Company Formation and Management Services
Mauritius offers a business environment that is very conducive to investment and business growth. Setting up a company and starting a business activity in Mauritius is a simple and straightforward process. A company incorporated in Mauritius can be 100% foreign owned with no minimum capital.
Each business structure varies in terms of category, nature, and type of company. It is thus important to understand the various business structures and choose the most suitable for your business.
Can be formed by Sovereign and is appropriate for owning property or trading in Mauritius.
Category 1 Global Business (GBC1)
GBC1 companies are formed under the Companies Act 2001 and now regulated by the Companies Act 2001 and Financial Services Act 2007. The substantial advantage offered by the GBC1 is that it may be structured to be tax resident in Mauritius, and may thereby access the taxation treaties signed by Mauritius. Tax treaties provide that profits can then be withdrawn from that country either without the imposition of withholding tax or subject to a substantially reduced rate of withholding tax.
GBC1s are subject to 15% tax on profit but the company is entitled to a deemed foreign tax credit of 80% of the tax payable e.g. the net effective rate after deduction of the deemed foreign tax credit is 3%. Capital Gains are exempt from tax in Mauritius.
A GBC1 is suitable for undertaking licensable global business activities “predominantly” outside Mauritius, with revenue in the form of dividends, royalties, interest or capital gains. As such it is ideal for activities such as international trading, investment holding, offshore funds management, offshore Insurance, IT services, IP licensing, pension related services and other activities.
GBC1 companies can be wholly owned by one shareholder. Bearer shares are not allowed. Details of the shareholders must be reported to the Companies Registry and to the Financial Services Commission (FSC). Where the beneficial owners are bodies corporate, latest audited accounts and corporate profile must be submitted to the FSC.
A GBC1 company must have at least one director who is ordinarily resident in Mauritius. Corporate directors are not permitted. It must file audited accounts within six months of the close of its financial year. Subject to name approval a GBC1 company can be incorporated within 10 working days. Ready-made companies are not available because of the need to report the details of the beneficial owners to the FSC.
A resident corporation that proposes to conduct business outside Mauritius may apply to the FSC for a Category 1 Global Business Licence. A resident corporation is a body corporate formed or registered in Mauritius, and may include any trust, société, partnership or any body of persons governed by the laws of Mauritius.
The FSC encourages a GBC1 to have more substance in Mauritius by ascertaining that it:
- Has at least two directors, resident in Mauritius, of sufficient calibre to exercise independence of mind and judgment;
- Maintains at all times its principal bank account in Mauritius;
- Keeps and maintains, at all times, its accounting records at its registered office in Mauritius;
- Prepares, or proposes to prepare its statutory financial statements and causes or proposes to have such financial statements to be audited in Mauritius;
A GBC1 can be structured in the form of a trust, partnership, limited partnership, collective investment scheme, global fund, protected cell company, captive or hybrid company.
A GBC1 is tax resident in Mauritius and may apply for a Tax Residence Certificate from the Mauritius Revenue Authority should this be required by the tax authorities in the jurisdiction in which the company is conducting its business.
Category 2 Global Business (GBC2)
The GBC2 company is formed under the same legislation as a GBC1. It is defined as a resident corporation conducting business outside Mauritius. There is no taxation in Mauritius on the worldwide profits of a GBC2 but a GBC2 cannot access Mauritian double tax treaties because it is considered non-resident. It can however be converted at any time to a GBC 1 category company to attain that access.
There is no withholding tax on dividend, royalty of interest payments to non-resident shareholders and a GBC2 is exempt from capital gains tax, stamp duty and pays no land transfer taxes. A GBC2 is an ideal special purpose vehicle (SPV) if withholding tax planning is not immediately required but might be in the future. It is suitable for holding assets, invoicing and marketing activities.
A GBC2 must have a minimum of one shareholder who may be corporate or individual. GBC2 companies may issue par value as well as no par value and fractional shares. Bearer shares are not permitted. A Register of Members will need to be maintained by the company but only shareholders have a right of inspection. The identity of the beneficial owners must be provided to the FSC prior to incorporation and any changes in beneficial ownership must be notified within one month.
A GBC2 company must have at least one director who need not be ordinarily resident in Mauritius. Corporate directors are being to take on the role of director. A GBC2 company is not required to file an annual return but a financial summary (in the form of a balance sheet) must be prepared and filed each year to cover a period not exceeding 18 months from the licence date of the company. The summary must be submitted to the FSC within six months of the balance sheet date.
Incorporation can be achieved within 48 hours. However it does take a few days for documents to arrive from Mauritius. Ready-made companies are not permitted. As a matter of local company law, the company must maintain a registered office address in Mauritius and appoint a Mauritian resident as a registered agent. Sovereign would generally provide these services as part of the domiciliary service.
