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
The Mauritius Variable Capital Companies Act 2022 (“VCC Act”), passed on 12 April 2022 and gazetted on 15 April 2022, allows the setting up of a VCC, which can be structured as a VCC fund (“VCC Fund”) and carry out its activities through its sub-funds and SPVs, with its assets and liabilities segregated and ring-fenced.
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. For example:
> A sub-fund may be structured as a CEF, which has a fixed committed capital/corpus. Investors generally do not have the right to call for their shares to be redeemed. The sub-fund may have a limited life. Assets are distributed to investors on the winding up of the sub-fund.
> A sub-fund may also be structured as a CIS (also referred as an open-end fund), which has variable capital. Investors are generally allowed to redeem their shares at their option or predetermined times in accordance with the sub-fund’s constitutive documents. The net asset value (NAV) is usually calculated daily, weekly, monthly or fortnightly.
> In addition, a VCC can accommodate several SPVs operating as vehicles ancillary to a sub-fund or the VCC Fund provided that the SPVs do not operate as a fund.
Each sub-fund and/or SPV may opt to have a separate legal personality from that of the VCC.
A single Global Business Licence will be required by the VCC, irrespective of whether its sub-funds or SPVs have separate legal personality, if criteria are met (principally owned by non-Mauritian citizens and carrying out activities principally outside of Mauritius).
Where the sub-fund and/or SPV has a legal personality, the directors of the VCC shall be the directors of each sub-fund and/or SPV, unless the constitution of the VCC provides otherwise.
A VCC can appoint a single CIS manager, custodian or other service provider for all its sub-funds. However, nothing prevents a sub-fund from appointing a separate CIS manager, custodian or other service provider from the VCC or other sub-funds.
The VCC may, at any time, by giving irrevocable notice in writing simultaneously to the Registrar of Companies and to the Director-General of the Mauritius Revenue Authority (MRA), elect to present separate financial statements in respect of each of its sub-funds and SPVs in accordance with International Financial Reporting Standards (IFRS).
Where a VCC elects to present separate financial statements for each of its sub-funds or SPVs under the VCC Act,
> each sub-fund or SPV shall be deemed to be an entity separate from the VCC and shall be liable for income tax in respect of its own income
> the Mauritius Revenue Authority shall not recover income tax due by a sub-fund or SPV from the assets of: > another sub-fund or SPV; or
> from the assets of the VCC where such assets are directly attributable to another sub-fund or SPV of the company
Where the VCC opts to present consolidated financial statements, the VCC fund will be required to file a single tax return to the MRA and will be liable for income tax on the aggregated income of its sub-funds and SPVs.
Taxation for companies applies.
Funds are required to file non-audited quarterly management accounts and yearly audited financial statements with the FSC. These reports must include at least the following:
> A statement of assets and liabilities, including the NAV
> The number of shares outstanding
> The NAV per share
> Details of the investment portfolio and the movements in the period, disclosed by types of securities and type of market
The financial statements must be audited in accordance with IFRS and/or International Accounting Standards.
Unless otherwise provided under the VCC Act or applicable law, the assets of a sub-fund or SPV of a VCC shall not be used to discharge any liability of the VCC or any other sub-fund or SPV, including during the winding up, administration or receivership of the sub-fund, SPV or VCC.
Every asset attributable to a sub-fund or SPV shall only be available to the creditors of the company who are creditors in respect of that sub-fund or SPV.
The VCC must keep separate records for each of its sub-funds and SPVs.
The fund manager can be structured as a Mauritius CIS manager or as a fund manager licensed in an equivalent jurisdiction.
If structured as a Mauritius CIS manager, the CIS manager licence specifies that the fund manager shall be engaged solely in the business of the management of collective investment schemes, unless otherwise authorised. The fund manager also has to demonstrate that it has suitably qualified staff with the appropriate expertise and experience to carry out the functions of a CIS manager. The minimum unimpaired capital is one million Mauritius rupees (approximately US $23,000).
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.
Double Taxation Avoidance Agreements (DTAAs)
Investment Promotion and Protection Agreements (IPPAs)
Memorandum of Understanding (MOUs)
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