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Opportunities in the Financial Services Sector

Rich in history and ancestral linage, the Mauritius Banking Sector has been at the service of the economy since 1838. Mauritius is in fact eulogized as having the oldest banking institution of the south of the Sahara, and one of the oldest banks of the Commonwealth.

Today, the Mauritius IFC is made up of 22 local and international banks, offering a wide array of services, from traditional retail banking facilities to specialized services such as fund administration, private banking, structured trade finance, Islamic banking, investment banking and custody services. All the banks are licensed by the Bank of Mauritius to carry out banking business locally and internationally.

Besides traditional banking facilities, banks offer card-based payment services, such as credit and debit cards internet banking and phone banking facilities. Specialized services such as fund administration, custodian services, trusteeship, structured lending, structured trade finance, international portfolio management, investment banking, private client activities, treasury and specialized finance are also offered by banks.

Banks in Mauritius are provided with a single banking licence which entitle them to conduct both domestic and international transactions, and transact in all currencies, including the Mauritian rupee. In practice, the banking business of a licensed bank is divided into two segments; Segment A relates to all banking businesses with the exception of businesses which give rise to “foreign source income”, which is termed as Segment B.

The Mauritius banking sector has been the recipient of a number of international accolades and awards over the past few years.

The fast expanding Mauritian economy and the buoyant regional opportunities present a lot of opportunities for investment in banking in and through Mauritius in the following fields:

  • Global Business Banking – Leveraging on its set of innovative products for investment structuring targeting the emerging countries of Asia and Africa, the Mauritian banking sector offers lucrative opportunities in global business banking.
  • Private Banking – the increasing pool of High Net Worth Individuals in Mauritius as well as in the region, makes the jurisdiction an ideal platform for private banking and wealth management services.
  • Investment Banking – the growing need of investments in the region positions Mauritius as the platform of choice for the structuring of financing needs.
  • Islamic Banking – boosting from a dedicated set of guidelines for Islamic Finance and Banking. Mauritius offers a neutral and competitive platform for the provision of Shariah compliant banking services. Mauritius is rapidly becoming an active player in the global Islamic finance industry. The combination of fiscal and non-fiscal factors has made Mauritius a very attractive jurisdiction to structure Islamic products.
Other Opportunities & Services:
  • Treasury services, including foreign currencies, risk management and investments.
  • Funds, including Shari’a-compliant investment funds.
  • Trade Finance, including letters of credit, bank guarantees and collection and discounting of bills.
  • Representative offices of foreign banks in Mauritius
Regulatory Framework

The banking sector in Mauritius is governed by the Banking Act 2004 and the Bank of Mauritius Act 2004. The regulator, the Bank of Mauritius, was established in 1967, and was modelled on the Bank of England, the central bank of England. The Bank of Mauritius also governs non-banking deposit taking institutions, and publishes guidelines and guidance notes on all matters pertaining to the commercial operations of banks.

http://www.bom.mu

Basel Requirements

The banks in Mauritius have to adhere to Basel II of the Basel Accords, as well as certain additional elements relating to the strengthening of the capital framework relating to Basel III, as per the reform package issued by the Basel Committee on Banking Supervision. It is noteworthy that the banks in Mauritius largely exceed, nearly around 35%, the minimum Tier I capital requirements recommended by the Basel Accords. This explains the resilience of the Mauritius banking system against shocks arising from financial and economic stresses.

Capital Markets

The Capital Markets in Mauritius is one of the most vibrant sectors of the economy and the country provides a dynamic debt and equity market. It is the second largest market in the African region.

Mauritius provides investors with a dynamic securities market and offers world class trading facilities. The trade of fixed interest securities and equity normally takes place through market intermediaries, regulated as Investment Dealers.

Coming a long way since its launch in 1989, the Stock Exchange of Mauritius (SEM) is today one of the precursors in sustainability in the African continent.

