STEP Mauritius: Giving a new impetus to Training in the field of trusts in Mauritius

Paper to be presented to Society of Trust and Estate Practitioners (STEP) Education Committee by the Mauritius Branch of STEP

Strategically located in the Indian Ocean at the crossroad of international investments, Mauritius has throughout the last decade forged a strong reputation as a premier international financial centre. Although the initial thrust of the business arose through the use by foreign institutional investors using Mauritius as a base to invest in India taking advantage of the generous provisions of the India-Mauritius Double Taxation Treaty, the other attributes of the jurisdiction namely the legislative and regulatory framework, low taxation, innovative financial products and competitive cost base resulted into other forms of business being attracted to the jurisdiction.

The trust industry kicked off through banks (Standard Bank and Deutsche Bank) which operated large trust operations in the Channel Islands, looking at Mauritius as an ideal base to outsource some of their back office trust administration to Mauritius, and gradually offering full fledged trust services from Mauritius, taking benefit of a very good trust legislation comparable to that of the more mature trust centers. Thereafter, other service providers followed heed and the government through its promotion agency, the Financial Services Promotion Agency, started to promote Mauritius as a competitive Trust jurisdiction. The growing number of members of the local branch of the Society of Trusts and Estate Practitioners (STEP) is a vivid testimony of the mounting interest in Trusts in Mauritius.

STEP Mauritius is committed to the growth of the trust industry in Mauritius and recognizes that this can only be achieved through the development of its human resources capabilities which are the backbone of any successful service industry. STEP Mauritius would like to work in tandem with STEP and Central Law Training (CLT) to pursue this objective and is looking ahead to a partnership which will be beneficial to the trust industry and by necessary implication to the association as a whole.

Guernsey - The Symbol of International Finance

Guernsey - The symbol of international finance highlights recent tax, legislative and regulatory changes on the Island, assessing their impact on the development of its financial services sector and just why Guernsey is considered the jurisdiction of choice in many major financial centres for corporate and individual investors. It includes the current activities and strategic vision of the Island’s authorities, the GFSC and GuernseyFinance, outlining initiatives planned for the foreseeable future, towards developing the finance sector and maintaining Guernsey’s impressive economic growth.

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Legal Aspects of Financial Services Regulation and the Concept of a Unified Regulator

Kenneth Kaoma Mwenda

Senior Counsel

Legal Vice Presidency

The World Bank

Over the years, financial regulation and supervision in many countries has been organized around specialist agencies that have distinct and separate responsibilities for banking, securities, and insurance. In recent years, however, there has been an emerging trend in some countries towards restructuring the financial supervisory function, and in particular creating unified regulatory agencies (agencies that supervise two or more of these areas). The fact that a number of countries are now moving towards integrating the different supervisory functions into a single agency, and that different types of financial services and products continue to spring up in the financial sector of many countries, are indications of the changing global landscape of the financial services industry. Equally important as indicators of the evolving course of financial services regulation are increases in the number of countries where universal banking is practised and in the numbers of parent and subsidiary companies providing different types of financial services and products.

This study examines the policy bases of different countries adopting various regulatory and institutional models of unified financial services supervision and addresses some of the key characteristics of these models. The study also highlights the progress achieved by the unified regulators in adopting a consistent framework for the regulation and supervision of all financial intermediaries they oversee. Practical problems faced by countries in setting up unified regulators are identified, and the study highlights important legal and policy issues that should be considered when developing regulatory and institutional models of unified financial services supervision.

This study deals with legal and policy issues underpinning the development and strengthening of the regulatory and institutional framework for unified financial services supervision. The study discusses developments in a number of jurisdictions, among them Australia, Canada, Estonia, Germany, Hungary, Ireland, Latvia, Malta, the Scandinavian countries, the United Kingdom, and the United States.

Chapter 1 examines conceptual issues to be taken into account in designing a sound regulatory and institutional framework for financial services supervision. The chapter also provides a working definition of “regulation” and delves into the intricacies of designing the appropriate regulatory framework. Chapter 2 analyses the concept of an independent financial services regulator, arguing that a unified regulator that is both independent and accountable would help promote the development of a sound financial sector. Chapter 3 discusses the concept of a unified regulator, examining the question of whether every country should adopt a model of unified financial services supervision. Chapter 4 provides country studies, addressing the efficacy of the framework for unified financial services supervision in Latvia, the United Kingdom, and the Scandinavian countries. Finally, Chapter 5 spells out policy recommendations and possible constitutional and legal challenges that might be encountered when a country is considering unifying its regulation of financial services.

