Global Funds

Global Funds, commonly referred to as Investment Companies in Mauritius, are licensed under a GBL 1 Company and are regulated by the FSC. The Investment Company’s business is to invest mainly in securities. Global Business Funds can be listed on the Stock Exchange of Mauritius.

There are two types of Investment Company:
(i) 'Close-ended company' (which has a fixed share capital), and
(ii) 'Open-ended company' (with a variable share capital).

Taxation
An Investment Company (GBC 1) is liable to tax at the rate of 15% but this can be reduced to 3% upon application of the foreign tax credit of 80%. The Funds, which are centrally managed in Mauritius can also benefit of the advantages of the DTA. Furthermore, there is no withholding tax on dividends, capital gains and interests.

Pending the introduction of specific legislation for Collective Investment Schemes, the Commission has adopted "best industry" practices from long established jurisdictions for regulating investment business. In the meantime, a set of flexible regulatory practices have been developed.

An Investment Company
A close-ended company which has a fixed share capital. Investors do not have the right to call for their shares to be redeemed at net asset value by the company. A close-ended company can be listed on the Stock Exchange enabling investors to buy and sell shares in the market thereby preventing any lock in. The company may be formed with a limited life after which the assets are distributed to investors on winding up.

An open-ended company which has a variable share capital. Investors are allowed to redeem their shares at net asset value at pre-determined times in accordance with the articles of association. It is also possible to constitute an umbrella fund under each of the foregoing structures. The umbrella fund will comprise two or more subfunds and investors subscribe for shares or units in specific subfunds. Each subfund has its own investment policy with segregated assets and accounting records. Investors can switch their investment from one subfund to another without redeeming their shares or units. A Mauritian Investment Company can also be set up as one of the sub fund of an umbrella fund not established in Mauritius.

Registration Requirements
In considering an application, the Commission needs to be satisfied about the following:

Track record and credentials of the promoters;

Fund structure;

Objectives of the fund;

Investors and the market targeted;

Types of investment the fund will be dealing in;

Track record of the investment manager, custodian, and administrator;

Compliance with regulations in third countries, as appropriate (e.g. SEBI's approval if investment is to be made in India).


The Commission generally wishes to satisfy itself that, as far as possible, the administration of the fund is in Mauritius. To this end, the Fund must have a local administrator and a local auditor.

The requirement that central administration is situated in Mauritius implies that:

Accounts are kept and the accounting documents are available in Mauritius;

Share registers are kept in Mauritius;

Issues and redemptions of shares are carried out in Mauritius;

Calculation of the Net Asset Value (NAV) is carried out in Mauritius.


The above does not exclude the possibility of the Fund obtaining assistance for the management of its assets from an investment adviser established overseas, nor does it prevent management decisions in relation to investment and disinvestment being executed overseas. Also, the requirement for the location of the issuance and redemption of shares in Mauritius does not preclude foreign intermediaries from participating in the placing and redemption operations as distributors or nominees. The FSC insists on the independence of the manager, the trustee and the custodian.

In appropriate circumstances, it is also possible to establish a management or advisory company in the sector to take advantage of the beneficial tax regime.

Custodian
All Funds registered with the Commission as GBC 1 must entrust the custody of their assets to an approved custodian, generally a banking institution. The custodian carries out operations concerning the day-to-day administration of the assets of the Fund, and is responsible for ensuring that the sale, issue, redemption, and cancellation of shares are done in accordance with the investment management regulations of the Fund. The main custodian can delegate certain of its activities to an approved third party, but retains its responsibilities.

Prospectus
Investment Funds operating from Mauritius must lodge a prospectus (or a placement memorandum). The information requirements of the prospectus include, inter alia:

the basis of the net asset value circulation;
the borrowing policies;
the type and the legal status of the fund;
the investment policy (by class of fund if an umbrella fund is opted for), including the use of financial instruments;
the remuneration of investment advisors and directors, investment managers, custodian and administrators;
the conditions for the issuance and redemption of shares, including their frequency, and the different rights attached to them;
the tax status;
the name and details of the custodian bank, the independent auditor, the investment manager, the investment adviser (if any), the directors and the registrar/administrator.


Reports
Funds are required to file with the Commission an unaudited half-year report and an audited annual report. These reports must include, at least, the following:

A statement of assets and liabilities, including the net asset value;
The number of shares outstanding;
The net asset value per share;
Details of the investment portfolio and the movements in the period, disclosed by types of securities and types of market analysed as a percentage of the fund's net assets.


In addition to the above report, quarterly accounts have to be submitted to the Commission, and these will include NAV at the end of each month, the change in the NAV, the proceeds from issue of shares and payments for shares redeemed.

Incorporation Procedures
The main documents that are required for incorporating a company are as in the following table:


1. 		The name of the proposed company (3 names in order of preference)

2.

 The stated capital and par value of shares (if applicable)

3.

 The names and addresses of the directors (we can provide two resident directors where required)

4.

 Proof of residential address of each director and shareholder (eg. a most recent utility bill not more than 6 months old)

5.

 Set of constitutive documents of the scheme (i.e, Prospectus, Custodian Agreements, sub Custodian Agreement, Investment Management Agreement, Administration Agreement, Investment Advisory Agreement, Secretarial and Registrar Agreement, etc.)

6.

 The names and addresses of the shareholders/beneficial owners

7.

 The shareholding structure of the proposed company

8.

 A track record on each shareholder (Well detailed Curriculum Vitae)

9.

 An original bank reference letter on each shareholder/beneficial owners

10.

 For corporate shareholder/beneficial owner, a copy of its latest audited accounts, and if available, any promotional material/ brochures produced by the company

11.

 A business plan to describe the proposed activities, investments to be made, initial amount and sources of funds to be invested and where possible, the expected performance of the proposed offshore company