PROTECTED CELL COMPANY

A GBC 1 MAY BE STRUCTURED AS A PCC

 

The PCC is a special legal structure made up of cellular and non-cellular assets. It provides legal segregation of assets attributable to each cell of the company whether owned by individuals or body corporate. The law allows PCCs to be created for asset holding, structured finance business, collective investment schemes & close ended funds, specialized collective investment schemes and close ended funds and insurance & captive insurance business.

MANAGEMENT OF A PCC

 

A PCC is managed by its Directors. However, the management may be transferred or shared through a management contract with an Investment Manager where the PCC is an Investment Fund.
 

CAPITAL REQUIREMENT

 

There is no minimum capital requirement for a PCC and for each cell within the PCC. However, on a case to case basis and depending on the nature of the business, the Financial Services Commission may prescribe certain capital requirements. In the case of insurance or re-insurance business, each cell must abide by the relevant Insurance legislation regarding the requirement of minimum paid up capital.
 

WINDING UP & LIQUIDATION

 

Special winding up procedures are provided in the PCC Act which protect contagion of solvent cells by insolvent ones. Dissolution of the PCC is addressed by special provisions in the PCC Act which provide for receivership and administration orders and no recourse to the creditor of the insolvent cell to the assets of the other solvent cells.
 

REPORTING & FILING OF AUDITED ACCOUNTS

 

A PCC is required to submit annual audited accounts to the Financial Services Commission. The accounts should contain a note explaining the status of the various cells. If it is deemed necessary the Commission may request each cell to report independently.

SETTING-UP A PCC IN MAURITIUS
 

A PCC may be directly incorporated or may be registered as a foreign company by way of continuation as a PCC, provided that the incorporation, registration and conversion requirements prescribed in the Companies Act 2001, the Protected Cell Companies Act 1999 (PCC Act) are satisfied. The incorporation and licensing procedures for a PCC is similar to that of a GBC 1. In the case of a continuation, additional requirements as laid down in section 5 of the PCC Act must be satisfied. Section 6 of the PCC Act stipulates that the suffix “PCC” must be added after the name of the company. A PCC may also be converted into a normal GBC 1.
 

GLOBAL FUNDS

 

A GBC1 can be specifically structured as a Collective Investment Scheme/Global Fund. The New Securities Act provides for a codified framework for regulating investment business sector. It also addresses regulatory/supervisory requirements for collective investment schemes. As at November 2007, the total number of licensed Collective Investment Schemes amount to 553 with an aggregate Net Asset Value of US$ 49.467 Billion, most of these are directed toward South Africa, China and India. However the country aims to diversify and develop further its client’s base for collective investment schemes.
 

CORPORATE & LEGAL STRUCTURE

 

A CIS is commonly structured as a company incorporated under the Companies Act 2001, and may be structured as a trust under the Trust Act 2001 or in such other form approved by the Financial Services Commission (FSC), and licensed as a Category 1 Global Business Company under the Financial Services Act 2007.
 

Additionally, the CIS should hold an authorisation under the Securities Act 2005 to operate. An investment vehicle can also operate as a Closed-end fund which, as defined under the Securities Act 2005, is an arrangement or a scheme, which is not a CIS, constituted in such legal form as approved by the FSC and whose object is to invest funds, collected from subscribers during an offering made under Part V of Securities Act 2005 or from sophisticated investors, in a portfolio of securities, or in other financial or non-financial assets, or real property, as approved by the FSC.
 

A Closed-end fund is also required to hold the relevant licence and authorization from the FSC before starting operation. Under each of these structures it is also possible to constitute an umbrella fund. The umbrella fund will comprise of two or more sub funds and investors subscribe for shares or units in specific sub-funds. Investors can switch their investment from one sub-fund to another without redeeming their shares or unit.
 

CUSTODIAN

 

All CIS authorised by the FSC must entrust the custody of their assets to an approved custodian, generally a banking institution or a trust that is a subsidiary of a bank. The custodian takes the assets of the scheme into its custody for safekeeping pursuant to a custody agreement and hold the assets of the scheme in accordance with the provisions of the CIS Regulations and constitutive documents of the CIS. Within specific circumstances, the principal custodian can delegate certain of its activities to a sub-custodian approved by the FSC, but retains its responsibilities.
 

CIS MANAGER AND CIS ADMINISTRATOR

 

The management and administration of a CIS is performed by a CIS Manager which is licensed or approved by the FSC. A CIS may opt to be self-managed given that it abides by the requirements and obligations related to a CIS Manager. Some of the administrative activities of the CIS Manager, as specified in the Securities Act 2005 can be delegated to a CIS Administrator which is approved by the FSC.
 

PROSPECTUS

 

CIS operating from Mauritius must lodge a prospectus or other offer document in accordance with the prescribed requirements.
 

REPORTS

 

As specified in the Securities Act 2005, within 90 days of its balance sheet date, every CIS has an obligation to file with the FSC an annual report which shall include audited financial statements prepared in accordance with IFRS and audited in accordance with the International Standards on Auditing, and such other standards as may be issued under the Financial Reporting Act 2004, by an audit firm approved by the FSC. As provided by the Securities Act 2005 or as the FSC determines, an annual report can be required to be made public.
 

LISTING

 

Global Business Companies with Fund Management activities can be listed on the Stock Exchange of Mauritius.

SETTING-UP A GLOBAL FUND IN MAURITIUS

 

In addition to the requirements prescribed for incorporation of GBC1 Corporations generally, the following additional documents should be submitted to the Financial Services Commission:
 

Letters of reference from banker, lawyer, accountant (Letters of reference may be dispensed with if the promoter is itself a fund manager authorised in another jurisdiction. In such cases, the letters of reference may be replaced by proof of authorisation in the other territory and a copy of the promoter’s latest accounts.
 

FINANCIAL SERVICES FROM MAURITIUS

• CVs are needed of the persons to be involved in key positions in the Mauritian company).
• Set of constitutive documents of the scheme (i.e, Prospectus, Custodian Agreements, sub Custodian Agreement, Investment Management Agreement, Administration Agreement, Investment Advisory Agreement, Secretarial and Registrar Agreement, etc)
• Brief track record of applicant and detailed business plan

SOCIÉTÉ

 

A GBC1 Corporation may be a Société en Nom Collectif (Partnership) and “Société en Commandite Simple” (Limited Partnership) set up under the Code de Commerce Amendment Act 1985. To enhance the use of such vehicles the Finance Act 1996 has introduced favourable taxation provisions which enable Sociétés to benefit from reliefs available under Double Taxation Treaties.
 

TRUST

 

A Trust set-up under the Trust Act 2001 may also apply for a Category 1 Global Business Licence. More information on trusts may be obtained in the relevant section of this Guide.
 

CATEGORY 2 GLOBAL BUSINESS COMPANIES (GBC2)

 

A private company proposing to conduct business outside Mauritius may apply for a Category 2 Global Business Licence provided that it proposes to conduct a business activity other than the following:

• Banking
• Financial services
• Carrying out the business of holding or managing or otherwise dealing with a collective investment fund or scheme as a professional functionary
• Providing of registered office facilities, nominee services, directorship services, secretarial services or other services for corporation
• Providing trusteeship services by way of business