SEO Economic Research: The Dutch Trust Industry

This report describes the main results of a study commissioned by the International Management Services Association (VIMS), supported by the Dutch Fiduciary Association (DFA) and carried out by SEO Economic Research. Interviews with stakeholders and a questionnaire among trust offices and extensive desk research are the main pillars of this study. The aim of this inquiry is answering the following questions:

• What services does the Dutch trust industry provide?
• How and to whom are services provided?
• What is the economic impact of the Dutch trust industry on the Dutch economy?
• What is the (competitive) position of the Dutch trust industry in an international perspective?

In order to answer these questions, SEO Economic Research carried out interviews with trust offices, industry organizations, regulators and providers of related professional services. In addition, SEO Economic Research set out a questionnaire among all trust offices in the Netherlands in possession of an ASTO-license and reviewed existing literature.

SEO Economisch Onderzoek: The Dutch Trust Industry

Het rapport The Dutch Trust Industry: facts & figures geeft inzicht in de activiteiten van trustkantoren, de rol van trustdiensten in het internationale financiële systeem en de omvang van de trustsector binnen de Nederlandse (financiële) economie. 

Globalisering en het daarmee gepaard gaande opknippen en uitbesteden van (delen) van de productieketen, doen het belang van de transactiekosten verder toenemen. Regio’s met een adequate financiële infrastructuur hebben vanuit dat perspectief een concurrentievoordeel als vestigingsplaats. Nederland heeft zo’n infrastructuur. Die is onder andere gelegen in een op internationale handel georiënteerd fiscaal stelsel, via de participatievrijstelling, een uitgebreid netwerk van belastingverdragen en een betrouwbaar en stabiel fiscaal klimaat. Een ander sterk punt van Nederland is de aanwezigheid van een grote en professionele financiële sector, die ingesteld is op internationaal zaken doen. 

Bedrijven die zich administratief in Nederland vestigen, doen dat om hun grensoverschrijdende financiële transacties af te handelen, en hun belastingplanning op concernniveau te optimaliseren. Administratieve vestiging in Nederland loopt via zogeheten doelvennootschappen: rechtspersonen in Nederland, met buitenlandse aandeelhouders, waarvan er meer dan 20.000 zijn. Trustkantoren zijn in veel gevallen de beheerders van deze doelvennootschappen en vervullen daarmee een belangrijke functie in de Nederlandse transactie-economie.

Mauritius : Offshore Fund / Collective Investment Scheme holding a Category 1 Global Business Licence (Global scheme)

A Collective Investment Scheme (“CIS”) is defined under the Securities Act 2005 (“SA 2005”) as a scheme approved by the Financial Services Commission (“FSC”) in Mauritius:

• whose sole purpose is the collective investment of funds in a portfolio of securities, or other financial assets, real property or non-financial assets as may be approved by the FSC;
  
• whose operation is based on the principle of diversification of risk;
  
• that has the obligation, on request of the holder of the securities, to redeem them at their net asset value, less commission or fees; and
  
• where the participants do not have day to day control over the management of the property, whether or not they have the right to be consulted or to give directions in respect of such management.

A "Global scheme" is defined under the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 (“Regulations”) as a company or any other legal entity approved by the FSC, holding a Category 1 Global Business Licence (GBL 1) and authorized to carry out activities falling within the definition of a Collective Investment Scheme.

Conditions applicable to Global schemes

The FSC may grant an authorisation for a Global scheme provided that:

1. information relating to the CIS Manager and the custodian as prescribed in the Regulations is submitted with the application for authorisation;
   
2. a CIS administrator [e.g. OCRA (Mauritius) Limited] with a place of business in Mauritius is appointed;
   
3. the accounting and reporting services are carried out by the CIS Manager, or the CIS Administrator of the scheme, having a place of business in Mauritius.
   
