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MAURITIUS
as a Base for International
Mutual FundsUday K. Gujadhur
December 5, 2003
ssociation of Offshore Management Companies
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Mutual Fund IndustryMutual Fund Industry -- OriginOrigin
Established in 1989 with the enactment of : Stock Exchange Act 1989
Unit Trust Act 1989
Companies Act 1984
The National Mutual Fund was launched
In 1992 the MOBA Act 1992 was enactedwhich gave rise to offshore funds
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FUND INDUSTRY IN MAURITIUSFUND INDUSTRY IN MAURITIUS
Domestic Funds
Global Funds
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Definition : Investment EntityDefinition : Investment Entity
Investment entity means : An Investment Company
An authorised Mutual Fund
A Unit trust scheme Any other Collective investment arrangement established
with objective of allowing participants to spread their
investment risk and benefit from the management of asset.
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FUND INDUSTRY IN MAURITIUSFUND INDUSTRY IN MAURITIUS
Domestic Funds
Open and closed ended
Unit Trust Funds and Fund managers regulated by FSC
Minimum capital requirement for fund manager is MUR 5
million (approx. USD 175,000).
Up to 40% of the corpus can be invested overseas subject
to FSC approval.
10 open ended {out of which 8 Unit trusts (1 listed) and 2
companies} and 12 close ended funds (all listed)
Taxed as tax incentive companies at 15%
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Close and Open Ended Funds in Mauritius
0
10
20
30
4050
60
70
2000 2001 2002 2003
YEAR
NA
V
inMillionUSD
Open
closed
Domestic Fund Industry inDomestic Fund Industry in
MauritiusMauritius
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GlobalGlobal FundFunds in Mauritiuss in Mauritius
Over 263 funds representing NAV of USD 6.6 bn.
Primarily India related Funds
Also Asian Regional funds and Africa Fund
Hedge funds
Single- tier or two tier
Open or close ended
Listed Portfolio funds
Private Equity funds
Debt funds
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Legal FrameworkLegal Framework
The Companies Act 2001
The Financial Services Development Act 2001
The Protected Cell Company Act 1999
Unit Trust Act 1989The Financial Intelligence and Anti-Money Laundering Act 2002
The Prevention of Corruption Act 2002 and The Prevention of
Terrorism Act 2002
Income Tax Act 1995
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Protected Cell CompaniesProtected Cell Companies
Used for Funds or Insurance Companies
Single legal entitylegal segregation and protection of assets / liabilities
No minimum capital requirements
Creation of cellular and non cellular assets
Unlimited number of cells
Incorporated/continued/convertedFormal procedure for liquidation/receivership of any individual
cells
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Regulatory FrameworkRegulatory Framework
FSC Licensing and supervision of all non-banking financial
services
Non-banking financial services includes:
Global Business Activities
Insurance
Fund Management
Leasing
Capital Markets
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Licensing : ConsiderationsLicensing : ConsiderationsProven and demonstrable track record, credentials and particulars of
promoters/sponsors and all persons involved.
Structure, Investment Policy, restrictions and objectives of the CIS.
Mode of raising funds, borrowing policy and restrictions.
Basis of NAV calculation
Conditions for issuance and redemption of shares
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Licensing : ConsiderationsLicensing : Considerations
Risk profile and location of the investors and the markets(s) targeted
Licence/registration with the foreign regulator
Compliance with regulations in third countries
Ability to implement procedures / arrangement to be able to fulfill
continuous obligations
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FSC : Best PracticesFSC : Best PracticesChanges in objects of the company to be notified
Restriction on doing business with residents except with FSC approval
Scheme documents, investment plans and operational agreements to be
filed.
Licence/registration with the foreign regulator before carrying activities in
any jurisdiction
Disclosures for Due diligence
Registered office in Mauritius mandatory
Transaction to be routed through a local bank
Hold directors meetings in Mauritius
Maintain accounting records in Mauritius
Quarterly reporting / NAV calculation
Adherence to future enactments
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Number of Registered Global Funds
050
100
150200250300
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
Calendar year
NumberofFunds
Global Fund StatisticsGlobal Fund Statistics
Source: FSC
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Analysis of Funds by typeAnalysis of Funds by type
7%7%
23%
63%
Venture capitalschemes
PCCs
Close ended
Open ended
Source: FSC Annual Report 2002
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Funds : Geographical spreadFunds : Geographical spread
Source: FSC Annual Report 2002
71%
5%
13%
5% 6%
0%
10%
20%
30%
40%
50%
60%
70%
80%India
Africa and Asia Pacific
South East and Far East
Asia
Europe and USA
Worldwide
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Global Funds ValuationGlobal Funds Valuation
Source: FSC
Note : The active NAV as at 30th June 2003 was USD 6.6 bn.
NAV
0
2
46
8
10
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
As at 31st December
US
$Billion
Source: FSC Annual Report 2002
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Single Tier Two Tier Branch Listed
Two Tier Parent in:
Guernsey and Jersey
LuxembourgCayman Islands
Ireland
Singapore
UK
Switzerland
Listed:
Luxembourg
IrelandLondon
Zurich
New York
Mauritius
Structure of FundsStructure of Funds
Single Tier:
Mauritius Domicile
Pooling of InterestsListing
Manager domiciled in
various jurisdictions, incl.
