Home » Mauritius Variable Capital Company – The Game Changer?
News Release

Mauritius Variable Capital Company – The Game Changer?

The Variable Capital Companies (VCC) Act, gazetted on 15 April 2022, is expected to further reinforce the status of Mauritius as a diversified international financial centre. Mauritius Finance, in collaboration with the Chartered Institute for  Securities and Investment (CISI), hosted a panel discussion on  “Mauritius Variable Capital Company – The Game Changer”.

The panel discussion held on Tuesday 26 July 2022 at Labourdonnais Waterfront Hotel, helped to analyze and share key insights on how this new regime will enhance the  competitiveness of Mauritius financial services sector. 

The Variable Capital Companies (VCC) Act, gazetted on 15 April 2022, is expected to further  reinforce the status of Mauritius as a diversified international financial centre and also enhance its offering as a fund jurisdiction. For Samade Jhummun, it is a game changer for the Mauritius International Financial Centre (MIFC), as it contains some unique features which add to its flexibility and cost-effectiveness. “The technical committee set up to work on this legislation made it a point not to replicate what’s already existed in other jurisdictions like Singapore. We believe that with its unique features, the VCC will enhance the competitiveness of the MIFC and encourage the setting up of new funds”, Mr. Jhummun stated. 

Rubina Toorawa underlined the numerous advantages of the new product and clarified the  ongoing obligations from a board/governance perspective, as well as AML requirements. The  Head of Sanne Mauritius insisted that the VCC will contribute to the attractiveness of the MIFC given the reduced fee structure. “The VCC also allows separate records for VCC and each sub-fund/SPV, as well as unique reporting requirements whereby at any time, the VCC can make an irrevocable election to present separate financial statements for sub-funds and SPVs. The  sub-funds /SPVs can even adopt different accounting standards,” Ms. Toorawa highlighted.  

Among the key features of the VCC Act, the sub-funds set up may opt to have a separate legal personality from the VCC with the option to appoint its own board, and be liable to taxation on its own income. The VCC Act equally allows the re-domiciliation of funds from other  jurisdictions to Mauritius. 

Faisal Oozeerally, Director (Large Taxpayer & International Taxation) at the MRA explained  that all VCC, sub-funds and SPVs are taxed at the rate of 15%, however they may be entitled to Partial exemption on certain categories of income subject to substance requirement. He also  mentioned that if a sub fund is authorised as a Special Purpose Fund, it will be exempted from  tax, provided that it meets substance conditions. This demonstrates the flexibility of the VCC  for promoters and fund managers which allows different funds to be housed under the same  structure. 

Commenting on questions from practitioners of the financial services, especially on the  possibility of conversions and spinoffs under the new regime, Renu Audit explained that the FSC has taken note of the request from the industry and would communicate its policy stand  on conversion in the coming days. “If a sub-fund under a VCC wishes to spin off and convert  into a stand-alone fund in the future, given it has grown in size, the conversion process will  depend on whether the new fund will be set up under the existing VCC regime or under the old one. The FSC will examine each request on a case-to-case basis. Our task is to ensure that there is no abuse of these fine lines, while allowing the VCC regime to meet its intended  objectives”, Ms. Audit added. The Director of Authorisation & Supervision stressed on the fact that the FSC will make amendments as this legislation unfolds.  

On this occasion, Mauritius Finance, in collaboration with the CISI, launched an online course  on Sustainable and Responsible Investment. In his speech, Kevin Moore from the CISI,  explained the need for the MIFC to push its practitioners to be professionally qualified. “If  Mauritius is going to develop into a world leading centre, then you’ll need world class people, and those people need to be qualified. If you are growing, you’ll be recruiting new people and  professional qualification will be a must”, Mr. Moore stated. 

The short structured online course on Sustainable and Responsible Investment is MQA  Approved and is relevant for wealth and investment managers advising clients but also those  working across financial services functions including risk, compliance, asset management,  banking, insurance, operations and financial planning.