The
Codes have been revised to meet new national
and international anti-money laundering and
anti-terrorist financing initiatives.
The
main changes brought to the Codes include the
following:
- the
substantive provisions of the Codes have been
reviewed to embrace the concept of Customer
Due Diligence as set out in the Revised recommendations
of the Financial Action Task Force;
- the
Codes have been clarified to indicate situations
where licence holding companies are required
to apply enhanced due diligence procedures
and situations where they may apply reduced
or simplified due diligence procedures;
- the
requirements regarding introduced business
have been realigned with international standards;
and
- new
provisions have been introduced in the Codes
with regard to omnibus accounts.
The
revised Codes came into operation on 01 August
2005.
Also
in 2005, the 2002 Financial Intelligence and
Anti-Money Laundering Act was amended and updated
by the Financial Intelligence and Anti- Money
Laundering (Amendment) Regulations 2005. The
full text of the amendments can be found here.
In
December, 2005, the FSC promulgated its proposed
Securities (Collective Investment Schemes And
Closed End Funds) Regulations 2005 and the proposed
Securities (Licensing, Prudential And Conduct
Of Business) Rules.
The
FSC said that in drafting the Securities Act
2005 (see above for more information), the approach
was to include only high-level principles in
the legislation and to include the finer details
(that are more subject to change) in Regulations
and Rules that will supplement the legislation.
In
April, 2006, Rama Sithanen, Deputy Prime Minister
and Finance Minister of Mauritius, told the
3rd annual meeting of the island's Financial
Intelligence Unit that the Prevention of Corruption
Act will be amended in order to permit the restructuring
of the Independent Commission Against Corruption
as a major partner in the fight against money
laundering.
Later,
the Prime Minister, Navin Ramgoolam, presented
the Prevention of Corruption (Amendment) Bill
2006 for its first reading in the National Assembly.
The new law will give the courts jurisdiction
over those accused of corruption. Previous amendments
in 2005 reorganized and simplified the management
of the Commission.
Also
in 2006, work started on a draft Financial Services
(Miscellaneous Provisions) Bill to be submitted
to Government, which would bring the necessary
amendments to various pieces of legislation
relating to the non-banking financial services
sector.
In
August 2007, the Mauritius Assembly passed the
Financial Services Bill, which became the Financial
Services Act the following month. The objective
of this bill was to amend and consolidate the
law regulating financial services in Mauritius,
other than banking, and global business and
to provide for related matters.
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Mauritius
Financial Services Development Act 2001
N.B
The Financial Services Development Act was repealed
when the Financial Services Act 2007 came into
operation.
The
Act (prior to updating) says its purpose is:
to provide for the establishment and management
of a Financial Services Commission to regulate
the non-bank financial services, the establishment
of a Financial Services Consultative Council
which will serve as a forum for discussions
of the innovative developments and international
trends in the field of financial services and
of a distinct and separate Financial Services
Promotion Agency for the promotion of the development
of the financial services industry in Mauritius;
and to provide for matters connected therewith
and incidental thereto.
The objects of the Commission are stated to
be:
- to
work out objectives, policies and priorities
for the development of the financial services
sector and to make recommendations to the
Minister;
-
to study new avenues for development in the
financial services sector, to respond to new
challenges and to take full advantage of new
opportunities for achieving economic sustainability
and job creation;
-
to ensure, in collaboration with the Bank
of Mauritius, the soundness and stability
of the financial system in Mauritius;
- to
ensure the sound conduct of business in the
financial services sector;
-
to ensure the orderly administration of the
financial services
activities; and
-
to elaborate policies which are directed to
ensuring the fairness, efficiency and transparency
of financial and capital markets in Mauritius.
The Commission is to:
-
be responsible for the administration of the
relevant Acts;
-
license, regulate, monitor and supervise the
conduct of business activities in the financial
services sector;
-
carry out investigations and take measures
to suppress illegal, dishonourable and improper
practices, market abuse and financial fraud
in relation to any activity in the financial
services sector;
-
set rules and guidance governing the conduct
of business in the financial services sector;
-
prepare, develop and implement a plan for
the better integration of the financial services
industry;
-
carry out research, commission studies and
disseminate information in the field of financial
services;
- promote
public understanding of the financial system
including awareness of the benefits and risks
associated with different kinds of investment;
-
ensure co-ordination and co-operation between
public sector agencies and private corporations
engaged in the financial services sector;
-
establish norms and standards in order to
preserve and maintain the good repute of Mauritius
in the financial services sector;
-
establish and maintain such links and liaison
with international agencies in the field of
financial services as may be necessary for
the furtherance of its objects;
-
take measures for the better protection of
consumers of financial services;
-
identify and take measures to prevent and
eliminate investment business abuse;
-
advise the Minister generally on any matter
relating to the financial services sector;
and
-
do such acts or things as are incidental or
conducive to the attainment of its objects.
