The Accrued Possibility for Global Business Companies to Conduct Business in Mauritius
The Global Business sector in Mauritius is constantly evolving to adapt to the requirements of international standard setters and also to face recent criticisms.
A prime example of such evolution is the amendment brought to section 71(6) of the Financial Services Act 2007 (the “FSA”) by the Economic and Financial Measures (Miscellaneous Provisions) Act 2013 in December last year. In effect this amendment now allows a holder of a Category 1 Global Business Licence (“GBC1”) to conduct business in Mauritius subject to such restrictions, terms and conditions as may be provided in any guidelines issued by the Financial Services Commission (the “FSC”). This amendment is in line with the renewed effort of the Government of Mauritius and the FSC to give greater substance to the Global Business Sector.
In light of the new section 71 (6) of the FSA, the FSC, on 28th February 2014 has amended sections 4 and 5 of chapter 4 of the Guide to Global Business which was issued on 25th January 2012 and which aims at providing guidance to investors and service providers regarding the requirements before applying for a Global Business Licence (the “Guide”).
The FSC has also issued, on 28th February 2014, a FAQ on the conduct of Global Business (the “FAQ”).
The changes brought to section 4 of chapter 4 of the Guide (“Section 4”) are in essence relative to GBC1s holding a global headquarters administration licence or a global treasury activities licence. Subsection 4.2 of the new Section 4 provides that such a licensee who operates in Mauritius and provides its services to related corporations, which are located outside Mauritius, or who are GBC1s, is deemed to be conducting business outside Mauritius.
The interest lies, however, in the amendments brought to section 5 of chapter 5 of the Guide (“Section 5”), which gives guidance to GBC1s as to how business can be conducted in Mauritius.
According to Section 5, the conduct of business in Mauritius shall be in compliance with the relevant Acts and other laws applicable in Mauritius.
Section 5 further provides that such a GBC1 shall be able to demonstrate to the FSC its eligibility to a Category 1 Global Business Licence i.e. that most of its business is carried out outside Mauritius.
Finally, such a GBC1 shall submit every year, along with its audited financial statements a report signed by the directors of the GBC1 certifying that the company has complied with all the provisions of the FSA and any regulations, FSC rules and guidelines issued under it and a certificate from its auditor confirming the percentage of the business conducted in Mauritius.
It is to be noted that pursuant to section 71(6) (b) of the FSA and subsection 5.4 of Section 5, the FSC may direct any GBC1 to cease part or all of its business in Mauritius or to take any remedial action that the FSC thinks fit if the GBC1 does not meet the conditions or requirements laid down in guidelines or FSC rules or if the GBC1 is conducting its activities in Mauritius in a way which is detrimental to the public or the economic interest of Mauritius.
Other than the conditions set out in Section 5, the FSC has not imposed any restrictions on the conduct of business by a GBC1 in Mauritius.
To have a better understanding of the approach that will be adopted by the FSC in relation to the conduct of business in Mauritius by a GBC1, the FAQ is a very useful guide.
According to the FAQ, in order to determine whether a GBC1 is conducting most or the majority of its business outside Mauritius, the FSC will adopt an approach based on the activity carried out by the GBC1. If the GBC1 is an investment holding company, the percentage of assets or investment held outside Mauritius shall at all times exceed the percentage of assets or investment held in Mauritius. If the GBC1 provides products or services, the percentage of revenue derived from the products or services outside Mauritius shall at all times exceed the percentage of revenue from the products or services produced in Mauritius.
Finally, a very important and novel possibility concerning holders of a Category 2 Global Business Licence (“GBC2”) has been set out in the FAQ. A GBC2 may now conduct business in Mauritius if it can demonstrate that the overall group structure has strong economic impact in Mauritius i.e. whether the proposal will generate revenue in Mauritius and is likely to create employment in Mauritius or may impact on the development of the country.