4. The prospectus or other offering document contains the following statements in a prominent position -
   
   "Investors in [name of the Global scheme] are not protected by any statutory compensation arrangements in Mauritius in the event of the fund's failure."
   
   "The Mauritius Financial Services Commission does not vouch for the financial soundness of the fund or for the correctness of any statements made or opinions expressed with regard to it."
   
   
5. a certified copy of the prospectus or other offering document filed in a jurisdiction where the collective investment scheme is regulated or exempted from regulation is filed with the FSC;
   
6. information is provided on the CIS Manager and the custodian, including name and registered addresses and where regulated, if applicable;
   
7. information is given on whether the collective investment scheme is regulated, or shall be subject to regulation, in any jurisdiction and if so, a copy of the authorisation or similar consent of the regulator and if not, indication on what basis it is exempted from securities regulation in other jurisdictions;
   
8. adequate measures are taken to prevent money laundering and financing of terrorism and provided that the FSC is satisfied that these measures meet legislative requirements.

An authorisation under section 97(5) SA 2005 may be granted subject to such terms and conditions the FSC considers necessary or desirable for the protection of participants.

Subject to FSC approval, a Global scheme may appoint and retain a CIS Manager and/or a custodian established in a foreign jurisdiction.

The Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008

Part VIII of the Securities Act 2005 contains substantive provisions relating to collective investment schemes. These provisions are supplemented by the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 ("the Regulations"). The Regulations introduce a comprehensive legal regime for the establishment, management and regulation of collective investment schemes.

The Regulations provide a wider array of vehicles that could be used for structuring collective investment schemes. Further, the Regulations clarify the responsibilities of the operators and functionaries of a collective investment scheme and introduce measures to improve corporate governance in relation to collective investment schemes in general and to their functionaries in particular.

Double Tax Treaties

International double taxation results when the same income is being taxed twice: once in the state where the income arises (Country of Source) and another time in the state where the income is received (Country of Residence).

International double taxation arises because each country has its own sovereign right to tax income and own set of tax rules. The areas in which two countries’ tax systems could differ include:

• The scope of taxation

Some countries are on the territorial system whereas others have adopted a worldwide taxation basis.

• Source rules for income

The source rules determine whether income is sourced in the state where income arises, or in the state where the income is received. Conflict of source rules can result in an income having a source in both countries.

• Rules for determining the tax residence of an individual or a company.

• Measures provided for under a country’s domestic laws to relieve double taxation.

Double taxation invariably increases the burden of tax on foreign income. This has a negative impact on cross-border movements of investment, technology and expertise.

To mitigate the effects of double taxation on its residents deriving income from outside its own national boundary, one measure that a country can take is to conclude a Double Tax Treaty (“DTT”) on a bilateral basis with other countries.

The DTT is an agreement usually entered into between two countries seeking to avoid double taxation. The main objective of a DTT is to provide certainty regarding when and how tax is to be imposed in the country where the income-producing activity is conducted or payment is made. In a DTT, the taxing right of each country is defined and there are provisions for one of the countries to give tax credit or exemption to eliminate double taxation.

Under a DTT, the taxation rights over income derived by a resident of one country from the other country can be allocated in any of the following ways:

1. full rights to tax only in one country, i.e., the other country exempts the income. The full rights may be allocated either to the country of source or residence;
2. full rights to tax by both countries but with tax in the source country limited to no more than a specified level and the country of residence giving a credit for tax paid in the source country. This form of allocation normally results in a sharing of tax between the two countries;
3. full rights to tax by both countries without limitation and the country of residence giving a credit for tax paid in the source country.

Although an item of income may be deemed to be sourced in a particular country under that country’s domestic laws, that country could give up totally or partially the source taxation by agreeing to share the rights to tax with the DTT partner.

Mauritius International Finance Centre

The future of business is in Mauritius and the International Finance Centre is an outstanding building designed specifically for businesses looking for an exclusive location.

The International Finance Centre boasts a sleek design with ultra modern facilities. A symbol of prestige and prominence, designed to suit your business needs and personal requirements .

An abundance of office space, equipped with state of the art facilities and technology, the International Finance Centre will help your business to soar by ensuring that you have everything you need at your fingertips, including a gym and coffee shop to fulfill your personal requirements.