The Commission is given a suitably wide range
of powers, including the ability to close the
Stock Exchange in various circumstances.
Financial
(non-banking) organisations licensed by the
Commission must
keep
in relation to his business activities in the
financial services sector, 'a full and true
written record, whether electronic or otherwise,
in the English or French language of every transaction
he makes.' The records must be retained for
at least seven years.
The Commission will establish compensation funds
'for the purposes of compensating investors
and other persons who suffer or have suffered
financial losses as a result of the inability
or eventual inability by a corporation licensed
under the relevant Acts to satisfy claims arising
from any civil liability incurred by it in connection
with services provided, or as a result of fraud
or defalcation by the corporation or any of
its employees or officers, or as a result of
the insolvency of such corporation.'
The
Act establishes two categories of 'Qualified
global businesses' which amount to offshore
companies, although there are multiple restrictions
and conditions, and licenses must be obtained
from the Commission. 'Management licenses' will
be issued to companies involved in the provision
of services to 'qualified global businesses'.
The
Act repeals the following existing laws:
-
The Mauritius Offshore Business Activities
Act 1992;
-
The Mauritius Offshore Business Activities
(Fees) Regulations 1992;
-
The Offshore Insurance Regulations 1992; and
-
The Mauritius Offshore Business Activities
(Companies) Regulations 1995.
It
also contains modfications to other existing
laws, including the Banking Act. Certificates
and licences issued under previous laws are
in most cases 'grandfathered' into the new regime.
Relevant laws include:
- The
Insurance Act 1987;
-
The Protected Cell Companies Act 1999;
-
The Securities (Central Depository, Clearing
and Settlement) Act 1996;
-
The Stock Exchange Act 1988;
-
The Trusts Act 2001;
-
The Unit Trust Act 1989.
The Act defines financial services or financial
business activities (which will therefore be
supervised by the FSC) to include:
- Asset
management;
-
Collective investment schemes;
-
Custodial services;
-
Factoring business;
-
Financial service providers and intermediaries;
-
Investment advisory services;
-
Leasing business;
-
Mortgage finance;
-
Retirement benefits schemes; and
-
Services provided by a qualified trustee under
the Trusts Act 2001.
Activities falling under the rules relating
to 'Qualified global businesses' (ie which can
have what used to amount to 'offshore' status)
include:
- Aircraft
financing and leasing;
-
Assets management;
-
Consultancy services;
-
Employment services;
-
Financial services;
-
Funds management;
-
Information and communication technology services;
-
Insurance;
-
Licensing and franchising;
-
Logistics and or marketing;
-
Operational headquarters;
-
Pension funds;
-
Shipping and ship management; and
-
Trading.
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Mauritius
The Trusts Act 2001
The
Trusts Act 2001 replaces the following Acts
which are repealed:
-
The Trusts Act 1989;
- The
Trust Companies Act 1989; and
- The
Offshore Trusts Act 1992.
The
following is a summary of some of the more important
features of the new Act.
The
new Act sets a maximum duration of 99 years
for trusts other than purpose trusts (25 years)
and charitable trusts (may be perpetual), and
permits the accumulation of income (limited
to 25 years if immovable property in Mauritius
is involved).
A settlor may also be a trustee, a beneficiary,
a protector or an enforcer, but may not be the
sole beneficiary of a trust of which he is a
settlor.
A
transfer or disposition by a non-citizen can
not be set aside, avoided, or otherwise declared
invalid or ineffective by virtue of any rule
or law of his domicile or nationality relating
to inheritance or succession or any rule or
law of a similar nature, or any rule or law
restricting the right of a person to dispose
of his property during his lifetime so as to
preserve such property for distribution at his
death, or any rule or law having similar effect.
Trusts
are irrevocable notwithstanding any provision
of the Bankruptcy Act, or any other law of Mauritius
or any rule of law of any other jurisdiction
or the fact that the trust is voluntary, and
is effected without consideration, or is made
on or for the benefit of the settlor, the spouse
or children of the settlor, or any of them.
