Taysun Corporate Services Ltd

Fund Services

Overview

The Securities Act 2005 defines “collective investment scheme” -
  • means a scheme constituted as a company, a trust, or any other legal entity     prescribed or approved by the Financial Services Commission -
    1. whose sole purpose is the collective investment of funds in a portfolio of securities, or other financial assets, real property or non-financial assets as may be approved by the Commission;
    2. whose operation is based on the principle of diversification of risk;
    3. that has the obligation, on request of the holder of the securities, to redeem them at their net assets value, less commission or fees; and
    4. where the participants do not have day to day control over the management of the property, whether or not they have the right to be consulted or to give directions in respect of such management; and
  • includes closed-end funds whose shares or units are listed on a securities exchange; but    
  • does not include such schemes as are specified in Part II of the Schedule.
  • “Commission” means the Financial Services Commission established under the Financial Services Act 2007;
According to The Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 Global scheme means a company, a trust or any other legal entity approved by the Financial Services Commission, holding a Category 1 Global Business Licence and authorised to carry out activities falling within the definition of a collective investment scheme;

A Global Scheme represents a pooling of public funds to be invested collectively by fund managers specialising in the investment business. Such a scheme is commonly referred to as “Collective Investments Scheme”.

Investment Funds can be classified in 2 broad categories:

  • Open-ended fund also known as Collective Investment Scheme (CIS)
  • Closed-end fund commonly known as the Private Equity Fund


Types of Collective Investment Scheme (CIS)

  • Regulated CIS (meant for Public and are mostly retail Funds)
  • Professional CIS - Professional CIS are CISs are investment vehicles solely for sophisticated investors or may be created as private placements. The Professional CIS are exempted from most on-going obligations and regulations generally imposed on retail CIS target to the public.
  • Specialised CIS - A Specialised CIS is a CIS which invest in real estate, derivatives, commodities or any other product authorised by the Financial Services Commission.
  • Expert Fund - An Expert Fund is a CIS that has applied to the Commission to be licensed as an Expert Fund. Expert Fund is only available to expert investors.

As per the CIS Regulations of 2008 an Expert Investor is an investor who makes an initial investment, for his own account of no less than USD 100,000 or is a sophisticated investor. The Expert Fund is exempted from most on-going obligations/regulations generally imposed on CIS.

A Collective Investment Scheme is distinguished by having:

  • Pooling of funds from investors
  • A professional manager to run the day to day management
  • Adopt risk diversification principles
  • Provide redemption at the option of the investors
  • Investment of funds spread into a portfolio of securities


Main Features

  • Qualified to be Mauritian tax resident & thus can avail of benefits under tax treaty network
  • Taxable at concessionary income rate: maximum of 3%
  • Exempt from capital gains
  • No withholding tax on payment of dividends, interests and royalties
  • Can be a public or private company, have a Limited Life Company status or Protected Cell Company status among others
  • Cannot deal or transact with Mauritian resident unless special approval obtained


Licence fees

  • USD 1,500 per year to FSC
  • Rs 6,000 per year to the Registrar of Companies

 

General Information

A CIS, which needs to be licensed as Category 1 Global Business Company (GBC1) can take the form of:

  • an open-ended fund 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.
  • a close-ended fund which has a fixed share capital. Investors do not have the right to call for their shares to be redeemed at the net asset value by the fund. A close-ended fund can be listed on the Stock Exchange enabling investors to buy and sell shares in the market thereby preventing any lock in. The fund may be formed with a limited life after which the assets are distributed to the investors on a winding up.
It is now possible to constitute a Fund in the form of a Protected Cell Company (PCC - which can be compared to an umbrella fund). The PCC will comprise of two or more cells (compared to sub funds) and investors can subscribe for shares in specific cells. Each cell can have its own investment policy with segregated assets and accounting records. A global business investment company can also be set up as one of the sub fund of an umbrella fund not established in Mauritius.

Funds are governed by the Companies Act 2001, the Financial Services Act 2007 and the Securities (Collective Investment Schemes and Closed End Funds) Regulations 2008. Promoters, Investment Managers, Investment Advisers, Custodians, Administrators and any other service providers have to be of good reputation with proven track record.  Funds may only be registered as GBC1 and not as GBC2. The conditions attached to the global business certificate of a Fund  are considerably more extensive than that of a basic Category 1 Global Business Company.
In addition for tax residence/treaty purposes, as far as possible substance and central administration should be effected from Mauritius. Hence, the Fund must have a local administrator, a local custodian or at least a local cash custodian and a local auditor acceptable by the Financial Services Commission.


Administration & Control

The Financial Services Commission provides that substance and central administration should be in Mauritius.

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

  • The accounts are kept and the accounting documents are available in Mauritius
  • The share register is kept in Mauritius
  • Issues and redemption of shares are carried out in Mauritius
  • Reports on a quarterly basis be submitted on the operation of the investment scheme
  • The Net Asset Value (NAV) calculation is prepared and signed in Mauritius
  • Such disclosures as due diligence requires are made

In addition the Fund may obtain assistance for the management of its assets from an investment adviser established overseas, and it can take management decisions in relation to investment and disinvestment being executed overseas. The requirement for the location of the subscription and redemption of shares in Mauritius does not preclude foreign intermediaries from participating in the placing and redemption operations as distributors or nominees. The CIS Regulations 2008 provides that the independence of the functionaries - manager, the trustee and the custodian.


Licensing Requirements

A CIS needs to be licensed by the Financial Services Commission before it commences business.

In considering an application, the Commission needs to be satisfied with the :
  • track record and credentials of the promoters and directors;
  • 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)

Once the Commission is satisfied with the above, it may issue an in- principle approval so as to enable all constitutive documents to be prepared and the company to be incorporated.

As Fund Administrators, Taysun Corporate Services Ltd can provide an extensive range of services applicable to funds:

  • Incorporation first as a GBC1 followed by a license as a Fund from the FSC
  • Advising on the operational structure for the management and administration of funds;
  • Calculation of Net Asset Values (daily, weekly or monthly as required);
  • Calculation and disbursement of management, incentive and performance fees
  • Liaising with lawyers in the drafting all relevant legal documentation
  • Assist in the preparation of Information Memorandum
  • Calling capital from investors as and when necessary;
  • Liaising with third party service providers (custodians, investment advisors.);
  • Preparation of weekly/monthly accounting statements and of the statutory annual financial statements in accordance with International Financial Reporting Standards (IFRS);
  • Undertake all relevant statutory filings with the local regulatory bodies.
  • Offer services for appointment of local bankers and foreign custodians.
  • Review and payment of invoices for other fund expenses;
  • preparation of accounts, account reporting and audit liaison.
  • Preparation of weekly/monthly accounting statements and of the statutory annual financial statements in accordance with International Financial Reporting Standards (IFRS);


Tax Residency Requirements

Same as for GBC1


Taxation

As far as taxation is concerned, the Fund has the same tax treatment as a GBC1.
Learn more about  taxation.