Fund Finance Laws and Regulations 2026 – Mauritius

Global market overview

The fund finance market has expanded significantly over the past decade, a trend that projections show continuing. This growth is built on a deeper understanding and wider adoption of fund finance products, coupled with rising investor confidence. Against a shifting global economic backdrop, the sector is fundamentally changing how funds secure capital for operations and investments.

A long period of low interest rates, large reserves of dry powder, and an investor pursuit of yield fuelled this expansion. We expect continued growth, marked by demand for innovative financing structures and a more diverse lending landscape. In Mauritius, subscription lines of credit remain the dominant financing tool. However, the market is maturing; alternative options like NAV-based loans, hybrid facilities, and GP financing are gaining ground. We saw this shift clearly in 2024, with a move towards bespoke financial solutions tailored to increasingly sophisticated fund managers and investors.

New lenders entering the space are increasing competition, which should benefit borrowers through better financing terms. Traditionally centred in the U.S. and Europe, the market is now expanding geographically, driven largely by Asia’s fast-growing private equity sector. We expect Asia and other emerging markets to become significant drivers of global fund finance growth.

This growth is not without its challenges. The market is subject to regulatory shifts that could affect fund structures, leverage, or disclosure rules. While investors appreciate the sector’s relatively low risk and predictable returns, especially in volatile economies, potential headwinds – such as regulatory surprises, macroeconomic shocks, or a sharp drop in capital commitments – require careful monitoring.

Private equity funds in Mauritius

Mauritius has established itself as a prominent hub for global funds, including private equity, thanks to its robust regulatory framework overseen by the Financial Services Commission (FSC). Since 2001, the FSC has implemented a flexible set of guidelines and a consolidated regulatory framework, which includes the Securities Act 2005, the Financial Services Act 2007, and various regulations governing collective investment schemes (CIS) and closed-end funds.

The regulatory framework

The regulatory environment in Mauritius is designed to promote transparency, investor protection, and the integrity of the financial system. The FSC plays a pivotal role in overseeing the activities of financial institutions and ensuring compliance with international standards. This robust regulatory framework is a significant factor in attracting foreign investment and establishing Mauritius as a reputable jurisdiction for fund management.

Key regulatory bodies

Financial Services Commission (FSC)

The FSC is the primary regulatory authority for non-banking financial services in Mauritius. It is responsible for licensing and supervising various financial entities, including fund managers, CIS, and securities dealers. The FSC aims to maintain a fair, efficient, and transparent financial market.

Bank of Mauritius (BoM)

While the BoM primarily oversees the banking sector, it also plays a role in regulating the broader financial system. The BoM’s policies can indirectly impact the fund finance market, particularly regarding interest rates and monetary policy.

Mauritius Revenue Authority (MRA)

The MRA is responsible for tax administration in Mauritius. Its policies and regulations regarding taxation can significantly influence fund structures and investment decisions, making it essential for fund managers to stay informed about any changes in tax legislation.

Fund formation and structure

The current regulatory framework recognises two primary categories of global funds: open-ended funds (CIS); and closed-end funds (private equity funds). These funds can be structured as companies under the Companies Act 2001 or as limited partnerships (LPs) under the Limited Partnerships Act 2011. The flexibility of the Mauritian LP structure allows foreign investors to participate without being involved in day-to-day management, while the GP retains responsibility for managing the fund’s affairs.

Key structures for private equity funds

Limited partnerships (LPs)

The LP structure combines features of both a corporation and a partnership, allowing for limited partners
to enjoy liability protection while not participating in day-to-day management. The GP manages the
fund and is personally liable for the debts of the partnership, providing a clear delineation of roles and
responsibilities.

Variable capital companies (VCCs)

Introduced by the Variable Capital Companies Act 2022, the VCC structure offers significant flexibility, allowing for the creation of multiple sub-funds under a single legal entity. Each sub-fund can have distinct investment objectives, and the VCC can operate without the automatic winding up of all sub-funds if one faces challenges. This structure is particularly advantageous for private equity and hedge funds seeking to segregate assets and liabilities.

Protected cell companies (PCCs)

The PCC structure allows for the creation of separate cells within a single company, providing asset protection and liability segregation. This is particularly useful for investment funds that wish to isolate risks associated with different investment strategies.

Trusts

Established under the Trusts Act 2001, trusts can be utilised for specific investment purposes, providing flexibility in structuring investments and managing assets for the benefit of designated beneficiaries.

Special purpose vehicles (SPVs)

SPVs are often established to isolate financial risk. They can be used for specific projects or investments, allowing fund managers to segregate assets and liabilities associated with particular ventures.

Fund financing solutions

As the private equity sector matures in Mauritius, the demand for financing solutions is increasing. Fund managers are exploring various options to meet their capital needs, including:

• Equity Bridge Facilities: These short-term loans assist private equity funds in managing liquidity during capital calls, enabling swift execution of investment opportunities. They are often used to bridge the gap between the time a fund identifies an investment opportunity and when it can draw down capital from investors.
• NAV-Based Margin Loans: Hedge funds are increasingly utilising NAV-based loans to provide liquidity or leverage, allowing them to capitalise on market opportunities without liquidating positions. This financing solution is particularly attractive during periods of market volatility when quick access to capital is essential.
• Hybrid Facilities: These facilities combine elements of traditional debt financing with structured finance solutions, allowing for tailored financing arrangements that meet specific fund requirements. Hybrid facilities can include features such as revolving credit lines combined with term loans.
• GP Financing: As GPs seek to enhance their investment capabilities, financing options that support GP commitments and operational needs are gaining traction. This type of financing can help GPs meet their capital contributions and fund operational expenses, ensuring they have the necessary resources to manage the fund effectively.

