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Innovation within the Mauritian International Financial Centre

By Marc R. M. Hein SC, G.O.S.K

Innovation is greatly needed within our International Financial Centre to retain our existing clients and bring along new ones. We are deeply suffering from the COVID-19 pandemic, the slowdown of transactions worldwide and our continued presence on the European Union black list. There are however opportunities ahead which we need to master for our benefit. Here, we briefly look at three new innovative products.


The Special Purpose Acquisition Company (SPAC) is the new flavour of the day on world markets. SPACs developed last year and are in a driving mode as a means of raising capital for investment purposes. The SPAC is sometimes known as a blank cheque company in the sense that investors give money in full trust that the promoters are going to put the funds to good use, en bon père de famille. The SPAC will normally be listed on a Stock Exchange and have a target which will be acquired and thereby transform the target itself into a listed entity. The acquisition is often made by way of a merger between the SPAC and the target company itself. The process will therefore allow the shareholders of the SPAC to become the new shareholders of the target company. The trend for SPACs has prevailed in the US but now it is an attractive prospect in some financial centres such as Hong Kong and Singapore where the Stock Exchanges are providing for new regulations to attract and cater for them. In Mauritius the SPAC would simply be a company incorporated under our Companies Act and if need be with a Global Business Licence obtained from the Financial Services Commission. It seems that amendments to the Rules of our Stock Exchange would be necessary to accommodate SPACs. There are positive signs that the Stock Exchange of Mauritius would be receptive to the idea of new Rules for SPACs. It is also possible to use the SPAC concept for the local market and it should not be therefore be seen as a pure “offshore” product for international investors.

The Variable Capital Company

The Variable Capital Company (VCC) has been attractive in Singapore since 2020. Its success there is continuing and so as not to miss this opportunity Government has decided in April 2021 to propose a Variable Capital Company Bill. The latter is being drafted by the Attorney General’s office and should hopefully be ready at the soonest. VCCs are used by international investment funds and can be used for open or closed ended investment funds and special funds such as hedge funds and venture capital funds. The VCC provides flexibility as the capital of the fund is variable and is therefore attractive to fund managers and administrators. The VCC, which may also be used for Private Equity business, should bring a plus to the Mauritian jurisdiction. The VCC has characteristics of the French inspired SICAV (Société d’Investissement à Capital Variable) which is omnipresent in Luxembourg and widely used to structure investment funds therefrom investing around the world in all spheres of economic activities. Some attractive features of the VCC concern the increase or decrease of the share capital of the company and the possibility to pay dividends from capital. Very few jurisdictions offer the VCC and furthermore Singapore provides for the re-domiciliation of overseas offshore funds to its own jurisdiction. We should therefore offer the possibility for overseas existing funds to migrate and relocate to Mauritius. The VCC should also be entitled to benefit from the tax treaties to which Mauritius is a party. We may well have the possibility of reopening doors towards India in the future.

The Special Purpose Fund

The FSC published new Rules in April 2021 to give more flexibility to the Special Purpose Fund (SPF) which had first been established in 2013. The SPF is still tax exempt and can be an open-ended or close-ended fund which shall operate under the aegis of the FSC. Previously, the SPF could only do businesses with those countries with which Mauritius had no Double Taxation Agreements but this has been changed and the SPF may now deal with any country. The SPF was also previously restricted to investing mostly in securities exempted from taxation and this requirement has also been lifted.

The SPF will need to have economic substance in Mauritius and be managed by a locally licensed manager and be administered by a locally licensed administrator. The SPF, manager and administrator will have to employ locally an adequate member of qualified persons to establish core income generating activities. The entity may have a maximum of 50 investors each investing a minimum of 100,000 USD. Such investors should have competency and significant experience of investment funds. It is therefore addressed to sophisticated investors and the FSC has wide discretionary powers to ascertain that the Fund complies with the condition imposed.

The Way Ahead

It is imperative to provide high value-added services to our clients and the management and administration of investment funds and private equity business are a fine way of doing so.

All of this has to be done evidently in full respect of the rules to combat money laundering and the financing of terrorism. By doing this in the proper way, we will ultimately leave this European Union black list which keeps tainting our reputation worldwide. Our financial centre is now additionally a corporate, administrative and outsourcing centre and we need imperatively to keep bringing innovative products to our jurisdiction.

This article was published in L'express Newspaper on 09.06.2021.

Article by Marc Hein, SC (assisted by pupil Manda Soobrayen).