Mauritius: New Rules for Category 1 Global Business Companies
The Economic and Financial Measures (Miscellaneous Provisions) Act 2013 amended the Financial Services Act 2007 with the aim of giving Category 1 Global Business Companies (GBC1) greater flexibility to conduct business activity in Mauritius, subject to regulations that would be issued by the Mauritian Financial Services Commission (FSC) in due course.
On the 28th February the FSC announced details of amendments to the Guide to Global Business Chapter 4 which relates to the conduct of business by GBC1’s. The new requirements will come into force on the 1st January 2015.
At present GBC1 are obliged to meeting the following substance rules to qualify under FSC regulations as being ‘managed and controlled’ from Mauritius. The obligations are met providing the company satisfies the requirements that:
- There are two resident directors. The directors themselves must be suitable and properly qualified to exercise independent judgement and decision making;
- Maintains its principal bank account in the jurisdiction;
- Keeps and maintains its accounts at its registered office;
- Prepares its financial statements or the financial statements are audited in Mauritius; and
- Board meetings include at least two Mauritian directors.
Under the new regulations greater substance will be required to demonstrate ‘management and control’ from Mauritius. In addition to the current requirements a GBC1 must meet a minimum of one of the following requirements:
- Maintaining office premises in the jurisdiction;
- Has at least one local full time employee at an administrative or technical level and that employee is resident in Mauritius;
- Disputes arising from the company’s constitution shall be resolved by arbitration in Mauritius;
- Holds assets worth a minimum of USD 100,000 in Mauritius, excluding bank account deposits and shares of another GBC;
- Listing its shares on the Mauritius stock exchange;
- Incurring reasonable annual expenditure in Mauritius, what constitutes ‘reasonable annual expenditure’ will be determined by the FSC on an individual basis. Consideration will be given to the GBC1’s activity, turnover, asset value and the industry average.
The purpose of the enhanced substance regulations is to strengthen the jurisdiction’s reputation as an attractive international financial centre where business activity is conducted in compliance with the OECD recommendations and current global best practice.
Section 71(6) of the Financial Services Act 2007 has been amended by the Economic and Financial Measures (Miscellaneous Provisions) Act 2013 to provide greater flexibility for Category 1 Global Business Companies (GBC1s) to conduct business in Mauritius, subject to such restrictions, terms and conditions as may be provided in any guidelines issued by the FSC.
Sections 4 and 5 of Chapter 4 of the Guide to Global Business have been amended to provide guidance to investors and service providers with respect to the determination of conduct of business by GBC1s.
The FSC will take appropriate actions where a holder of a Category 1 Global Business Licence fails to comply with any guidelines or Rules issued by the FSC.