Mauritius
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Taxation of Global Funds inTaxation of Global Funds inMauritiusMauritius
Tax incentive company: liable to income tax atthe rate of 15%.
Entitled to a tax credit equivalent to the higher of :
actual foreign tax suffered and
80% of the Mauritian tax on its foreign source ofincome.
Gains on disposal of securities is exempt in
Mauritius No withholding tax in Mauritius
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Typical Fund StakeholdersTypical Fund Stakeholders
Investors
FundInv. Manager
Inv. Advisor
Administrator,
Registrar &Secretary
Custodian
Sub-CustodianCash
Custodian
Auditors
Sub-Administrator
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Administrator
Mauritius
Fund Investment
Manager
InvestmentsIndian Custodian
Mauritian Cash Custodian
InvestorsInvestors Investors
Parent Holding
Worldwide
Mauritius
India
Fund Structure : IndiaFund Structure : India
STRUCTURE A
Analysts
Global Custodian
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Administrator
Mauritius Fund
Investments
Investment Manager
AnalystsIndian Custodian
Mauritian Cash Custodian
Global Custodian
Fund Structure : IndiaFund Structure : India
InvestorsInvestors InvestorsWorldwide
Mauritius
India
STRUCTURE B
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FundInvestment
Manager
Investment
AdviserClass A Class B Class C
Administrator
Custodian
Debt Equities Debt & Equity Regional Investments
Fund Structure:Fund Structure: MulticlassMulticlass
Investors
Worldwide
Mauritius
Investee Countries
Class D
Global Custodian
Sub-Custodian
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Administrator
Cell A
Equity
Investment Manager
Cash Custodian
Fund Structure : PCCFund Structure : PCC
InvestorsInvestors Investors
Cell B Cell C Cell D
Investors
Debt Mixed
Portfolio
Regional
Worldwide
Mauritius
Investee CountriesSub-Custodian
Global Custodian
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Supervision by FSCSupervision by FSC
Onsite visits
Offsite supervisionThrough audited accounts prepared in accordance with
International Financial Reporting Standards
Through contacts with other supervisory bodies for purpose
of exchange of information on cross border supervision
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Listing Requirements on Stock Exchange of MauritiusListing Requirements on Stock Exchange of Mauritius
for investment entitiesfor investment entities Demonstrate an adequate trading and financial record for three
preceding years. For investment company this condition may bedispensed with.
Board of directors must be able to demonstrate that it will actindependently of any investment manager
Distributable income must be principally derived from investments
Company must not take legal or management control of
investments in its portfolio Must invest in 10 or more securities each of which has been issued
by non related parties
Dividends must not be paid unless they are covered by income
received from the underlying investments Within one year of the first marketing of the securities to the
public, the company must have a minimum paid up capital of 20million rupees
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Listing Requirements on Stock Exchange of MauritiusListing Requirements on Stock Exchange of Mauritius
for investment entitiesfor investment entities
Issue at least 25% of the shares to the public(minimum of
200 shareholders) (may be waived in appropriatecircumstances)
Not more than 20% of the gross assets of the company
may be lent to or invested of any one company or group
The listing particulars must contain information to enable
investors to be reasonably well informed about the
securities quoted and the issuer
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Functions of AdministratorFunctions of Administrator Set up and launch
Full administration: Portfolio pricing and NAV calculation at
required frequency
Performing Registrar functions
Acting as Company Secretary
Ensuring compliance with legislation and licensing conditions
Maintenance of all books and records
Liaison with external parties for settlement of trades
Monitoring investment parameters
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Functions (contd.)Functions (contd.)
Comparing portfolio performance with benchmarks
Processing subscriptions/ redemptions
Maintaining share register
Organising board meetings
Preparing semi-annual and annual reports
Advising on dividend distributions
Co-ordinating audits
Liaision with tax advisers and ensuring that relevant tax
returns are filed within deadline
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Future DevelopmentFuture Development
Proposed Securities legislation
CIS Legislation
Insolvency legislation
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Mauritius as a Mutual Fund JurisdictionMauritius as a Mutual Fund Jurisdiction
Common jurisdiction for pooling of investors
Proven fund administration facilities
Cost efficiency
Well regulated and recognised financial services sector
Availability of banking and legal expertiseIdeally located between the Far East / Australia / Europe/USA
DTAs with 28 countries and IPPAs with several countries
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Treaty CountriesTreaty Countries
EuropeBelgium Sweden
France LuxembourgU.K. Belgium
Italy Cyrus
Croatia
AsiaIndia Singapore
China MalaysiaSri Lanka Indonesia
Thailand NepalPakistan
AfricaZimbabwe Namibia
Swaziland South AfricaMadagasca Mozambique
Botswana Rwanda
Middle EastOman
Kuwait
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Opportunities in MauritiusOpportunities in Mauritius
Marketing of overseas products
Fund Management Pension Funds
Gateway to Africa
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Thank YouThank You
AOMC Secretariat Tel: + 230 211 2153C/o Suite 608 Email: [email protected]
St. James Court
St. Denis Street Website : www.aomc.mu
Port Louis (operational as from January 2004)
Mauritius
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Uday K. Gujadhur10, Frere Felix de Valois Street
Port Louis-Mauritius
(230) 202 3000 Telephone
(230) 212 5265 Facsimile