The FSC Mauritius wishes to draw the attention of its licensees on compliance with the requirement to maintain a minimum stated unimpaired capital as prescribed under Regulation 38(1) of the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008. The Regulations provides that a CIS Manager shall maintain a minimum stated unimpaired capital of at least MUR 1 million or equivalent amount. While reviewing the audited and interim financial statements, the FSC Mauritius came across two major issues regarding minimum stated unimpaired capital.
- The stated capital was actually below the minimum requirement due to accumulated losses.
The FSC has established that the minimum stated unimpaired capital should be interpreted as "stated capital plus revenue reserves", i.e. stated capital plus retained earnings.
It has also been clarified that the stated capital should be fully paid while determining whether the minimum stated unimpaired capital has been met.
Furthermore, to 'maintain' a minimum stated unimpaired capital of at least MUR 1 million or equivalent amount implies that the minimum requirement should be met at all times.
- In many cases, the financial statements showed that loans which had no contractual obligation are being treated as equity instruments. As such, although the shareholders' fund is more that MUR 1 million, the stated capital plus retained earnings is less than MUR 1 million.
In such cases, licensees are not in compliance with the requirement of Regulation 38(1) and necessary steps should be taken to meet the above definition of minimum stated unimpaired capital.
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