Quick 101: Mauritius Variable Capital Companies - March 2023
Following the introduction of the Variable Capital Companies Act 2022 in Mauritius in April 2022, Rajan Rosick, Director of our Mauritius office, provides a quick overview of the main features and characteristics of a Variable Capital Company (VCC).
A VCC is essentially a fund scheme which carries out its business through sub-funds and special purpose vehicles (SPVs), with its assets and liabilities segregated and ring-fenced. The sub-funds and SPVs may have legal personality distinct from the VCC under which they operate.
A VCC Fund is comparable to a Protected Cell Company or an umbrella fund; however, a VCC Fund can accommodate both collective investment schemes (CIS) and/or closed-end funds (CEF) under one structure
- A VCC needs to be authorized by the Financial Services Commission (Commission) to operate as a VCC Fund. It also requires the approval of the Commission to create sub-funds and SPVs. An SPV differs from a sub-fund as it does not operate as a fund but rather as a vehicle ancillary to the VCC and its sub-funds.
- Each sub-fund shall operate as a Collective Investment Scheme or Closed-End Fund, subject to approval from the Commission.
- The VCC needs to include “Variable Capital Company” or “VCC” after its name. The name of the sub-fund or SPV needs to include the expressions “incorporated VCC sub-fund” or “incorporated VCC special purpose vehicle” respectively.
- The assets and liabilities of the sub-funds and SPVs are ringfenced so that the assets of a sub-fund or SPV cannot be used to discharge the liabilities of the VCC or any other sub-fund or SPV, including during winding up, administration or receivership. However, the Mauritius Revenue Authority (MRA) may recover any income tax due by a sub-fund or SPV from the VCC.
- The VCC can issue shares in its sub-funds and SPVs, whose proceeds are comprised in the assets attributable to the sub-fund/SPV in respect of which the shares are issued.
- Dividends are paid in respect of shares of a sub-fund/SPV by reference only to the assets and liabilities attributable to that sub-fund/SPV.
- The VCC has to disclose that it is a VCC and ensure that agreements, contracts, documents or transactions that refer to its sub-funds/SPVs include the name, whether they have legal personality (if so, the registration number has to be provided), approval number and the fact that the assets and liabilities are segregated.
- A sub-fund/SPV may invest in another sub-fund/SPV. However, a sub-fund/SPV cannot invest in another sub-fund/SPV that has already invested in it.
- Separate records are to be kept for the VCC and each of the sub-fund/SPV and which sufficiently explain their transactions and financial position along with allowing for preparation of true and fair financial statements.
- The VCC may elect to present separate financial statements for its sub-funds/SPVs in accordance with IFRS or any other internationally accepted accounting standards by giving irrevocable notice to the Registrar of Companies and the MRA. Sub-funds / SPVs which have legal personality are required to file financial statements separate from the VCC.
- Where the VCC has made an election to present separate financial statements for its sub-funds/SPVs, each sub-fund/SPV shall be liable to income tax in respect of its own income.
Where the VCC meets the criteria of a Global Business Corporation, it is required to apply for a Global Business Licence. The Commission expects the VCC to appoint the same Company Secretary / Management Company for all of its sub-funds / SPVs.
How We Can Help
We provide a full range of corporate and fund administration services and can assist with the formation of a new VCC structure or re-domiciliation to Mauritius of an existing fund.