Mauritius Foundations

The enactment of the Foundations Act 2012 ("the Act") enables the global business sector to offer an additional financial vehicle to high net worth individuals and corporate entities both local and foreign that prefer to entrust the management of their assets to a legal entity. The Foundation Act 2012 is in line with ongoing efforts to increasingly promote Mauritius as an International Financial Centre of global repute and to diversify its product range. Such law exists in most of the competing offshore jurisdictions, including Jersey, the Isle of Man and the Bahamas. 

Foundations are utilised for asset management in civil law jurisdictions whereas Trusts provide a similar legal framework in common law jurisdictions. Mauritius, professing a hybrid of the two laws, now has the Foundations Act 2012 to supplement the Trusts Act 2001 in a bid to reach out to a wider clientele across the globe. The Foundations Act 2012 will therefore secure business opportunities for Mauritius in countries where the concept of Trust is not well understood or popular. 

A Trust involves a Settlor transferring the title of his assets to a Trustee for management, in the interests of specified beneficiaries.  For the same reasons, a Foundation involves a Founder transferring the title of his assets to an entity legally created for that purpose. Here the functions of a trustee are performed by the Council of the Foundation and are defined in the Charter of the Foundation. The equivalent under Trusts is the trust deed between the Settlor and the Trustee. 

A settlor under the Trust Act 2001 relinquishes the ownership of assets and is not allowed to interfere in the operational management of assets.  Settlor interference makes the Trust null and void. Although, under Foundations, the client relinquishes the title of his assets, the Founder can still have a legitimate say in the operational management of assets by becoming a member of the Council. Council members collectively manage the Foundation’s assets contributed by one or more Founders. 

In general, Foundations may not offer as much secrecy as Trusts do. As an incorporated entity, a Foundation opens itself to public scrutiny. Thus Foundations offer greater transparency in property and estate management, which is consistent with government policy. 

Under the Foundations Act 2012, a Foundation registered abroad can be redomiciled in Mauritius. Similarly a Foundation registered in Mauritius can be redomiciled abroad. This latter provision enables the clients of the global business sector to shift the management of their assets closer to home if that option gives them greater sense of comfort and security. Flexibility in domiciling Foundations makes the product all the more attractive. 

This Foundation Act 2012 provides for Foundations to be either charitable or non charitable or both. For tax purposes, Foundations will be treated on similar lines as a Trust. A Charitable Foundation will be tax exempt while a non charitable Foundation will be taxed as a Trust. In the event that a Foundation has both charitable and non charitable objects, it will be taxed on all its profits as a non charitable Foundation to avoid the problematic issue of apportionment. 

Main features of the Foundation Act 2012 

Part I sets the purpose and objects of Foundation. It also sets out who is a Founder. 

Part II of the Act deals with the mode of establishment of, its charter, articles and property of a Foundation, the powers and obligations of a Foundation as well as the duties and powers of the Council. A Foundation may be established through registration or by means of a duly executed will. The Foundation shall acquire legal personality when it has been registered and issued with a certificate of registration by the Registrar. Provision has also been made for the appointment and qualification of a secretary and the appointment of auditors. Every Foundation shall, at all times, have a registered office in Mauritius to which all communications and notices may be addressed and which shall constitute the address for service of legal proceedings on the Foundation. 

This part also specifies that every Foundation shall have a Council which shall administer the property of the Foundation and carry out the objects of the Foundation. The Council of a Foundation shall, at all times, have at least one member who shall be ordinarily resident in Mauritius. Also, the Council shall have the duty to act honestly and in good faith and to exercise the necessary care, diligence and skill.; and it shall have the power to appoint such officers as may be necessary for the effective discharge of its duties and obligations. Officers and members of the Foundation Council shall be personally liable in the event of fraud, wilful misconduct or gross negligence committed by that person. 

Part III deals with the name of the Foundation and the restriction in the use of certain words in the name of a Foundation. 

Part IV and V concern the registration, the keeping and inspection of register. A Foundation registered under this Act shall have a separate legal personality as from the date of issue of a certificate of registration. Any action conducted by the Foundation prior to registration may be ratified, after the date of registration by a resolution of the council. The duty of the Registrar is to maintain a record and all the relevant documents of each foundation registered under this Act. A person may, on payment of the prescribed fees and with the authorization of the Registrar, inspect the register and the relevant documents. 

The capacity of the Foundation to undertake a business and the disclosure of interest by concern parties are dealt with under Part VI. The beneficiary of a Foundation has the right to obtain information in relation to the Foundation. 

Part VII relates to the keeping of records and accounting.  A Foundation shall have proper books of accounts to be kept at its registered office or any other place as may be determined by the council and it shall be available for inspection by any authorized person. 

Part VIII deals with the removal and restoration of a Foundation on the register. It should be noted that the register will be kept by the Registrar of Companies. If the Registrar believes that a Foundation registered under this Act no longer satisfies the requirement prescribed for a Foundation, then the Registrar shall, by way of written notice, inform the Foundation and have the name of the Foundation removed from the register after giving reasonable opportunity to the Foundation to make representation on the matter. 

The cases when a Foundation can be liquidated and winding up of a Foundation are defined in Part IX. A foundation shall be liquidated provided that a notice of liquidation has been signed by a member of the council, delivered to the Registrar and published in two daily newspapers. For the distribution of assets upon liquidation and winding up this is provided under the clause 44 of the Act. 

Under Part X, the Registrar is the one who is responsible to issue a certificate of current standing. The certificate of current standing shall contain the statement as to whether the foundation is in the process of being wound up and dissolved or any proceedings to remove the Foundation from the Register have been instituted. Moreover every officer, protector, member, any other supervisory person, or auditor shall not disclose any confidential information available to him to any person, or make use or act on such information, except for the purposes of the Foundation as mentioned in the Act. This Part also deals with the re-domiciliation of Foundations. 

The relevant fees to be paid by the Foundation are listed in the schedule.