In today’s intricate financial landscape, fund managers face a myriad of challenges in meeting the diverse needs of their investors while navigating the complex web of regulatory and fiscal requirements. It’s a landscape where precision, expertise, and efficiency are paramount. At Blue Azurite, we recognise the multifaceted nature of these challenges, and we specialise in providing comprehensive fund services meticulously crafted to meet your specific needs and regulatory standards.
Our approach is rooted in a structured integration process and a rigorous work methodology. We understand that each investment fund is unique, with its own set of attributes and requirements. Therefore, our team of specialists is dedicated to delivering turnkey solutions tailored precisely to your fund’s structure and objectives.
When it comes to fund services, we offer a wide range of solutions designed to streamline operations, enhance compliance, and optimise performance. From fund administration to statutory compliance, investor services, tax management, company secretary tasks, and substance, we’ve got you covered every step of the way.
Operating a Fund in Mauritius
Mauritius presents a compelling landscape for investment funds, underpinned by a sophisticated regulatory framework overseen by the Financial Services Commission (FSC). At the heart of this framework lies a hierarchical system that blends primary legislation with responsive regulations, ensuring adaptability to market dynamics.
To operate in Mauritius, investment funds must undergo registration or approval as either Collective Investment Schemes (CIS) or Closed-End Funds (CEF), with fund managers seeking approval to manage the fund unless the fund is managed by its board of directors. The spectrum of fund categories, including Retail Schemes, Global Schemes, Expert Funds, Specialised CIS, and Professional CIS, provides diverse investment avenues.
When considering establishing a fund in Mauritius, fund managers have access to a range of structures, among which the Global Business Company (GBC) stands out as the predominant choice. Under this arrangement, shares are typically issued at a specified par value, with all outstanding shares enjoying equal rights. The GBC can be formed as an independent entity or integrated into a multi-entity vehicle like a master-feeder structure. It is usually setup with limited liability which limits shareholders liability to the initial amount invested.
Using a company structure, a fund can issue multiple share classes, provided such provision is outlined in its constitution. Multiple share classes give the investment manager flexibility in offering different terms to different group of investors. For example, varying performance fee structures or restricting participation in certain types of income, such as new issues.
Another option is the limited partnership structure. One advantage of this structure is that investors are automatically segregated into their own ‘class’, thus eliminating the need to create multi share classes to deal with different offering terms as would be required with a company. Instead, each limited partner’s investment is tracked in a capital account which will be updated to reflect the profit and loss, based on the fund’s performance and each net asset value (NAV) calculation date.
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The variable capital company (VCC Fund) is another structure which was released in Q3 2022. The VCC Fund facilitates the creation of multiple sub-funds and SPVs in a cost-effective way. The MAIN benefit of this structure is the ability to separately manage different types of funds, CIS and CEF, under a common governance framework while avoiding any cross-liability. If losses occur in one sub-fund, the other sub-funds cannot be held liable.
We also have the unit trust as a fund structure that has been popular among African fund managers. The unit trust is often viewed as the preferred vehicle by Africans for investing because of the security brought by the qualified trustee overseeing the management of the portfolio of investment.
Irrespective of the structure chosen and the type of fund, the FSC will require a business plan, risk management procedures and the relevant legal documentation including the offering documents, custody agreement (if applicable) and administration agreement. The approval process also requires the submission of sufficient background information about the promoter and fund manager to satisfy the FSC regarding their personnel, experience and financial resources to fulfil their responsibilities.
Topics like operational due diligence and transparency are now just as important as a fund’s performance. Having an independent fund administrator is viewed as a requirement by most institutional investors as it provides an added level of confidence in the calculation of the NAV of the funds.
Blue Azurite, the fund administrator of a Mauritius domiciled fund will also ensure that the entity is compliant with local regulatory requirements and it will keep the fund manager abreast of any impeding changes to the regulatory that may be relevant to their funds.
A minimum of two of the fund directors must be resident in Mauritius. Each director must be approved by the FSC by passing their ‘fit and proper’ test, in terms of competence and capability, honesty, integrity, fairness and ethical behaviour, and financial soundness.