Both GBC1 and GBC2 companies can be structured as “hybrid” companies, which are companies limited both by shares and by guarantee. Hybrids have two classes of member, shareholders and guarantee members, which provide great flexibility in the financing and distribution of profits within the company. The different rights and obligations that attach to each class of membership can be arranged to create structures that are precisely tailored to the different needs of the client.
Typically a hybrid will be structured so that the shares are issued on terms that each carries one vote but no rights to dividends or to participate in the capital or income of the company in any other way. The guarantee memberships are issued on terms that they carry no rights to vote but all the rights to participate in the income and capital of the company. Thus all control rests with the shareholders but all benefits flow to the guarantee members. This quasi trust structure, generally with professional managers acting as shareholders, offers many advantages to a guarantee member, including absence of ownership and control, enhanced confidentiality and the potential for straightforward transmission of assets upon death.
The rights and obligations of each class of members of the hybrid company can be laid down in its constitution or can be set out by its directors in board resolutions and thus remain confidential. Additionally, there are minimum disclosure requirements, where the company is structured as a GBL2. There are a number of jurisdictions in which it is possible to form hybrid companies but the Mauritius hybrid offers perhaps the most flexibility and greatest advantage.
A Limited Partnership (LP) combines the benefits of limited liability protection with a highly flexible and tax transparent structure. It must consist of one or more general partners and one or more limited partners. LPs are principally established for investment purposes, such as in private equity, venture capital and investment funds.
Once a Mauritius entity is incorporated, we provide a domiciliary service, which includes the provision of company secretarial, registered office and nominee shareholder services. Full management services from our own licensed corporate directors are also available and highly advisable in most cases. Re-mailing services are available at modest cost for all companies established by Sovereign.
Note: Ancillary services
In addition to providing incorporation, domiciliary and management (directorship) services, a range of ancillary services at competitive prices is available on request. These services include, but are not limited to: provision of dedicated telephone lines; office and personnel assistance; designated staff members (temporary or permanent availability); assistance with office relocation, introduction to real estate agents, government agencies and other third parties.
Trust Formation and Trustee Services
Trusts have many applications and advantages, including the protection and preserving of assets, tax planning or just avoiding the expense and delays of obtaining probate under a will. They also provide a high degree of confidentiality. Trust services can be provided by our licensed trust corporations in Mauritius.
Although trusts were recognised and given effect by the courts in Mauritius as far back as 1962, the first trust legislation was enacted only in 1989. The Offshore Trusts Act was enacted in 1992 as part of the legislative framework to launch Mauritius as a financial centre. A new Trusts Act was enacted on 1 December 2001. It repealed and replaced both the 1989 and the 1992 acts and provides a single integrated legislation to regulate all trusts in Mauritius.
- Registration – There is no requirement to register a Mauritian trust but a settlor may opt to register a trust with the Mauritius Registrar General.
- Duration – Except for a purpose trust, duration may not exceed 99 years. A charitable trust may be of perpetual duration. A non-charitable purpose trust may not exceed 25 years.
- Trustees – The number of trustees may not exceed four. A trust must have at least one “qualified” trustee, which is a person or company resident in Mauritius and authorised by the Financial Services Commission.
- Beneficiaries – Must be identified by name or by reference to a class.
- Settlor – May be any person who has the legal capacity to contract but may not be the sole beneficiary of the trust.
- Property – May not include any immovable property situated in Mauritius if the beneficiary is a not a citizen of Mauritius unless prior approval is received from the Prime Minister.
- Courts – The Supreme Court of Mauritius has jurisdiction to hear any matter relating to trusts in Mauritius.
- Taxation – A trust is tax resident in Mauritius and subject to tax on its income at a rate of 15% per annum where the trust is administered in Mauritius and a majority of the trustees are resident in Mauritius, or where the settlor of the trust was resident in Mauritius at the time the instrument creating the trust was executed. A trust that is tax resident in Mauritius can benefit from the Mauritian network of double tax treaties.
A trust may opt to be non-resident for income taxation purposes and pay no income tax in Mauritius provided that the settlor is a non-resident and all beneficiaries are either non-resident or hold a global business licence.
Under a circular issued by the Financial Service Commission, high-net-worth individuals may set up a private trust company (PTC) holding either a GBC1 (tax resident) or a GBC2 (tax exempt) licence to act as a trustee. The PTC must provide its private trust business services solely to connected persons and must not solicit trust business from, or provide trust business services to, the public. The PTC must appoint a licensed management company to carry out its trust administration services in relation to any express trust to which it is a trustee.