The international finance centre will be located in the Finance and IT hub of the Ebene Cybercity. It is situated just 10km from Port Louis, the capital of Mauritius, and not only acts as a link between African and Asian markets but it is also a cable landing point of the SAFE high-speed submarine communications cable between South Africa and Malaysia.

Foreign firms looking to invest in Mauritius are offered low corporate tax rates, free repatriation of profits and exemption of custom duties on resources. So, all in all Mauritius is the place to be if you want your business to thrive.

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Mauritius: Financial Services Consultative Council (FSCC)

Section 12 of the Financial Services Act 2007 provides for the establishment of a Financial Services Consultative Council (FSCC) which shall consist of –

1. the Minister who shall be the Chairperson;
2. the Financial Secretary, who shall be the Vice-Chairperson;
3. the Governor of the Bank of Mauritius;
4. the Chairperson of the Financial Services Commission (FSC);
5. the Chief Executive of the FSC; and
6. not more than 6 other members designated by the Minister from amongst persons of high calibre and of international repute in their relevant fields.

The objects of the FSCC shall be to act as a think-tank and to serve as a platform for discussions of the latest concepts and international trends in the field of financial services and global business and to formulate suggestions and ideas for the development of the financial services and global business sectors.

What it takes to succeed

Not only low taxes but a great deal besides

Places in the sun

Offshore financial centres are booming, thanks to their easy-going tax regimes. But the best of them are more than tax havens: they are good for the global financial system, argues Joanne Ramos

Mauritius: Registered Agent

Appointment of registered agent

(1) A company which intends to apply for a Category 2 Global Business Licence shall, by a resolution of its directors appoint a registered agent in Mauritius.

(2) Every registered agent shall, within 14 days of his appointment apply to the Financial Services Commission ("FSC") for a Registered Agent Licence.

(3) An application under paragraph (2) shall -

(a) contain such information and particulars as may be acquired therein and shall be made in such form and in such manner as may be approved by the FSC.

(b) be dealt with in the same manner, as is provided for under section 20(3) and (4) of the Financial Services Development Act 2001.

(4) Where an application for a Registered Agent Licence is approved by the FSC, the Chief Executive shall, after payment by the applicant of the annual fee specified in item 4 of Part II of the Fourth Schedule of the Financial Services Development Regulations 2001, issue the Registered Agent Licence on behalf of the FSC subject to such terms and conditions as the Board of the FSC may impose.

(5) Where the annual fee in respect of a Registered Agent Licence is not paid within one month after the date when payment becomes due the FSC may, in writing, notify the holder of the licence that the licence has lapsed.

Change of registered agent

(1) A company holding a Category 2 Global Business Licence may, by a resolution of its directors, change its registered agent.

(2) The company shall, within 7 days of the resolution changing its registered agent, give written notice simultaneously to the FSC and to the Registrar of Companies ("RoC") of the change and of the name and address of the new registered agent.

Resignation of registered agent

(1) Where a registered agent proposes to resign as registered agent in respect of a company holding a Category 2 Global Business Licence and is unable to agree with the company on his replacement, he shall give notice in writing at least 60 days before his resignation-

(a) to the director or officer of the company at his last known address;

(b) where he has no notice or knowledge of any change in the name and address of any director or officer of the company from the one on his records, to the person from whom he last received instructions concerning the company;

(2) (a) A copy of the letter of resignation shall be submitted forthwith simultaneously to the FSC and to the RoC.

(b) The resignation of the registered agent shall take effect on the sixtieth day after submission of the letter of resignation to the FSC and to the RoC.

(3) Where-

(a) before the expiry of the notice by the registered agent under paragraph (1), the company fails to inform the FSC and the RoC of any change of name and address of his registered agent.

(b) The RoC has reasonable cause to believe that a company holding a Category 2 Global Business Licence does not have, or is likely to find itself without a registered agent.

The RoC shall cause to be published in the Gazette a notice that the company is to be removed from the register unless the company notifies him within 30 days from the publication of the notice of the name and address of its registered agent.

(4) The RoC shall-

(a) in accordance with the Companies Act 2001, remove from the register any company holding a Category Global Business Licence which fails to comply with a notice under paragraph (3); and

(b) cause to be published in the Gazette a notice to that effect.