A trust shall not be void or voidable, or otherwise
invalidated in the event of or by reason of
the settlor's bankruptcy or liquidation of his
property or in any action or proceedings against
the settlor at the suit of his creditors.
However the Court may declare a trust void,
where it is established that the trust was made
with the intent to defraud persons who were
creditors of the settlor at the time when the
trust property was vested in the trustee. No
such action can be undertaken after more than
2 years from the date of the transfer or disposal
of the assets to the trust.
Notwithstanding any rule or law relating to
enforcement of judgments given by the court
of another jurisdiction, where the law of Mauritius
is the proper law of a trust, the Court shall
not vary it or set it aside or recognise the
validity of any claim against the trust property
pursuant to the law of another jurisdiction
or the order of a court of another jurisdiction
in respect of:
-
the personal and proprietary consequences
of marriage or the dissolution of marriage;
-
succession rights (whether testate or intestate)
including the fixed shares of spouses, ascendants
and descendants or relatives; or
- the
claim of creditors in an insolvency.
Protective or spendthrift trust are allowed
for. The terms of a trust may make the interest
of a beneficiary subject to termination, restriction
on alienation of or dealing in that interest
or any part of that interest, or dimunition,
suspension or termination, in the event of the
beneficiary becoming insolvent or any of his
property becoming liable to seizure or sequestration
for the benefit of his creditors and such trust
shall be known for the purposes of this Act
as a protective or spendthrift trust.
A purpose trust must have an enforcer whose
duty is to enforce the trust in accordance with
its terms and purposes.
The
settling of immovable property in Mauritius
on a trust of which a non-citizen is a beneficiary
requires the approval of the Prime Minister
under the Non-Citizens (Property Restriction)
Act.
The
Act allows for a protector of a trust to be
appointed. His functions will be to advise the
trustee of the trust. The exercise by the trustees
of any of their powers and discretions shall
be subject to the prior consent of the protector.
The trust instrument may appoint as protector
any person of full age and of sound mind, including
the settlor, or any body corporate, any firm,
partnership or group of persons, whether incorporate
or unincorporate. The protector has a range
of other powers and may also be a settlor, a
trustee or a beneficiary of the trust.
The
Act provides for the appointment of a custodian
trustee which shall be a firm, a partnership
or a body corporate and who will act on the
instructions of a managing trustee.
The
Act provides for the appointment of a managing
trustee having the role and functions to manage
the trust without being vested with the trust
property which is vested in a custodian trustee.
The settlor or beneficiary of a trust may give
to the trustees a letter of his wishes or the
trustees may prepare a memorandum of the wishes
of the settlor with regard to the exercise of
any functions conferred on the trustees by the
terms of the trust.
The
number of trustees of a trust shall not exceed
4 of whom, at any one time, at least one shall
be a qualified trustee.
Except where ordered by the Court or a Judge
in Chambers a trustee shall keep as confidential
and shall not be required to disclose to any
person not legally entitled to it or be required
to produce or divulge to any Court, tribunal,
committee of enquiry or other authority in Mauritius
or elsewhere, any information or document in
his possession or under his control relating
to:
-
the state and amount or any other details
of the trust property;
-
the conduct of the trust administration;
- the
trustee's deliberations as to the manner in
which a power or a discretion was exercised,
or a duty conferred or imposed by the law
or by the terms of the trust was performed;
-
the reason for any particular exercise of
such power or discretion or performance of
duty or the material upon which such reason
will be or might have been based; or
- the
exercise or proposed exercise of such power
or discretion or the performance or proposed
performance of such duty.
However, these secrecy provisions are heavily
compromised by a series of qualifications in
respect of money laundering, international mutual
assistance treaties etc.
In most respects, the new Act inherits tax privileges
granted under previous acts, and Section 46
of the Income Tax Act 1995 is amended accordingly:
- (1)
Subject to section 7 and subsections (2) and
(3) of this section, every trust shall be
liable to income tax on its chargeable income
at the rate specified in Part III of the First
Schedule.
- (2)
A trust of which
- (a)
the settlor is a non-resident; and
- (b)
all the beneficiaries appointed under
the terms of the trust are, throughout
an income year, non-resident, or hold
a Category 1 Global Business Licence or
a Category 2 Global Business Licence under
the Financial Services Development Act
2001
- shall
be liable to income tax on its chargeable
income at the rate specified in Part II
of the First Schedule.
- (3)
Where a trust which qualifies under subsection
(2) deposits a declaration of non-residence
for any income year with the Commissioner
within 3 months after the expiry of the income
year, it shall be exempt from income tax in
respect of that income year.
