Section 20 of the FSA lists the criteria that the Commission may have regard in considering whether a person is a “fit and proper person” and these include his “ability to perform the relevant functions properly, efficiently, honestly and fairly” and his “reputation, character, financial integrity and reliability”.
Application of the Guidelines
The Guidelines is applicable to the following non-exhaustive list of persons:
- all the shareholders of the applicant and/or licensee;
- any beneficial owner of the applicant and/or licensee;
- any controller of the applicant and/or licensee;
- any director of the applicant and/or licensee;
- any officer of the applicant and/or licensee;
- any incumbent officer such as the Money Laundering Reporting Officer, the Deputy Money Laundering Reporting Officer and the Compliance Officer;
- any representative or agents of the applicant and/or licensee;
- trustees and management committees of occupational pension plans;
- external and outsourced auditors of regulated entities;
- the principal representative of a foreign financial institution that is conducting insurance business or business of a financial nature;
- an insurance agent, broker and sales representative and any such person as may be determined by the Commission.
The applicant and/or licensee has to satisfy an initial ‘fit and proper’ test carried out at the time of submitting its application for a license or at the time of seeking an authorization from the Commission. The applicant and/or licensee is thereafter required to act in a “fit and proper” manner on an on-going basis and the onus remains on such applicant and/or licensee and each ‘Relevant Person’ to establish that the latter is a ‘fit and proper’ person. Any material change should be notified to the Commission.
Pursuant to the Guidelines, the Commission’s approach is a cumulative one, that is, it may conclude that a licensee and/or applicant has not met the “fit and propriety” test by considering various cumulative facts and circumstances, each of which on its own would not have led the Commission to determine a lack of fitness and propriety. The Commission shall have regard to any material change affecting the probity questions in the ‘Fit and Proper Person Questionnaire’ required to be completed by the applicant and/or licensee and ‘Relevant Persons’, in assessing whether there is a continuous satisfaction of the ‘fit and proper’ test. Failure by a ‘Relevant Person’ to meet any one of the criteria established by the Commission may not lead to an automatic refusal of an application.
The Guidelines define “Relevant Persons” as:
- the officers,
- beneficial owners of the applicant and/or licensee as well as any person who is to be employed by, or associated with the applicant and/or licensee,
- any agent or representative of the applicant and/or licensee,
- the officers and any shareholder of the applicants and/or licensees,
- the related corporations of the applicant and/or licensee and
- the officers of those related corporations.
Where any of the provisions of the Guidelines are breached, the Commission is empowered to decide whether those involved continue to satisfy the “fitness and propriety” test. In the event the Commission reaches the conclusion that an officer of a licensee has not satisfied the “fit and propriety” test, it may, pursuant to section 24(7) of the FSA, after giving such officer and the licensee an opportunity to make representations, direct the licensee to remove such officer.
Criteria for assessing Fitness and Propriety
In concluding whether the test was satisfied, the Commission shall apply a ‘balance of probabilities’ standard and shall, on a best endeavors basis, assess all evidence, irrespective of whether it is classed as positive or negative, including but not limited to changes in key relationships such as auditors and bankers and may enquire about the reasons for such changes.
The criteria for assessment of “fit and proper” are as follows:
- Honesty, integrity, diligence, fairness, reputation and good character;
- Competence and capability; and
- Financial soundness.
In introducing the revised guidelines to the “fit and propriety” test, the Commission seeks not only to establish an international benchmark for licensing and for ongoing regulation of licensees and/or applicants but also to, inter alia, protect the interests of investors by deterring dishonest, incompetent, unskilled or otherwise inappropriate operators in Mauritius and to encourage high standards of conduct within the financial markets of Mauritius. It is to be noted that the FSA empowers the Commission to reassess the fitness and propriety of any licensee and to accordingly take measures based on the assessment, should the need so arise.
The effective date of the Guidelines shall be 01 November 2020.
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