Mauritius: Country and Foreign Investment
IThe Stock Exchange Act of 1988 led to the formation of the Stock Exchange of Mauritius (SEM) in 1989. The exchange is regulated by the Financial Services Commission. There is an Official List with 38 listings and a 'Development & Enterprise Market' (DEM) with 51 companies listed.
Total market capitalization stood at just under US$10.3 billion at the end of November 2017, a dramatic increase on the 2011 total of US$5.721 billion. Annual turnover in 2016 decreased by nearly 25% from 2015 to just over US$371 million. A new Securities Act was passed in 2005 and the regulatory system was modified in 2008.
The automated trading system, SEMATS, launched in 2001, lead to a shake-up of the trading system on the stock exchange. Trading in securities is conducted through dedicated trading workstations at stockbroking firms and linked by communication lines to the SEM trading engine.
The status of the SEM recently rose from 'corresponding exchange' to ‘affiliated securities market’ within the Fédération Internationale des Bourses de Valeurs (FIBV). Mauritius is also a member of the African Stock Exchanges Association (ASEA).
The market was opened to foreign investors after the lifting of exchange controls in 1994. Foreigners are limited to individual holdings of not more than 15% in sugar companies, but are not otherwise limited unless they attempt to gain legal or management control of a Mauritian company (see Business Environment below). Settlement can be made in foreign currency; there is no capital gains tax or withholding tax on dividends from companies on the Official List.
Launched in 2006, the Development & Enterprise Market (DEM) was designed for companies previously quoted on the Over-The-Counter (OTC) Market, Small and Medium-sized Enterprises (SMEs) and newly set up companies which have a sound business plan and demonstrate a good growth potential.
It is meant for companies seeking an organised and regulated market to raise capital to fund their future growth, improve liquidity in their shares, obtain an objective market valuation of their shares and enhance their overall corporate image. The rules governing the DEM are less stringent than those of the official market, and the market is open to foreign investors.
In early 2010, the SEM brought some major changes to its Listing Rules to align them with the Collective Investment Schemes Regulations 2008 with a view to positioning the SEM as an attractive venue for the Listing of Global and Specialised Funds. The recent changes to the Listing Rules were designed to attract the listing of Global and Specialised Funds on the Exchange. The Exchange made its Listing Rules more flexible to reflect the specific attributes and characteristics of the Specialised Funds it would like to list on the SEM. The SEM joined the World Federation of Exchanges (WFE) in November 2005.
In February 2008, the Financial Services Commission (FSC) announced that a licence to operate a Commodity Exchange had been issued to Global Board Trade Ltd (GBOT). GBOT’s main promoter is Financial Technologies (India) Ltd (FTIL), a company listed on both the Bombay Stock Exchange and the National Stock Exchange of India and one of the main promoters of the Multi Commodity Exchange of India (MCX). MCX, India’s largest Commodity Exchange, is partly owned by NYSE Euronext.
This has taken shape as a spot trading market for diamonds, gold and other precious metals. The Dubai Multi Commodities Centre has provided assistance with this endeavour. This part of the Commodity Exchange is intened to be the first phase of a broader Multi Asset Class Exchange. In the next stage, trading on the Commodity Exchange will expand to base metals, energy, green contracts and agricultural commodities. The Commodity Exchange will allow different categories of participants - from within Mauritius and abroad - to trade through an electronic platform linking geographically dispersed buyers and sellers in real time.
The promoters of GBOT expect that the Commodity Exchange based in Mauritius will help accelerate the integration of the African sub-continent with the world economy by exploiting the strategic location of Mauritius between the time zones of New York, London and Tokyo and will boost the image of Mauritius as a globally-integrated, leading financial centre in the region. The Exchange will facilitate links between commodity markets in Africa and global trading hubs, in accordance with principles of price transparency, trade efficiency, risk hedging and structured finance to the interiors of the region.
The exchange started trading operations on 18 October 2010 and had contracts worth US$12 million traded in its first month of operations.