As a competitive offshore jurisdiction of choice, Mauritius continues to grow steadily to further promote its capabilities and opportunities to investors. This first edition captures new measures since 1 January 2019. As a result of the National Budget 2019-2020 which was tabled recently before the Mauritian National Assembly, it is anticipated that there will be further changes to the regulatory offshore landscape.
There have been a number of regulatory updates to the Mauritian legal framework across a number of sectors. The following provides a summary of these updates.
1. Non-Citizens (Employment Restriction) Exemptions (Amendment No. 2) Regulations 2019:
An amendment to the Non-Citizen (Employment Restrictions) Exemptions Regulations, published through GN 55 of 2019, removed foreign spouses of Mauritian citizens from the category of non-citizens who were exempted from the requirement of a work permit for working in Mauritius.
The new regulations will only apply for non-citizens being spouses of Mauritian nationals who have been residing and working in Mauritius after the 8th of March 2019, and a moratorium of 3 months is granted to employers to obtain a permit in respect of such non-citizens under the Non-Citizens (Employment Restriction) (Work Permit) Regulations 2017.
2. Immigration (Amendment) Act 2019:
The amendments brought to the Immigration Act apply retrospectively. Any person, not being a citizen but who enjoys the status of resident by being the spouse of a citizen, should not have been a prohibited immigrant at the time of becoming a spouse.
Furthermore, the definition of “prohibited immigrant” has been extended to include:
(i) persons who, from information or advice which in the opinion of the Minister is reliable information or advice, are likely to be undesirable inhabitants of, or visitors to, Mauritius; and
(ii) persons whose presence in Mauritius, from information or advice which in the opinion of the Minister is reliable information or advice, is likely to be prejudicial to the interests of defense, public safety, public order, public morality or public health.
3. Companies (Amendment of Schedule) Regulations 2019:
The proceedings at meetings of shareholders has been amended regarding the written notice of time and place of a meeting of shareholders which shall be sent to every shareholder entitled to receive notice of the meeting and to every director, secretary and auditor of the Company to not less than 21 days (previously 14 days) before the meeting.
4. Financial Services (Global Business Corporations) Rules 2019:
FSC rules made by the Financial Services Commission (FSC) under sections 71 and 93 of the Financial Services Act 2007.
A corporation shall apply for a global business license or authorised company if the majority of its shares are held or controlled by a non-citizen of Mauritius and such corporation proposes to conduct or conducts business principally outside Mauritius or with such category of persons as may be specified in the FSC Rules. However, since the 1 January 2019, the FSC has issued new rules which reinforced the government’s objective to enhance business processes by stating that it is not a mandatory requirement for the following resident corporations to apply for a Global Business License:
– Corporations incorporated before 31 December 2018 not holding GBL1 or GBL2;
– Corporations incorporated or established after 31 December 2018 and which have amongst their investors or proposed investors development financial institutions, multilateral agencies or sovereign funds, provided that the resident corporations have been granted an approval by the FSC on such terms and conditions as the FSC sees fit;
– a trust established under the Trusts Act 2001 governed by the laws of Mauritius; and
– a foundation established or registered in Mauritius under the Foundations Act 2012.
5. Financial Services (Consolidated Licensing and Fees) (Amendment) Rules 2019:
On the 8 April 2019, the FSC recognised, as security, Security Token Offerings in its legislation but subject to the FSC’s prior approval save and except in respect of offering to the following investors:
a. Sophisticated Investors;
b. Expert Investors;
c. Expert Funds;
d. Professional Collective Investment Schemes; and
e. Specialised Collective Investment Schemes.
Moreover, the FSC expanded the financial business market and activities to include Custodian Services involving digital asset. The Custodian Services (Digital Assets) License fee involves a processing fee of MUR 175,000 (USD 5,000) and a fixed annual fee of MUR 350,000 (USD 10,000). Holders of the Custodian Services (Digital Asset) Licence will have to comply with the applicable framework for AML/CFT, in line with international best practices.
