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As of 1 January 2019, the Category 1 Global Business Company (GBC 1) came to be known as the Global Business Company (GBC) and the Mauritius Financial Services Commission (FSC) proceeded to no longer issues the Category 2 Global Business Licence, replaced by a new type of entity known as the Authorised Company (AC).

Companies that have been licensed as a GBC1 or GBC2 prior to 16 October 2017 had been grandfathered until 30 June 2021.

Both the GBC and the AC offer the highest degree of confidentiality and the choice between the two types will depend on a number of factors including the proposed activities of the company and the geographical area of operation. The GBC and the AC can undertake a wide range of activities ranging from investment holding (SPVs) to trading.

The GBC is resident for tax purposes in Mauritius and can thus avail itself of the benefits of the double taxation treaties signed by Mauritius. The GBC may conduct business in Mauritius provided that the majority of its transactions is done outside of Mauritius.

On the other hand, the AC is non-resident for tax purposes and is therefore not liable to pay income tax in Mauritius. The AC is typically used where no tax treaty benefits are sought.

The concept of the trust since then has been introduced in various jurisdictions and has evolved enormously. Trusts were once regarded only as a tool available to the ultra-wealthy. While this was true for many decades, there has been a proliferation of use of these flexible and powerful planning tools. People have discovered that trusts can be useful for almost any socioeconomic class.

A trust generally involves three parties (Fig 1); the settlor or grantor (the original owner of the assets) sets up the trusts and commits to formally gifting certain assets into the trust. The trustees assume the job of managing and overseeing the trust assets, they do this for the benefit of the current and often future beneficiaries. The trustees have a fiduciary relationship with the beneficiaries, meaning they are obliged to put the beneficiaries’ interests above their own. They are also the legal owners of the assets in the trust.

Trusts allow for flexibility and control over where, when and under what conditions someone’s assets are used to provide a benefit to someone else. A case study is being provided to demonstrate use of Trust in Mauritius and how it is beneficial for asset protection/family succession.

The Introduction of Foundations further reinforces Mauritius as a platform for wealth management, succession and estate planning. Endowed with legal personality, a Foundation is viewed as a combination of a Trust with certain characteristics of a regular company.

Basically, a foundation is established by a Founder who donates assets with which to achieve the objects of the foundation. The objects can be both charitable and non charitable, or both simultaneously, and can be either for the benefit of persons or class of persons or to carry out a specified purpose. The Founder’s intentions for the Foundation are set out in a charter to determine how the assets are to be dealt with, for what purpose or for whose benefit, although such objectives can be less specific provided the mechanism by which such decisions are to be made is clearly defined.

Foundations are usually used for asset protection, inheritance planning, wealth management, charitable purposes and general asset holding purposes.

In Mauritius, funds are generally structured as companies, limited partnerships and protected cell companies and are authorised to operate as either an open-ended fund or a closed-end fund under the Securities Act 2005.

A fund can be self-managed or appoint a CIS manager subject to the approval of the FSC. However, most funds choose to incorporate a CIS Manager, also known as a Investment Manager, in Mauritius in order to manage the CIS. Though this is not compulsory, it can help strengthen the tax residence of the CIS in Mauritius. The Investment Manager will have to demonstrate a proven track record in fund management to be granted a licence by the FSC.

A Protected Cell Company (“PCC”) is a corporate structure in which a single legal entity is comprised of a core and several self-contained Cells that have separate assets and liabilities for the purposes of separating and protecting individual Cell assets from the threat of contamination by the failure of another asset. PCC in Mauritius is governed by the Protected Cell Companies Act 1999 and the Protected Cell Companies (Amendment of Schedule) Regulations 2005. Main Features of a protected cell company:

• A PCC may create one or more Cells
• A PCC is a single legal person
• The creation of a PCC does not create in respect of that Cell, a legal person separate from the company
• The assets of a PCC can be either Cellular assets or non-Cellular (Core) assets
• A PCC may in respect of any if its Cells, create and issue shares (“Cell shares”)
• A PCC may pay a Cellular dividend in respect of Cell shares

PCCs are perceived to be of interest to a wide variety of insurance companies – life insurance companies and general insurance companies, mutual funds or other forms of collective investment scheme for the following reasons:

• Reduced administration costs
• Reduced individual regulatory compliance
• Better investment security environment
• Better returns for the investor

The VCC is a new type of investment vehicle that combines the best features of a traditional company and a collective investment scheme (CIS). Like a company, a VCC has separate legal personality, limited liability, and perpetual succession. It can issue and redeem shares and distribute profits to shareholders. At the same time, a VCC is also a CIS, meaning that it pools funds from investors and invests them in a portfolio of assets.