- (4)
The chargeable income under subsections (1)
and (2) shall be the difference between:
- (a)
the net income derived by the trust; and
- (b)
the aggregate amount distributed to the
beneficiaries under the terms of the trust.
- (5)
Any amount distributed to the beneficiaries
under the terms of the trust shall be deemed
to be a charge under section 10(1)(d) and
shall be liable to income tax in the hands
of the beneficiaries.
- (6)
Notwithstanding subsection (5), a non-resident
beneficiary of a trust shall be exempt from
income tax in respect of his income under
the terms of the trust.
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Mauritius
Companies Act 2001
Until
2001, companies in Mauritius were formed under
the Companies Act 1984, which was modelled on
the English Companies Act 1948. Companies may
be limited by shares or by guarantee, or they
may be unlimited. Companies are incorporated
by swearing a deed of incorporation in front
of a notary, after the Registrar of Companies
has approved the company's name. There has to
be a local registered office where the company's
books and records are kept, but this can be
maintained by a professional firm. There must
be a minimum of two directors, and a secretary
who must be a local resident. Audited annual
financial statements and an annual return must
be filed with the Registrar of Companies. Company
formation takes between two and three weeks.
Minimum authorised capital is MR 25,000, and
annual registration fees vary between MR 4,000
and 8,000 depending on the amount of share capital.
The
new Companies Act 2001 replaced most of the
Companies Act of 1984, other than sections dealing
with insolvency and public companies, which
remained in force until new legislation is brought
forward in separate bills.
The
Government's starting point for the new law
was New Zealand company law, which is widely
regarded among English-speaking jurists as representing
the best available compromise between the various
modern trends in corporate legislation, now
that English law has been so influenced by EU
law as to be no longer satisfactory as a model
for common law jurisdictions.
The
incorporation and management of Offshore Companies
and International Companies, which were previously
constituted under the separate International
Business Companies Act 1994, have been brought
under the Companies Act 2001, and the two types
of company are now known as Global Business
Company 1 (GBC1) and Global Business Company
2 (GBC2).
Some
key features of the new legislation are as follows:
- The
Act introduces a simple form of incorporation
enabling a company to be incorporated on the
filing of a single application together with
the necessary consents from the proposed directors
and secretary and a notice of reservation
of the proposed company name. It will not
be necessary to submit a constitution at the
time of incorporation. If a company wants
to depart from the standard requirements set
out in the Actl, then, either on incorporation
or subsequently, it needs to file a separate
constitution setting out the departures from
the standard form. The new legislation also
recognises the reality of 'nominee' shareholders
by allowing companies to operate with just
one shareholder.
- The
Act does away with the need for a separate
objects clause, and provides that a company
has the rights, powers and privileges of a
natural person; this incidentally removes
the remains of the one-time ultra vires doctrine.
This would not preclude a company from stating
specific objects in its constitution if it
wished to limit the capacity of a company
in this way.
- The
Act replaces the Memorandum and Articles of
Association by a single constitution, which
is no longer required to be notarised.
-
Private companies continue to be prohibited
from offering shares or debentures to the
public, and are able to dispense with the
holding of company meetings by passing resolutions
by means of entry in the company minute book.
Exempt private companies will not be required
to appoint a qualified auditor or a qualified
secretary and will be entitled to file only
a summary statement of accounts with the Registrar.
-
The proposed legislation retains the distinction
between exempt and non-exempt private companies
in the same form as in the existing legislation.
- The
Act introduces no par value shares and permits
a company to issue shares which are not designated
with any monetary value.
- The
Act incorporates the new procedure of self-purchase
and holding of treasury shares introduced
by the Finance Act 1999.
-
The new legislation makes provision for a
company to provide in its constitution for
the company to have power to indemnify or
insure its directors, secretary or employees
in accordance with the limitations provided
by the Act.
-
The Act contains a requirement that public
companies and non-exempt private companies
are required to prepare and present their
accounts in accordance with international
accounting standards and that exempt private
companies are required to present their accounts
in accordance with accounting practices and
principles that are reasonable in the circumstances
and having regard to any requirements set
out in regulations made under the Act.
- The
old Companies Act required all companies to
appoint an auditor but relieved exempt private
companies from the requirement to appoint
a qualified auditor. The new Act allows an
exempt private company not to appoint an auditor
(whether qualified or unqualified).
-
New provisions allow for the continuation
in Mauritius of companies which are incorporated
elsewhere and also provides for the incorporation
of limited life companies.
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