Maurice : L’offshore impliqué dans le scandale « Oil for Food » irakien

Lors de sa mission à Maurice entre le 25 et le 31 octobre, M. Courroye, travaillant de concert avec les responsables du State law Office, avait sollicité et obtenu un Judge’s Order ordonnant la Deutsche Bank de fournir tous les détails des comptes bancaires opérés au nom de Teillac SA. Après examen dans des conditions d’extrême confidentialité de ces documents bancaires, le juge d’instruction français a décidé de procéder à l’audition des employés de deux compagnies engagées dans l’offshore à Maurice.

Cette audition des employés d’AAMIL Limited, une offshore management company et de The Deutsche International Trust Corporation (Mauritius) Limited, s’est déroulée mardi de la semaine dernière en présence de la Deputy Master and Registrar, Mme Rehana Mungly-Gulbul, aux termes des dispositions de la loi. À ce jour, très peu de détails ont transpiré de cet exercice.

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The Standard: Offshore Financial Services Guide 2005-06

Snapshot and description of 30 major offshore centres

Directory of offshore service providers

Thought-provoking articles on leading issues.

Mauritius: FSPA “Training on Double Tax Treaties”

In line with its objective to develop professionals in the financial services and to be abreast of new developments in the sector, the Financial Services Promotion Agency (FSPA) will be organising a seminar on ‘Double Tax Treaties’ in November 2005.

Professor Jean Marc Tirard from Paris will give a series of ten lectures on the subject over five afternoons during the week from 7^th to 11^th November, 2005.

He is one of the leading international tax practitioners in France and President of STEP France. He is also the leading expert on common law trusts in civil law countries, including France. Mr Tirard will be making extensive use of French case studies (and other countries of relevance to Mauritius) on various treaty issues as well as will work on examples from other common law countries.

Course details

Lectures: Double Tax Treaties

Course Leader: Mr Jean Marc Tirard

Venue: 1^st Floor, Le Labourdonnais Waterfront Hotel

Time: 14:00hrs – 17:30hrs

Fee/participant: Rs 10,000

Please note the following:

• The deadline for enrolment is Monday 31^st October, 2005.
• Enrolment for the course will be on a first come first serve basis.
• Payment along with dully filled in Registration form should reach the FSPA at latest by 31^st October, 2005.
• Certificate of attendance will be provided at the end of the seminar
• MQA approval is in process and you will be advised as soon as approval is granted.

Mauritius: FSC Practice Notes on Managed Corporate Service Providers

The Financial Services Commission wishes to announce that it has, on 06 January 2005, issued Practice Notes on Managed Corporate Service Providers under section 7(1)(a) of the Financial Services Development Act 2001. These Practice Notes will come into operation on 02 February 2005.

A draft version of the Practice Notes on Managed Corporate Service Providers was released for consultation in September 2004. Management Companies were invited to respond before 11 October 2004 and a number of valuable comments and suggestions were received.

On the whole, the proposals were well received and the Commission has fully considered each and every comment submitted in finalising the Practice Notes on Managed Corporate Service Providers.

Practice Notes on Managed Corporate Service Providers

1. Management Companies are licensed by the Financial Services Commission ("FSC") under section 24 of the Financial Services Development Act 2001 (“the Act”) to set up and manage global business companies , to provide nominee and other services to the latter or to act as corporate trustee or qualified trustee under the Trust Act 2001.
2. A Management Company (“MC”) is licensed on the basis that it will operate as a full fledged stand alone operation. Current practice requires Management Companies to have a permanent establishment locally and to operate from business premises with adequate logistics and staff of adequate number, skills, knowledge and experience to undertake and fulfil their duties. The only exception is where the operation of a MC is managed under a Management Agreement by a fully established Management Company having the resources to provide such a service.
3. The FSC is responsible for supervising Global Business. The FSC’s role is to reduce the risk of money laundering and other financial crime and to protect the good repute of Mauritius as a financial centre. The FSC discharges this responsibility in different ways, for example, by promoting and enforcing legislation, statements of policy and principles, guidelines and codes of practice or practice notes.
4. In particular, practice notes explain the manner in which the principles already established under legislation or a guideline will be interpreted and implemented. Practice notes are issued under section 7(1)(a) of the Act. They do not have the force of law in that breaches will not by themselves constitute criminal offences – although they may entail regulatory sanctions. However, where as a result of a breach or failure to comply with practice notes, the FSC directs the Licensee under section 7(l)(d) of the Act to comply with any practice notes or any part thereof, failure to do so will constitute a contravention of the law and may lead to prosecution- quite apart from any other regulatory action that may be taken.