With the view to modernise the existing Special Purpose Fund regime, the Mauritius Financial Services Commission (FSC) issued the Financial Services (Special Purpose Fund) Rules 2021 effective as from 06 March 2021 which replaced the Financial Services (Special Purpose Fund) Rules 2013. This moves Mauritius a step ahead in its aim to position itself as an international financial centre of choice with modern securities laws among other competing jurisdictions.
The industry expects renewed interest from sophisticated investors, Fund managers and promoters to this cost-effective and tax-efficient corporate structure coupled with Mauritius continuing achievements in terms of good corporate governance, proven top level service for set up and administration of private equity funds and with the prime aim to protect the interests of investors.

A SPF is a collective Investment Scheme (“CIS”) or a Closed-Ended Fund (“CEF”), authorized by the FSC as a Special Purpose Fund, which shall offer its shares to sophisticated investors with a maximum of 50 investors and a minimum subscription of USD 100,000 per investor and shall always be managed by a CIS manager; and administered by a CIS administrator.

A Limited Partnership is a blend of partnership with a private limited company. It gives owners the flexibility of operating as a partnership while having a separate legal identity. A Limited Partnership requires at least one General Partner (“GP”) and one Limited Partner (“LP”). 

The GP is the deciding body of the Limited Partnership and has the authority to conduct and manage the business and affairs of the Limited Partnership and exercise all its rights, powers and authority. The GP is personally liable for partnership debts. The LP’s liability is limited to the capital contributed or agreed to be contributed in the Limited Partnership and cannot execute documents on behalf of the Limited Partnership nor bind the Limited Partnership.

Advantages of the Limited Partnership entity compared to other structures:

• Limited Partnerships are tax transparent vehicles, i.e. the partners are liable to income tax on their share of income from the Limited Partnership. The Limited Partnership, however, may opt to be liable to income tax on its taxable income.
• The liability of the LPs is limited to the amount which they have contributed to the Limited Partnership.
• The day-to-day duties and responsibilites of the Limited Partnership are dealt by the GPs with minimal intervention from the LPs.
• The LPs rank pari-passu in respect of their return of their contributions.

A domestic company, also referred to as a local company, is defined as being a company incorporated under the laws of Mauritius and governed by the Mauritius Companies Act 2001. The domestic company is resident in Mauritius and accesses to the Double Taxation Agreements (DTAs) which Mauritius has in place. It is also taxable at a flat rate 15% on chargeable income and is not subject to withholding tax on capital gains tax, dividends or exchange control in Mauritius.
A domestic company can either be a Private or Public Company. There are three types of domestic companies in Mauritius, namely:

1. Limited by shares

Company limited by shares means a company formed on the principle of having the liability of its shareholders limited by its constitution to any amount unpaid on the shares respectively held by the shareholder.

2. Limited by guarantee

Company limited by guarantee means a company formed on the principle of having the liability of its members limited by its constitution to such amount as the members may respectively undertake to contribute to the assets of the company in the event of its being wound up.

3. Limited by both shares and guarantee (Also known as Hybrid)

Company limited by shares and by guarantee means a company formed where constitution limits its life to a period not exceeding 50 years from the date of its incorporation. However, this period may be extended to a maximum of 150 years. Its constitution contains the specific matters as laid down in the law.

A captive insurance company is a subsidiary of a non-insurance entity.
It is a special purpose legal entity holding an insurance licence and has, as its primary objective, to insure either its holding company or a sister company for all or a proportion of its insurable risks.
However, this is not the sole purpose of a captive. A captive can also be used to insure or reinsure the risks of third parties, such as customers, suppliers or subcontractors

What is the Role of a Captive?

• Establishes a centralised risk framework
• Rapidly and effectively responds to the emerging needs of the insured company
• Provides tailored, comprehensive, and responsive coverage – it can adapt to fluctuations in the insurance market, adjust retention levels or amend insurance parameters when required
• Establishes a proactive risk and claims framework into the organisation
• Accesses the insurance market directly
• Potentially reduces the overall cost of risk
• Potentially increases the cash flow of the combined business enterprise
• Generates a new revenue stream by covering third party risks

An IBC is a legal, tax – free, non-resident entity incorporated in Seychelles (except small fixed annual government fees). The IBC is primarily used for International Business activities and cannot conduct business in the country of incorporation. Unique type of company which can undertake any activity outside Seychelles except Banking, Insurance and Trusts. Zero Tax liability on profits accrued outside Seychelles. Exemptions on stamp duty on transfer of shares and transfer of assets.