The FSC’s Chief Executive declared that the rationale of the Crowdfunding Rules is to offer ‘new financial products/services’ and to ‘complement the Peer-to-Peer Lending Rules [1] that were issued last year’ such that both ‘frameworks will foster innovation and facilitate access to finance SMEs’.

The introduction of the Crowdfunding Rules in our legal landscape necessitated (i) an amendment to the Financial Services (Consolidated Licensing and Fees) Rules 2008 and (ii) the introduction of the Securities (Exemption) Rules 2021.

In effect, the Crowdfunding Rules legitimate the operation of a crowdfunding platform in Mauritius and provide for its modus operandi. Thus, in order to operate as a crowdfunding operator, a legal person must apply to the FSC for a licence to operate a crowdfunding platform in accordance with Part V of the Financial Services Act.

Crowdfunding platforms will be available to both retail and expert investors. In this regard, while a retail investor has a limit of MUR 350,000 [USD 8,200] over a 12-month period to invest, there are no corresponding investment limits for an ‘expert investor’. On the question of definitions, an ‘investor’ designates ‘the person providing funding to the issuer through the purchase of an investment in the issuer’s business on the crowdfunding platform.’  While the term ‘expert investor’ bears the same meaning as under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008, the term ‘retail investor’  designates anyone not being an ‘expert investor’. Finally, an ‘issuer’ is an entity which seeks funding through a crowdfunding platform.

The two salient definitions under the Crowdfunding Rules are the terms (i) ‘crowdfunding’ which means the ‘solicitation of funds from investors for a specific investment purpose through an online portal or electronic platform’ and, (ii) ‘crowdfunding operator’ which designates a legal person licensed by the FSC to operate a crowdfunding platform.

The Crowdfunding Rules confirm the features of a crowdfunding operator as follows:

(a)   its registered office and principal place of business must be in Mauritius;

(b)   it must meet with the minimum unimpaired stated capital of MUR 2 million [USD 50,000] or its equivalent in any other currency or such higher amount as the FSC may determine;

(c)   its governance structure must provide for an effective oversight of its activities;

(d)   it must implement adequate internal controls and adopt strategies, policies and processes and procedures which are aligned with principles of sound governance and risk management;

(e)   it must maintain a disaster recovery and business continuity plan to ensure that the necessary measures have been implemented to address disruptive and major events;

(f)    it must set up and maintain at all times a risk management framework;

(g)   it must set up a documented policy in relation to the outsourcing of any of its functions;

(h)   it must maintain an updated transactional record of its clients;

(i)    it must be managed by a board of directors comprising a minimum of 3 directors of which 30% must be independent directors and, of whom 1 must be resident in Mauritius;

(j)    it must ensure that its staff comprise persons who are fit and proper and possess the appropriate competence, experience and proficiency to operate a crowdfunding platform and, that the staff is provided with the requisite training for the relevant functions which they hold.

As regards the modus operandi of a crowdfunding platform, the Crowdfunding Rules regulate the operational requirements which range from the question of reporting issuer, due diligence, handling of funds, the minimum investable amount and disclosure for instance. The Crowdfunding Rules come at an opportune time for the Mauritian International Financial Centre. Amongst other things, they confirm the ambition of the Mauritian Government to weather through the challenges of building a resilient economy through innovation and therefore promote emerging technologies as a way ahead to boost the Mauritian economy at a time when the world as a global village is still finding new ways to reinvent its economy in the un-precedented times which the COVID-19 has triggered.

[1] please refer to the Appleby EAlert dated 03 September 2020 (The Financial Services Commission of Mauritius issues Peer to Peer Lending Rules)

Key Contacts

Malcolm Moller

Group Managing Partner: Mauritius, Seychelles, Shanghai

T +230 203 4301
E Email Malcolm

Share
Twitter LinkedIn Email Save as PDF
More Publications
26 Apr 2022

Appleby Mauritius Newsletter, April 2022

In the April 2022 issue of Appleby’s newsletter, we give you an overview of the latest legal and r...

26 Apr 2022

Employment rights during and following a pandemic under the Workers’ Rights Act

In view of the ongoing COVID-19 pandemic which is currently affecting the community at a global leve...

12 Mar 2021

Material adverse change clauses in light of the Covid-19 pandemic

Experts from each of our key global offices provide jurisdiction specific advice and answer question...

8 Mar 2021

Appleby Celebrates International Women’s Day

International Women’s Day is celebrated annually in support of gender equality and equal participa...

30 Oct 2020

When Worlds Collide – How COVID is Connecting Technology with Natural Resources

Dating back to the beginning of 2020, the natural resources sector has been extremely active at both...

Contributors: Peter Colegate
21 Sep 2020

The role of Private Equity in economic recovery from Covid-19

Against this gloomy backdrop, we expect private equity firms and their investors to play a key role ...

4 Sep 2020

Safe havens: Temporary relocation and residency by investment in Appleby’s jurisdictions

In this article, we examine how the digital nomad culture is evolving in our jurisdictions.

21 Aug 2020

Investment Funds and ESG Investing – the Appleby perspective

In this article, we examine these trends from the perspective of our Appleby offices around the worl...