Private placement rules and law in Mauritius

Mauritius is not a Member State of the EU and is thus not subject to the AIFMD and the respective rules. 

The private placement regime in Mauritius is contained in the Mauritius Securities Act 2005 (“Securities Act”) and more specifically in the Securities (Preferential Offer) Rules 2017 (“Preferential Offer Rules”). 

Subject to certain exceptions, the Preferential Offer Rules will be applicable to a foreign issuer only to the extent that the latter issues securities to investors in Mauritius. 

The definition of an issuer of securities under the Securities Act is widely couched and means a person or any other entity that issues, has issued or is going to issue securities. 

Under Mauritius law, the umbrella concept of preferential offers encompasses private placements, offers of securities to sophisticated investors and offers of securities to related corporations of the issuer. 

The definition of private placement under the Securities Act is as follows: 

“private placement” means an offer of securities where the total cost of subscription or purchase for each person to whom the offer is made is at least equal to the amount determined by FSC Rules and where each   person subscribes or purchases for his own account and no publicity is made by the person making the offer;”.

Pursuant to the Preferential Offer Rules, for any private placement of securities, the subscription or purchase amount for each person must be at least one million Mauritius rupees whereas in the case of an offer of securities by a professional collective investment scheme (which is a special category of fund in Mauritius), the subscription or purchase amount shall be of at least two hundred thousand United States Dollars. 

Offering of securities by way of private placement shall require the following: 

• Approval of shareholders of the issuer of securities (in case of equity securities) and alignment with constitutive documentation of the issuer; 
• Issuance of a preferential offer document (in the form prescribed by the Preferential Offer Rules) submitted to the Mauritius Financial Services Commission (“FSC”); 
• Mandatory notification to the FSC within 10 days of the offer of securities being made; 
• In case of debt securities, an application for registration of the offer of debt securities shall be made  to the FSC at least 14 days prior to the issuance of the debt securities with respect to every offer of debt securities; 
• Allotment of the securities offered to be made within 12 months of the approval of shareholders (above). 

Pre-marketing is not specifically regulated under Mauritius law. 

The regulatory framework in Mauritius does not provide specific rules on the pre-marketing of fund interests. As a general principle, any fund document provided to investors must clearly disclose the nature and status of the document, especially if in draft form and the regulatory status of the person marketing such document, that of the fund and the fund manager. Investors should be warned about reliance on such documents and should only make an investment decision on the final version of the constitutive documents. 

Marketing of fund interest (whether by a local or non-Mauritian fund) to retail investors in Mauritius mandatorily require the holding of an investment intermediary licence (investment dealer licence or an investment adviser licence). 

Retail investors under the Securities Act refers to such category of investors other than sophisticated investors. 

Sophisticated investors under the Securities Act includes: 

• the government of Mauritius; 
• a statutory authority or an agency established by an enactment for a public purpose; 
• a company whose shares are wholly owned by the government of Mauritius, a statutory authority or an agency established by an enactment for a public purpose; 
• the government of a foreign country, or an agency of that government; 
• a bank (licensed by the Bank of Mauritius); 
• a collective investment scheme; 
• a fund manager (licensed by the FSC); 
• a pension fund or its management company; 
• a closed-end fund; 
• an insurer (licensed by the FSC); 
• an investment adviser (licensed by the FSC); 
• an investment dealer (licensed by the FSC); 
• an investor that warrants, at the time of entering into a securities transaction, that:
  1. its ordinary business or professional activity includes the entering into securities transactions, whether as principal or agent;
  2. for a natural person, the individual net worth or joint net worth with a spouse exceeds USD1 million or its equivalent in another currency; or
  3. it is an institution with a minimum amount of assets under discretionary management of USD5 million or its equivalent in another currency; and
• a person declared by the FSC to be a sophisticated investor. 

Securities of foreign funds may hence be marketed to sophisticated investors (as defined above) or expert investors (being sophisticated investors or an investor making an initial investment of not less than USD 100,00 for his own account) without resorting to the mandatory application for an investment dealer licence or investment adviser licence.  

The FSC has also published a guideline on Advertising and Marketing of Financial Products regulating the advertising and promotion methods which licensed entities must use to market financial products. These guidelines regulate the conduct of the marketing and the content of advertisements and marketing materials which require a certain amount of disclosure and disclaimers on the product and the persons marketing same. 

Additionally, in 2013, the FSC signed a Memorandum of Understanding with the European Securities and Markets Authority (“ESMA MOU”) pursuant to which funds licenced in Mauritius may market in Europe subject to meeting any requirements that may be imposed by the regulator of each EU Member State where the funds are being marketed.  

No specific offence is provided for non-compliance of the Preferential Offer Rules. However, generally, offences may be committed under the Securities Act the consequence of which may range from an administrative fine or to a criminal sentence of imprisonment.