6. Courts (Determination of Prescribed Amount) Regulations 1995:
The threshold to lodge a case before the Mauritian courts has been amended in relation to:
a. the Intermediate Court, an amount not exceeding 2 million rupees (USD 58,000); and
b. a District Court, to an amount not exceeding 250,000 rupees (USD 7,200).
Furthermore, the Chief Justice made rules, operative as from 1 July 2019, in order to introduce mediation before the Intermediate Court. As a result of these rules, the following will apply:
- mediation may be initiated where either the Intermediate Court or any party to the proceedings is of the view that mediation will resolve the issue(s) between the parties;
- the entire mediation process shall remain confidential and it extends to documents submitted during the process with the result that these documents may not be used against the interests of the party which submitted them during the mediation process;
- the time limit for the conduct of mediation is 30 days, unless an extension has been granted on the grounds that it was necessary for the success of the mediation process.
- the magistrate of the Intermediate Court in charge of the mediation process is entitled to appoint an expert to assist on technical points. The expert shall act independently and his costs shall be borne equally by the parties;
- the magistrate in charge of the mediation process is entitled to ask a party to provide documents and a position paper concerning the stand of the party in relation to specific issues;
- the magistrate responsible for mediation is entitled to suggest the terms of settlement for the parties with their consent;
- any settlement reached by the parties must be recorded in writing and signed by the parties as well as the magistrate in charge of the mediation process; and
- in the event that the mediation process did not result in a settlement by the parties, the matter will proceed to be heard on its merits.
Importantly, the rules contemplate the scenario that the outcome of the mediation process is that parties reached an agreement on specific issues only. Under such circumstances, the matter will proceed to be heard on the merits on the issues which could not be resolved by mediation.
7. Mauritius and Kenya have taken a commitment to cooperate in environmental protection, tourism, trade and investment :
Following the visit of President Uhuru Kenyatta to Mauritius on the 9 April 2019, six agreements were signed to consolidate Mauritius Economic and bilateral relations with Kenya following the Double Taxation Agreement (DTA) signed in May 2012.
8. Kenya–Mauritius Double Tax Agreement Invalidated in Kenya and replaced by new DTA:
Kenya and Mauritius entered into a DTA in May 2012 which was published by the Cabinet Secretary for Treasury on 23 May 2014 through a Legal Notice 59 of 2014. On the 15th of March 2019, the High Court of Kenya at Nairobi delivered a long awaited judgement in the petition challenging the validity of the DTA. The Court identified the following issues for determination:
a. whether the making of the DTA was a violation of the Constitution;
b. what are the laws that govern the making of DTAs; and
c. the merits of the petition.
The High Court of Kenya, in its judgement, found that the Petition lacked merit on the issue of constitutionality of the bilateral agreement subject of the petition. It is important to note that the High Court did not invalidate the DTA because of a provision(s) contained therein but purely on the grounds that the proper procedures in bringing into force the DTA was not followed. It is therefore open to the Cabinet Secretary for Treasury to publish the legal notice afresh before parliament for scrutiny in compliance with the current law. However, a new DTA was entered into by the Mauritian and Kenyan Governments during the State visit of President Uhuru Kenyatta in Mauritius in April 2019.
9. Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation (Miscellaneous Provisions) Act 2019:
The Act was enacted with a view to meeting international standards on anti-money laundering and combating the financing of terrorism and proliferation and in order to address threats to international peace and security in relation to the following:
(i) The Banking Act 2004 – Every financial institution and holder of a license including its branches and subsidiaries operating in a group structure shall implement group-wide programmes against money laundering and terrorism financing which include procedures to ensure group level compliance, audit and anti-money laundering with the power to request customer, account and transaction information from branches and subsidiaries as necessary to perform their functions to combat money laundering and terrorism financing.
(ii) The United Nations (Financial Prohibitions, Arms Embargo and Travel Ban) Sanctions Act 2019
The The United Nations Sanctions Act 2009 requires that no person shall deal with the funds that are owned or controlled by a designated/listed party or any other assets whether tangible, intangible, actual or potential, however acquired, of a designated/listed party. Designated party has been defined under the Act as a party who has committed or commits or attempt to commit, a terrorist act whereas a listed party means any party listed by or under the authority of the United Nations Security Council.