• a close-ended fund which has a fixed capital and investors cannot redeem their shares and
• an open-ended fund which has a variable share capital and investors are allowed to redeem their shares at net asset value at pre-determined times in accordance with the provisions of the Constitution of the Company.
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. A more sophisticated structure similar to that of an umbrella fund that Funds may avail of is the Protected Cell Company
A Fund needs to be authorised approved by the Financial Services Commission (FSC) before it commences business. In considering an application, the FSC will want to have sufficient information on the following:
• the track record and credentials of the promoters
• the Fund’s structure
• the objectives of the fund
• the investors and the market targeted
• types of investment the fund will be dealing in
• the track record of the investment manager, custodian and administrator
• compliance with regulations in other countries
Once the FSC is satisfied with the above, it will give its in-principle approval so that all constitutive documents can be prepared and the company incorporated.
As the Fund is registered in Mauritius, the Fund may seek to be fiscally resident in Mauritius by ensuring that it has all times its central management and administration is in Mauritius. Usually the following criteria are applied to determine whether the central administration and control is in Mauritius:-
• whether the Fund has a local administrator, local custodian and a local auditor
• whether accounting records and statutory records are kept in Mauritius
• whether issues and redemption of shares are carried out in Mauritius.
• whether the calculation of the Net Asset Value is carried out in Mauritius.
The above does not exclude the possibility of the Offshore Fund to obtain assistance for the management of its assets from investment advisers established overseas nor the participation of foreign intermediaries in the placing and redemption operations as distributors or nominees.
Funds registered in Mauritius are liable to tax in Mauritius at 15%. However, there are ample provisions for foreign tax credits.
As an Offshore Fund is registered as a Category 1 Global Business Company, it will be able to accede to benefits under Double Taxation Treaties.
All Offshore Funds must entrust the custody of their assets to an approved custodian who carries out 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.
Investment Funds operating in 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 calculation
• the borrowing policies
• the type and legal status of the fund
• the investment policy
• the remuneration of investment advisors and directors, investment managers, custodian and administrators
• conditions for the issuance and redemption of shares
• tax status
• the name and details of the custodian, auditors, investment adviser, directors and registrar.
Offshore Funds are required to file with the FSC an audited half-yearly report and an audited annual report covering the following:-
• a balance sheet showing the net assets value of the fund
• number of shares outstanding
• net asset value per share
• detail of the investment portfolio and the movements in the period, disclosed by types of securities and type of market analysed as a percentage of the Fund’s net assets.
In addition quarterly accounts have to be submitted to the FSC and these include NAV at the end of each month, charge in the NAV, proceeds from issue of shares and payments for shares redeemed.
The Offshore Authority may request other information in addition to the above and has the right to inspect or cause to be inspected the books and records of the Funds.
A Fund holding a Global Business License may apply for the exempt regime (expert fund status) and benefit from more flexible reporting obligations under the Securities Act.
Funds can be listed on the Stock Exchange of Mauritius.
Incorporation are similar to the incorporation of global Companies except that in addition sets of constitutive documents like Prospectus, Custodian Agreements, Sub-custodian Agreements, Investment Management Agreement, Administrator Agreement, Investment Advisory Agreement, Secretarial and Registrar Agreement, etc.. will have to be submitted.