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Collective investment schemes and closed-end funds in Mauritius

Updated time: Jul 31, 2018 , 14:59 (UTC+08:00)

Overview

Global funds registered with the Financial Services Commission (FSC) in Mauritius are commonly structured as companies incorporated under the Companies Act 2001 and licensed as a company holding a Category 1 Global Business Licence under the Financial Services Act 2007 (FSA). Such a structure, referred to as an investment company, is defined as one where the company’s business consists of investing its funds mainly in securities with the aim of spreading investment risk and giving members of the company the benefit of the results of the management of its funds.

The law in Mauritius provides for two main categories of investment companies (funds):

  • open-ended funds, also known as collective investment schemes (CIS); and
  • closed-end funds, commonly known as private equity funds.

Any CIS or closed-end fund (individually a scheme or collectively schemes) wishing to be approved, registered with, recognised by and/or licensed by the Commission under the Securities Act must first apply to the Commission for the authorisation as a CIS or closed-end fund in the manner set out in the Securities and obtain a Category 1 Global Business Licence (GBC1).

General requirements for collective investment schemes

The CIS shall, in the manner and at the frequency described in the prospectus, publish the issue, sale, repurchase and redemption prices of the shares of the CIS. Any such publication shall be made at least once a week or at such frequency as may be approved by the Commission.

No expense shall be paid out of the assets of a CIS unless clearly disclosed in the prospectus or offer document of the CIS. The periodic fees of the CIS manager, paid out of the assets of a CIS by way of remuneration, shall be calculated, accrued and paid in the manner determined by the constitutive documents of the CIS.

The fees of the custodian, paid out of the assets of a CIS, shall be calculated, accrued and paid in the manner determined by the constitutive documents of the CIS.

All payments or repayments of an income/capital nature payable out of or into the assets of a CIS shall be payable out of or into the income/capital (as the case may be) assets of the CIS.

The constitutive documents of a CIS shall provide for the creation, cancellation, sale, repurchase and redemption of shares, the valuation of the assets of the CIS and the calculation of the sale, issue, repurchase and redemption prices of shares.

Investment restrictions

A CIS shall not do the following.

  • Purchase a security, other than a debt security issued by the Government of Mauritius or the government of any other country, if, immediately after the purchase, more than 5% of its net assets, taken at market value at the time of purchase, would be invested in securities of that issuer
  • Purchase a security of an issuer where, immediately after the purchase, the CIS would hold more than 10% of a class of securities of that issuer
  • Purchase real estate
  • Purchase a mortgage
  • Purchase a security for the purpose of exercising control or management of the issuer of the security
  • Purchase an illiquid asset if, immediately after the purchase, more than 10% of the net assets of the CIS, taken at market value at the time of the purchase, would consist of illiquid assets
  • Except within the limits established by the Commission or, in the case of a specialised fund authorised by the Commission, purchase or sell derivatives
  • Except in the case of a specialised CIS authorised by the Commission, purchase or sell a physical commodity, including precious metals