Mauritius

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Mauritius has firmly established itself as a premier jurisdiction for fund domiciliation, particularly for investments targeting Asia and Africa. With over 1,000 investment funds currently licensed by the Financial Services Commission (FSC), the jurisdiction continues to attract significant international capital. 

The island's strategic positioning is built upon:

• Extensive network of 46 double taxation avoidance treaties and 45 investment protection agreements
• Favorable tax environment with no capital gains tax, no withholding tax on dividends, and no exchange controls
• Political stability and a sophisticated regulatory framework balancing oversight with business-friendly policies
• A highly skilled, bilingual workforce supporting the financial services sector

Recent developments in fund structures, particularly the introduction of the Variable Capital Company (VCC) in 2022, have further enhanced Mauritius' competitiveness in the global fund industry.

• Over 1,000 investment funds licensed by the Financial Services Commission (FSC)
• Predominantly private equity funds targeting investments in Africa and Asia
• Strategic positioning as a gateway for investment into emerging markets

Mauritius has positioned itself as a specialized domicile for funds targeting emerging markets, particularly in Africa and Asia. While smaller in total AUM compared to global hubs like Luxembourg, Ireland, or the Cayman Islands, Mauritius offers distinct advantages for specific investment strategies and geographic focuses.

The jurisdiction has successfully carved out a niche as a preferred domicile for:

• Private equity funds focusing on African investments
• Asian investment vehicles requiring tax-efficient structures
• Alternative investment funds seeking a balanced regulatory environment

Mauritius has developed its international financial center over more than three decades, consistently enhancing its legal framework, expanding its treaty network, and upgrading its regulatory capabilities to meet international standards.

• Robust regulatory oversight by the Financial Services Commission (FSC)
• Comprehensive legislative framework including: 
  • Securities Act 2005
  • Financial Services Act 2007
  • Securities (Collective Investment Schemes and Closed-End Funds) Regulations 2008
  • Variable Capital Companies Act 2022
• Hybrid legal system combining English Common Law with French Civil Law principles

• Long-standing democratic tradition with peaceful transitions of power
• Stable economic policies supporting international business
• Strong adherence to rule of law and contract enforcement

• Strategic location in the Indian Ocean, positioned between Africa and Asia
• Same time zone as the UAE, facilitating efficient international transactions
• Ideal positioning as a gateway for investments into emerging African and Asian markets

• Comprehensive network of international and local service providers
• Diverse range of international banks
• Professional firms offering specialized fund administration services
• Modern telecommunications infrastructure

• Bilingual workforce fluent in both English and French
• Cultural affinity with both Asian and African markets
• Multilingual capabilities facilitating cross-border transactions

• Highly skilled and qualified workforce specializing in financial services
• Strong educational system producing finance professionals
• Professional development infrastructure supporting continuous skills enhancement

• Competitive operational costs compared to European and North American jurisdictions
• Reasonable regulatory fees
• Cost-effective professional services

Collective Investment Schemes (CIS) & Closed-End Funds (CEF) 

• CIS: Open-ended funds with variable share capital and obligation to redeem shares
• CEF: Fixed share capital structure where investors are locked in with distribution at the fund's option

Company Structure 

• Established under the Companies Act 2001
• Separate legal entity with limited liability for shareholders
• Can be structured as either public or private

Limited Partnership 

• Governed by the Limited Partnerships Act 2011
• Requires at least one general partner (GP) and one limited partner (LP)
• Can elect to have or not have separate legal personality

Unit Trust 

• Established through a trust deed
• Managed by trustees who hold assets on behalf of unit holders
• No legal personality, simplifying the setup process

Protected Cell Company (PCC) 

• Governed by the Protected Cell Companies Act 1999
• Consists of a core and an indefinite number of cells
• Assets and liabilities of each cell legally protected from other cells

Variable Capital Company (VCC) 

• Introduced under the Variable Capital Companies Act 2022
• Can operate through sub-funds and special purpose vehicles (SPVs)
• Sub-funds/SPVs may elect to have separate legal personality

Retail CIS 

• Fully regulated scheme primarily for the local market
• Must be established as an open-ended fund
• Subject to full FSC regulations

Professional CIS (PCIS) 

• Offers shares solely to sophisticated investors or as private placements
• Can be set up as open-ended or closed-ended
• Private equity and venture capital funds typically structured as CEFs authorized as PCIS
• Exempted from most obligations imposed on retail CIS

Specialized CIS 

• Invests in specific asset classes (real estate, derivatives, commodities)
• Can only be constituted as open-ended funds
• Regulatory requirements determined case-by-case by FSC