Security structures for fund financing

The security structure for fund financing transactions in Mauritius typically involves assignments of capital commitments and rights to make capital calls. While funds have traditionally been structured as corporations, the introduction of LPs has simplified the investment landscape, allowing for more tax-efficient structures and reducing the need for complex master-feeder arrangements.

Security for fund financing often includes:

• Security Assignment: Funds assign their capital commitments and rights to make capital calls to lenders, providing a clear mechanism for lenders to access funds in case of default. This assignment is often documented through a security agreement that outlines the terms of the assignment.
• Charge on Assets: A charge may be placed on the fund’s other assets, including accounts, investments, and negotiable instruments, ensuring that lenders have recourse to a broader range of collateral. This charge provides additional security to lenders, enhancing their confidence in the financing arrangement.
• Power of Attorney: In typical fund financing transactions, a power of attorney may be granted to the lender, allowing them to exercise capital call rights on behalf of the fund in case of default. This provision ensures that lenders can act swiftly to protect their interests if the fund encounters financial difficulties.
• Subordination Agreements: In some cases, funds may enter into subordination agreements, which establish the priority of claims among different classes of creditors. This can be particularly relevant in complex financing arrangements involving multiple lenders.

Recent regulatory developments (2025)

The regulatory environment in Mauritius saw significant updates in 2025, primarily through the comprehensive 2025 Finance Act. These changes, which amended several key pieces of legislation, introduce new compliance layers and align the jurisdiction with international standards on transparency and taxation.

While the Securities Act saw important updates in previous years (2023–2024), the 2025 changes focused on related corporate and financial services laws:

• Companies Act Updates: The Finance Act introduced key amendments to the Companies Act, most notably enhancing the rules around beneficial ownership. Companies are now subject to more stringent requirements for identifying, verifying, and maintaining records of their ultimate beneficial owners (UBOs), a move aimed at bolstering corporate transparency.
• Strengthened GBC Requirements: For GBCs, a cornerstone of the fund industry, rules were tightened. This includes a clear mandate for GBCs to maintain at least two resident directors in Mauritius, reinforcing economic substance requirements.
• New Tax Framework: A major component of the 2025 legislation is the introduction of a new tax regime. This includes the implementation of a QDMTT in line with OECD Pillar Two, a new “Fair Share Contribution” for high-income companies, and an “Alternative Minimum Tax” (AMT).
• Financial Services Act and AML Enhancements: The Finance Act also amended the Financial Intelligence and Anti-Money Laundering Act (FIAMLA) to refine AML/CFT frameworks. Separately, the FSC introduced new rules, such as the Financial Services (Framework for the Imposition of Administrative Penalties) (Amendment) Rules 2025, that clarify the penalty and settlement process, giving the regulator a more structured enforcement toolkit.

Impact of regulatory developments

The 2025 regulatory and tax reforms have a direct and profound impact on the fund finance market. The new tax laws – particularly the QDMTT and Fair Share Contribution – fundamentally alter the fiscal landscape. Fund managers and their portfolio companies must re-evaluate their structures and financial models to ensure tax efficiency and full compliance.

The sharpened focus on UBO transparency and AML/CFT frameworks places a greater compliance burden on funds and their administrators. These measures, while adding operational steps, are critical for aligning Mauritius with global standards and maintaining its reputation as a transparent and co-operative jurisdiction.

Finally, the new penalty and enforcement rules from the FSC signal a move towards more robust oversight. This increases the stakes for compliance, pushing fund managers and finance providers to invest in stronger governance and risk management frameworks to navigate the more assertive regulatory climate.

The 2026 outlook: key themes

As we look to 2026, several key themes will define the market. The integration of ESG criteria is no longer niche; it is becoming a central part of lending and investment decisions. Funds that prioritise sustainability may find themselves at a competitive advantage for capital.

Technology is also a major factor. Digital platforms and data analytics are already streamlining lending and improving risk assessment. We expect emerging technologies, such as AI and blockchain, to find more practical applications, moving from concept to operation. This tech adoption is happening alongside the rise of alternative lending models. Non-traditional financing is creating a more dynamic ecosystem beyond traditional bank-led facilities.

Naturally, as the market grows, it will attract greater regulatory scrutiny. Fund managers must anticipate and adapt to new compliance burdens. This adaptation will occur against a complex global economic backdrop. Interest rate movements, inflation, and geopolitical events will all influence investor sentiment and capital flows.

As the fund finance landscape becomes more complex, clear communication between managers and investors is essential. Providing transparency around strategies, risks, and performance will be critical for maintaining trust and securing future capital.

The private equity fund sector in Mauritius is well positioned for 2026. The jurisdiction’s commitment to modernising its regulatory framework, combined with the global market’s push for innovation and ESG integration, creates a strong foundation for growth. Our dedicated Mauritius Fund Finance Team is prepared to support stakeholders in navigating this market. Success will depend on the ability to adapt to these trends, from new technologies to increased regulatory oversight, in a competitive and evolving landscape.

First published by Global Legal Group as the Mauritius chapter for Global Legal Insights – Fund Finance 2026, January 2026