In the Mauritius 2019/2020 Budget, it was announced that there would be a revamping of the Special Purpose Fund (SPF) regime. On 6 March 2021, the Financial Services Commission (FSC) published the Financial Services (Special Purpose Fund) Rules 2021 (2021 Rules) in the Official Gazette.
The 2021 rules repealed the previous 2013 rules. They provide guidelines and set the requirements to obtain authorisation as an SPF.
The 2021 Rules have entered into force on 6 March 2021.
1. Authorisation Requirement
Any Collective Investment Scheme (CIS) or closed-end fund authorised under section 97 of the Securities Act may apply to the FSC for an authorization as a special purpose fund.
A SPF shall:
- Offer its shares, solely by way of private placements to investors having competency, significant experience and knowledge of fund investment.
- Have a maximum of 50 investors and a minimum subscription of USD 100,000 per investor.
- Be at all times managed by a CIS manager and be administered by a CIS administrator.
Requirements that must be met by the CIS manager and CIS administrator:
- They must carry out their relevant core income-generating activities in or from Mauritius
- They shall employ, directly or indirectly an adequate number of suitably qualified persons to conduct such core income-generating activities.
- They must incur minimum expenditure proportionate to the level of such activities
3. Upon Approval As A SPF
- The SPF shall file its audited financial statements with the FSC
- The SPF shall be exempted from provisions of section 106 of the Securities Act.
From a tax and financial perspective, we can see from the above requirements and obligations that the 2021 rules differ widely from the 2013 rules in that the 2021 rules do not include the previous requirements that a SPF:
- conduct investments solely in countries that do not have a tax arrangement with Mauritius
- invest mainly in securities whose returns will be exempted from taxation or all investors of the schemes are pension schemes or other persons entitled to tax exemption.
The 2021 rules provide more flexibility and will certainly ease access to new markets.
A SPF also remains a tax-exempt vehicle under the Mauritian Income Tax Act. Interest, rents, royalties, compensation, and other amounts paid by a SPF to a non-resident is exempt income.