The downloadable PDF version of the Practice Notes is available here

Mauritius: FSPA "2 year Postgraduate Diploma in International Tax Planning"

The Financial Services Promotion Agency (FSPA) is launching its postgraduate qualification course in International Tax Planning for its next intake in August 2004.

International taxation deals with the rules under domestic tax laws and tax treaties under international tax law. International tax planning uses the knowledge of international taxation to develop tax-efficient tax structures on cross-border transactions. Owing to the complexity of the subject, international taxation is taught by very few academic institutions in the world. It is learnt largely through in-house experience or training programmes within international professional firms.

The FSPA considers that there will be significant benefits in having an internationally recognised Diploma. Those individuals following the course will indicate a high level of competence in International Taxation and a successful candidate will be able to demonstrate knowledge in the following areas:

• the principles of international taxation

• in-depth knowledge of international tax issues for their primary jurisdiction

• an awareness of basic tax issues, particularly in relation to international tax, in at least one secondary jurisdiction

Currently, overseas professional advisors do most of the tax planning on assignments involving Mauritius global business as many local professionals lack either the knowledge or the experience in the subject. This course is designed to provide the necessary training to develop their expertise locally. It will impart them with the knowledge to enable them to perform more value-added services and, thus, help to enhance the reputation of Mauritius as a high quality financial service centre. The experienced faculty and the high quality study materials provide a balance of practical and theoretical teaching techniques, making the learning relevant, as well as beneficial and motivational.

The Financial Services Promotion Agency has made arrangements with the Royal Society of Fellows in the United States to set and mark the examination papers and award the Diploma. The Royal Society of Fellows is a learned society of international tax professionals and academics. The Diploma applies towards the requirements of their Society and towards the title as a Fellow of the Society. It is also linked with the LL.M. program in international tax at the St Thomas University School of Law, Miami, USA. (For details see their website http://www.royalfellows.org)

In the global business, our customers and competitors are overseas. Although the market for global services continues to grow it is also very competitive. In order to maintain and expand our market share, we all need to continue to expand our knowledge base and develop our skills. The Financial Services Promotion Agency in Mauritius is here to assist you. Its mission is to bring you the best hands-on learning solutions at affordable cost to enable you to succeed in your business.

To ensure the high standards and personalised attention to the students, the student intake is limited. The registration for the course will be strictly on a first-come-first-served basis.

U.S-Mauritius Trade and Investment Mission

The U.S. Embassy, in close collaboration with the U.S. Commercial Service based in Johannesburg, is planning a two-day U.S. - Mauritius Trade and Investment Mission to be held on April 1-2, 2004 at the U.S. Commercial Service Ron Brown Center in Johannesburg, South Africa.

The objective of this important business event is to bring a delegation of Mauritian businesspersons to Johannesburg to meet with U.S. companies in South Africa to explore trade and investment opportunities in Mauritius. There are more than 800 U.S. firms based in South Africa and we plan to specifically target those companies that have interest in expanding their business in the region. In addition to presentations of business opportunities in Mauritius by the Mauritian delegation, and presentations of support services available from the Foreign Commercial Service and other U.S. agencies, there will be opportunities for one-on-one meetings between the Mauritian and U.S. business delegates. We also envisage interactions with business in the U.S. via video conferences.

The Embassy is working with representatives of the Government of Mauritius as well as private sector institutions to plan this event. These include the Board of Investment, the American Chamber of Commerce, the Mauritius Freeport Authority, the Business Parks of Mauritius Ltd., the Financial Services Promotion Agency, the Mauritius Chamber of Commerce & Industry, and the Mauritius Export Processing Zone Association. All these agencies will be active participants in the trade mission in Johannesburg.