Expert Funds 

• Available only to expert investors (minimum initial investment of USD 100,000) or sophisticated investors
• Must be constituted as open-ended funds
• Hedge funds typically set up as expert funds
• Lighter regulatory touch than retail funds

Special Purpose Funds (SPF) 

• Tax-exempt entity with maximum of 50 investors
• Minimum subscription of USD 100,000
• Shares offered solely by private placement to experienced investors
• Can be set up as open-ended or closed-ended fund
• Lightly regulated

VCC Advantages:

• Flexible umbrella structure with multiple sub-funds
• Segregation of assets and liabilities between sub-funds
• Economies of scale through shared service providers
• Conversion flexibility for existing entities

Limited Partnership Advantages:

• Liability protection for LPs
• Flexible partnership agreement
• Option for separate legal personality
• Tax transparency options

PCC Advantages:

• Legal separation between cells
• Risk segregation under shared structure
• Single administrative framework for multiple segregated portfolios

Unit Trust Advantages:

• Simplified setup without formal incorporation
• Option for non-resident trust status with tax exemption
• Familiar structure for certain investor types

The introduction of the Variable Capital Company (VCC) in 2022 represents a significant innovation in Mauritius' fund structures, providing greater flexibility and efficiency for fund managers, especially those managing multiple strategies or asset classes.

Private equity funds dominate the Mauritius fund landscape, with a particular focus on investments in African and Asian markets. Other asset classes include:

• Venture capital
• Real estate
• Infrastructure
• Hedge funds
• Debt instruments

Fund initiators primarily originate from:

• Europe (seeking access to African investments)
• Asia (particularly India and China)
• Middle East
• North America
• Africa (cross-border investment vehicles)

• Standard income tax rate of 15%
• Partial exemption of 80% on qualifying income (reducing effective rate to 3%)
• 95% exemption on interest income (reducing effective rate to 0.75%)
• Special Purpose Funds are fully tax-exempt

• No withholding tax on dividends paid by Mauritius companies
• No withholding tax on interest payments

• 46 double taxation avoidance treaties
• 45 investment protection agreements
• Strategic treaty coverage with key African and Asian economies

Mauritius offers significant advantages through its:

• No capital gains tax regime
• Extensive treaty network specifically targeting emerging markets
• Tax neutrality for properly structured vehicles
• Absence of withholding taxes on dividends and interest

• Local and international fund administrators
• Global accounting firms with substantial local presence
• Legal service providers with international capabilities
• Banking infrastructure supporting fund operations

• Investment Manager requirements: 
  • CIS requires either a Mauritius-licensed investment manager, foreign regulated investment manager, or can be self-managed
  • CEF requires either a Mauritius-licensed investment manager or can be self-managed
• Economic Substance Requirements: 
  • Must meet prescribed economic substance requirements to benefit from partial tax exemptions

• Robust AML/CFT compliance framework
• Corporate governance standards aligned with international best practices
• Reporting requirements to the FSC based on fund classification

• Regulatory approvals typically processed within reasonable timeframes
• Competitive setup and ongoing operational costs
• Cost efficiencies available through certain structures (e.g., VCC umbrella arrangements)

• Increased adoption of the VCC structure for multi-strategy funds
• Growth in ESG-focused investment vehicles
• Development of specialized vehicles for fintech investments

• Growing interest in Africa-focused funds using Mauritius as a gateway
• Increased demand for tax-efficient structures for Asian investments
• Rising prominence of institutional investor participation

• Continued alignment with international standards
• Enhanced focus on substance requirements
• Balanced approach to regulation supporting industry growth while maintaining compliance

• Further development of the VCC framework to compete with similar structures in Singapore and other jurisdictions
• Enhanced positioning as the preferred gateway for African investments
• Continued development of the service provider ecosystem

Mauritius has successfully established itself as a specialized fund domicile with particular strengths in:

• Facilitating investments into African and Asian markets
• Providing tax-efficient structures through its extensive treaty network
• Offering diverse fund vehicles to meet varying investor needs
• Balancing regulatory oversight with business-friendly policies

The jurisdiction's key strengths include:

• Political and economic stability
• Skilled, bilingual workforce
• Strategic geographic positioning
• Hybrid legal system combining the best elements of English Common Law and French Civil Law

With the introduction of innovative structures like the VCC and ongoing refinement of its regulatory framework, Mauritius is well-positioned to continue its growth as a leading fund domicile for specific investment strategies, particularly those targeting emerging markets in Africa and Asia.