed in Mauritius include some of the major names in international banking like HSBC, Barclays, Afrasia, Standard Chartered

The Financial Services Commission (FSC)

Collective Investment Schemes and other non-bank financial services are regulated by The Financial Services Commission (FSC). The regulator has stated that it aims to align itself with the practices and policies of countries that meet the highest international standards of regulation and supervision of non-banking financial services. As a member of international organizations, the FSC is bound by strict standards and practices thus preserving the stellar reputation of Mauritius in the international financial services sector. The Mauritius Financial Services Commission has their focus clearly on international policies in order to:

• Ensure that international standards and practices are adhered to in Mauritius.
• Encourage cooperation between local and international regulators for effective supervision and control of financial systems and exchange of information for stability, fairness and efficient markets.
• Reinforce capacity building to enhance financial stability through cooperation, providing support and mutual assistance.
• Eliminate money laundering, tax fraud and the financing of terrorist organizations.

About Mauritius CIS Manager License

The Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 is the legal framework governing the provisions and setting the parameters within which a Collective Investment Scheme can be operated. A CIS manager holding a licence issued by the Commission shall be a company which shall be incorporated and have its place of business in Mauritius, and is engaged solely in the business of management of CISs, unless otherwise authorised by the Commission.

Applicable Laws

• Financial Services Act 2007 (31 Dec 2018)
• Companies Act 2001 (Corporate and Business Registration Department)
• Securities Act 2005
• Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008
• Code of Business Conduct (October 2015)
• Prevention of Terrorism Act 2002
• Financial Intelligence and Anti-Money Laundering Act 2002
• Code on Prevention of Money Laundering and Terrorist Financing
• Data Protection Act 2017

CIS Administrator Approval

A CIS manager or a collective investment scheme may appoint a CIS administrator to provide administrative services with respect to a collective investment scheme. When seeking the approval of the Commission, the CIS manager or the collective investment scheme is required to:

• specify which administrative services the CIS administrator may provide;
• give complete details of the CIS administrator, including its constitution, resources, past experience in providing such services, names of the collective investment schemes to which administrative services have been or are presently provided;
• provide any other information required by the Commission;
• include the fees specified in FSC Rules.

The Act requires the CIS manager or the collective investment scheme to seek prior approval of the Commission for a change of CIS administrator.

Permitted Activities of a CIS Manager

A CIS Manager may carry out any of the activities related to the management of a collective investment scheme, including:

• all administrative services required by the scheme;
• provision of registrar and transfer facilities;
• distribution of the securities of the scheme;
• maintaining accounting records of the scheme;
• giving investment advice in relation to the scheme; and
• managing the portfolio of the scheme.

Licensing conditions for a Mauritius CIS Manager License

The Financial Services Commission (“FSC”) shall not grant a licence for CIS Manager license unless it is satisfied that an application for a CIS manager licence filed with the Commission is accompanied by:

• the constitutive documents of the applicant
• a detailed description of how the applicant intends to comply with the Act, including any regulations and rules made thereunder;
• information that demonstrates that it has suitably qualified staff with the appropriate expertise and experience to carry out the functions of a CIS manager;
• the personal questionnaire form for every officer or proposed officer, controller, shareholder and beneficial owner of the CIS manager;
• a list of persons responsible for the management of securities portfolios of the CISs under management and the competence of these persons;
• the audited financial statements of the applicant as at the last balance sheet date; and the relevant fees.

Mauritius CIS Manager License Legal requirements

Categories

Entity Requirements

The entity making the application is a Mauritius GBC 1 holding a Global Business Category One License (GBL1).

Director’s Requirements

Legally speaking, a minimum of 2 directors are required for GBC 1 holding a special license such a CIS Manager license. However, the regulator’s and Mauritius Corporate Governance regime require that:
a. Such an entity has got a well-balanced board in terms of experience, expertise and governance independence;
b. There needs to be fit and proper directors in different areas of running such a regulated Investment Business. Therefore, the 2 local directors required for the GBC 1 regime, almost always will not satisfy the regulator’s criteria. There will need to be an additional minimum 2 directors of different backgrounds, and who are fit and proper with experience in the investment industry.

Shareholder requirements

• The CIS Manger will need at least one shareholder.
• Corporate shareholding is allowed.
• 100% Foreign ownership is permitted.

Mauritius Office

• The applicant must satisfy the authorities that they have procured and equipped a place of business in Mauritius from where the operations of the company shall be run.

Auditor

• A CIS Manager is required to have its accounts audited annually by an auditor.
• The applicant must put forward at the time of application, the designate auditor for approval by the authority.
• The auditor must be a firm licensed in Mauritius

Insurance

• A CIS Manager is also required to have a Professional Indemnity cover that varies with the volume of activities and risk of its business.
• An insurance quote must be submitted along with the application for approval by the authority.
• Upon licensing, such insurance cover must be procured within the period set in the license conditions and a copy of the policy submitted to the regulator.

Minimum Capital Requirements

• A CIS manager holding a licence issued by the Commission shall maintain a minimum stated unimpaired capital of at least Mauritian rupees one million or an equivalent amount.

Ongoing Obligations

• A licensed CIS Manager must meet the following ongoing obligations at all times to remain compliance with the Act:
  • Maintain all the conditions set in the license approval letter at all times
  • Be required to file its audited financial statements and tax return within 12 months from its balance sheet date.
  • Maintain an office in Mauritius on a full-time basis and have officers accessible in such an office on a full-time basis during its official working hours.
  • Maintain 2 resident director in Mauritius at all times
Tax Obligations and Exemptions
A CIS Manager will need to be structured as a company holding a Global Business Category One License (GBL1).
• GBL1 are governed by the Income Tax Act 1995, under which they are taxed at the flat rate of 15%.
• Mauritius law allows 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%.
• There is no capital gains tax, nor withholding tax on dividends and interest paid to non-residents.

A GBL company should meet the following conditions at all times:

• The core income generating activities of the GBL should be in or from Mauritius
• GBL companies should employ directly or indirectly a reasonable number of qualified persons to carry out the core activities
• The GBL companies should have a minimum level of expenditure proportionate to its level of activities
• Be managed and controlled from Mauritius

Application Process

Categories

Collection of Information

The main activities shall include;
a) Determining the shareholding structure and board membership
b) Collation of company formation KYC documents
c) Name check at the Registrar of Companies

Company Incorporation

a) Preparation of company incorporation pack
b) Filling for incorporation

Bank Account Opening

a) Opening of bank account Depositing of required capital

License Application Preparation

a) Collation of license application KYC documents
b) Signing up of required functionaries and obtaining relevant consents
c) Preparation of required documents (Constitutive documents) Signing of relevant forms and documents
d) Courier of the original signed documents and due diligence documents to Mauritius

Filing of the application

Filing of the application with FSC

Procuring of office

a) Procuring of suitable office
b) Furnishing, servicing and equipping the office
c) Request for FSC visit for office approval

License Approval

Post License Compliance

a) Obtaining the insurance policy
b) Meeting any other condition imposed upon licensing