Mauritius is home to some of the most impactful and leading funds from around the world. Boasting over a thousand funds, a collective AUM in excess of USD 80 billion, and a sizeable number of them from development finance institutions and sovereign wealth funds, Mauritius is noted as the gold standard for fund management and administration.

Mauritius is home to some of the most impactful and leading funds from around the world.  Mauritius is noted as the gold standard for fund management and administration. Mauritius offshore fund clients to ensure the ongoing quality, efficiency and service level of our global fund services. As a global fund service provider, we are both proactive and reactive to support our offshore fund clients' evolving needs.

The Funds are structured as investment companies in Mauritius, and can either be open-ended, falling under the Collective Investment Schemes category, or closed-ended, commonly referred to as Private Equity funds. The Funds domiciled in the Mauritius IFC are eligible to all the benefits which accrue to Global Business Companies.

Global Funds domiciled in Mauritius may also take advantage of the flexible listing rules of the Stock Exchange of Mauritius to list on one of the leading platforms in Africa, member of a number of international bodies, including the World Federation of Exchanges, South Asian Federation of Exchanges, African Securities Exchanges Association and Committee of SADC Stock Exchanges. Such listings would attract investors’ value, and demonstrate substance, notably to institutional investors and development finance institutions.

Collective Investment Schemes

A Collective Investment Scheme ('CIS' / Offshore Fund / Global Fund) is defined under the Securities Act 2005 as a scheme constituted as a company, a trust, or any other legal entity (e.g. a limited partnership) prescribed or approved by the Financial Services Commission (FSC) in Mauritius:

  • 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 FSC;
  • Whose operation is based on the principle of diversification of risk;
  • That has the obligation, on request of the holder of the securities, to redeem them at their net assets value, less commission or fees;
  • 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;
  • Includes closed-end funds whose shares or units are listed on a securities exchange;
  • Excludes such schemes as are specified in Part II of the Schedule SA 2005.

Global CIS

The Global CIS is a fully-regulated CIS, and they are funds which are essentially meant for the public. This CIS normally does not hold a Category 1 Global Business license, and is not entitled to any of the exemptions generally provided to funds.

Professional CIS

Professional CIS are schemes which offer their shares solely to sophisticated investors or as private placements. Sophisticated investors include Governments or public bodies, and banks, amongst others. Professional CIS are exempted from most obligations and regulations as long as the interests of the Professional CIS are not resold to the public and they are not listed on a securities exchange, whether in Mauritius or elsewhere.

Specialized CIS

A Specialized CIS consists of funds which are invested in real estate activities or in derivatives or commodities, as well as other products which may be approved by the Financial Services Commission.

Expert Funds

An Expert Fund consists of funds which only available to Expert Investors. An Expert Investor is an investor who makes an initial investment for his own account of no less then USD 100,000. Most of the obligations and restrictions governing Global Funds do not apply to Expert Funds.

The Mauritius IFC boasts a well-developed Insurance sector; it is regulated and supervised by the Financial Services Commission (FSC) under the Insurance Act 2005. The current regulatory framework has many strong elements, including reliance on solvency monitoring, prudent asset diversification, international accounting standards, and actuarial methods.

The well-developed insurance industry in Mauritius comprises of 24 companies and contributes to 3.1% to the GDP.

Insurance Business in Mauritius
  • Long Term Insurance Business means life insurance, pension and permanent health insurance business.
  • General Insurance Business: insurance business other than long term insurance business whereby policies are delivered with respect to Accident & Health, Engineering, Guarantee, Liability, Motor, Property, Transportation.
  • External Insurance Business: Corporation engaged in insurance business, including captive insurance business, restricted solely to non-Mauritian policies.

In 2014, total assets of Life and General insurance companies reached 33.7% of GDP whereas the Long-Term Insurance category held assets totalling USD 3.92 Billion.

There is no minimum requirement for investment in Government securities.  Investment in overseas assets are limited to 25 percent of total assets, except for foreign life companies and general insurance business which are not allowed to invest in overseas assets.

