JTC : Mauritius Special Purpose Fund – A New Look

In this Q&A Neeraj Nawaz, Director - Client Services, highlights why Mauritius is a fund domicile of choice and the benefits of the revised Special Purpose Fund (SPF) rules… Why is Mauritius a preferred jurisdiction for funds?

Over the past two decades, Mauritius has established itself as an International Financial Centre of high repute, a jurisdiction of substance providing a sound platform for investment funds.

Mauritius is widely recognised by both fund managers and investors as a leading jurisdiction for setting up and administering funds and is commonly used for structuring international investments, particularly into Africa and Asia.

Mauritius is also known for its state-of-the-art infrastructure, modern and innovative legal framework and its ease of doing business. With its knowledge and proximity to the Indian market, in addition to being a natural hinterland for Africa, Mauritius has seen sizeable inward and outward investments from Asia into Africa.

Factors that have contributed to Mauritius's success as a funds location include the quality and flexibility of its legislation; the strength of its legal system and regulatory framework; its political stability; its infrastructure; a beneficial time zone (GMT+4) that allows trading on global markets on the same day; its wide range of international banks and professional firms and, most importantly, the availability of qualified and skilled staff. In addition, Mauritius has a number of tax treaties that are currently in place worldwide and is regarded as a very cost-effective jurisdiction.

What is the regulatory investment fund framework in Mauritius?

A Mauritius Investment Fund can be structured as a company, a protected cell company, a trust, a limited partnership, or any other legal entity prescribed or approved by the Mauritius Financial Services Commission (FSC). Funds can either be open-ended - with a variable share capital - that fall under the Collective Investment Scheme (CIS) category, or Closed-End Funds (CEFs) with a fixed share capital, often commonly known as private equity funds.

Why are the SPF rules being revised?

At the last Mauritius National Budget it was announced that the existing SPF regime was to be modernised to provide additional flexibility and ease of access to new markets.

The objective surrounding the revised SPF rules is to offer a tax-exempt entity which has economic substance in Mauritius. The new rules are designed to further attract international fund promoters and managers wishing to avail themselves of modern securities laws and overall fund logistics, supported by globally competitive cost structures.

Because of the changes to this regime it becomes even more appealing to both managers and investors in respect of the set-up, ongoing operations and maintenance of fund structures.

What are the salient features of the SPF?

Any scheme, open-ended or closed-ended fund, may apply to the Commission for an authorisation as a SPF, subject to any conditions as may be imposed by the Commission and the FSC Rules.

Characteristics of a SPF include: the SPF offering its shares, solely by way of private placements, to investors having competency, significant experience and knowledge of fund investment; having a maximum of 50 investors; and the minimum subscription is USD 100,000 per investor.

What is unique about the SPF?

A SPF, though being a tax-exempt vehicle with economic substance in Mauritius, is eligible to tax treaty benefits.

Unparalleled attributes of such fund structures, alongside both the sound regulatory regime and tax efficiency, reinforce the position of Mauritius as a fund destination of choice for investors and fund managers.

To conclude, the revamping of the SPF regime is yet another landmark in the evolution of the fund structure in Mauritius.

If you would like to discuss the SPF rules in further detail, or to find out about our service offering in Mauritius, please contact Neeraj directly.