Captive Insurance

Following the enactment of the Captive Insurance 2015, the legislative framework has been set for the establishment and management of pure captive vehicles in Mauritius.

The captive Insurance Law is a fine and modern piece of legislation which should establish the jurisdiction as a domicile of choice for captive insurers focusing on Africa and why not Asia too.

The Act only applies to “pure captives” meaning the business of undertaking liability restricted to the risks of parent and affiliated corporations. The Insurance Act 2005 which has now been amended was previously governing captives but unfortunately not in a satisfactory manner. Captive insurers will be regulated by the Financial Services Commission and can also be licensed as Global Business Companies Category I.

Mauritius offers an attractive and stable environment for captive insurance companies. The Captive Insurance business has become an ever increasing method for companies to manage their annual premium payments with sustained and continued growth over the past decade. There are over 5,700 captives worldwide writing a total of more than USD 55 billion of premiums annually.

A captive is a wholly owned subsidiary created to provide insurance to its parent company and group. It is essentially a form of self-insurance where the insurer is owned by the insured. It reduces costs and risk management and enhances risk control. These captives do not offer insurance to the public. They do not cover life insurance business or items such as liability for motor vehicles.

Regulatory Framework

The Financial Services Commission, Mauritius (the ‘FSC’) is the integrated regulator for the non-bank financial services sector and global business. Established in 2001, the FSC is mandated under the Financial Services Act 2007   and has as enabling legislations the Securities Act 2005, the Insurance Act 2005 and the Private Pension Schemes Act 2012 to license, regulate, monitor and supervise the conduct of business activities in these sectors. The current regulatory framework has many strong elements, including reliance on solvency monitoring, prudent asset diversification, international accounting standards, and actuarial methods.

http://www.fscmauritius.org/

Global Legal Advisory Services Licence

The Global Legal Advisory Services (GLAS) Licence enables flagship international law firms to set up their regional offices and operations in the Mauritius IFC.

The law firms licensed under GLAS are eligible to provide legal advisory services on both international and domestic laws, including in the field of alternative dispute resolution, financial services, and corporate and cross-border transactions, capital markets, insurance, and banking, amongst others.

Limited Liabilities Partnership

The Mauritius IFC has introduced the Limited Liability Partnership (LLP) to provide a conducive structure for the flagship international law firms to establish in Mauritius. The LLP also caters for other professional service providers operating in fields other than legal services.

Overseas Family Offices

The Overseas Family Office Scheme caters for the domiciliation of assets and wealth of high net worth families in Mauritius.  The Scheme consists of two licences, one for single family offices and the other for multi-family offices.

Asset and Fund Managers

The Fund and Asset Manager Scheme provides mid to big size fund and asset managers with the incentive to establish their management offices in Mauritius, notably for their African portfolio.

Global Headquarters Administration

The Global Headquarters Administration Licence is provided to a holding company, incorporated in Mauritius and belonging to a well-established international group, reputed in its field of business and industry.

Global Treasury Activities

The Global Treasury Activities Licence caters for treasury nerve centre of multinational corporations incorporated in Mauritius, and providing treasury services to related entities.

Investment Bank

The new Investment Banking Licence caters for investment banks to establish in Mauritius, and to provide investment banking services in mergers and acquisitions, listings, IPOs, cross-border investments and other advisory services.

Capital Markets

The Capital Markets in Mauritius is one of the most vibrant sectors of the economy and the country provides a dynamic debt and equity market. It is the second largest market in the African region.

Mauritius provides investors with a dynamic securities market and offers world class trading facilities. The trade of fixed interest securities and equity normally takes place through market intermediaries, regulated as Investment Dealers.

Coming a long way since its launch in 1989, the Stock Exchange of Mauritius (SEM) is today one of the precursors in sustainability in the African continent.

The SEM operates two markets:

  • The Official Market
  • The Development and Enterprise Market

In pursuit of its internationalisation strategy, the Mauritian capital markets is embracing multi-product and commodities platforms in addition to its equity-based platform.