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Highlights on the Mauritius Financial Services (Crowdfunding) Rules 2021

Insight 1 October 2021

Highlights on the Mauritius Financial Services (Crowdfunding) Rules 2021

In this highlight, we provide a brief summary of the crowdfunding rules, emphasizing the key points set out therein.

In line with its strategy to sustain the growth of the Fintech ecosystem within the Mauritius International Financial Centre, the Financial Services Commission (FSC) has issued the Financial Services (Crowdfunding) Rules 2021, following the announcement in the 2019 - 2020 Budget speech.

These rules are effective as from 04 September 2021 and shall apply to any person operating a crowdfunding platform in Mauritius and must be read in conjunction with the relevant Acts and any guidelines which the FSC may issue from time to time.

The FSC expects that the new regulatory framework for crowdfunding will contribute to shape and improve access to finance for individuals, entrepreneurs, as well as Small and Medium Enterprises (“SMEs”) operating in or from Mauritius. Both retail and expert investors will have the opportunity to participate, in a regulated environment, to the growth of SMEs, thus bolstering entrepreneurial spirit in the jurisdiction.

Access the rules as published by the FSC

Obligations of the licensee

A crowdfunding operator is required to apply for a crowdfunding operator licence pursuant to the Financial Services Act and operating a crowdfunding platform without a licence constitutes an offence.

A crowdfunding operator shall, inter alia,

  • have its registered office and principal place of business in Mauritius;
  • at all times, have a minimum unimpaired stated capital of MUR 2 million or its equivalent in any other currency, or such higher amount as the FSC may determine;
  • have an effective oversight of its activities, taking into consideration the nature, scale and complexity of its business;
  • implement adequate internal controls, risk management, business continuity and disaster recovery plan;
  • be managed by a board of directors composed of a minimum of 3 directors, of which at least - (i) 30 per cent shall be independent directors; and (ii) one shall be resident in Mauritius;
  • employ adequate staffs in Mauritius who shall be fit and proper and provide the staff appropriate training for their respective duties and responsibilities;
  • have a disaster recovery and business continuity plan to ensure that appropriate measures are in place to address widely disruptive and major events;
  • at all times, set up a risk management framework to identify, assess, manage, mitigate and report risks associated with the business;
  • when outsourcing any function, conduct appropriate due diligence to ensure that the delegate is fit and proper and has the capacity to fulfil the delegated function;
  • at all times, it has up to date transactional records on its clients, including details of the business relationship therewith and these records shall be made available for inspection by the FSC upon request;
  • have adequate measures which must be reviewed at least annually to ensure – (a) that its information technology systems are resilient and not prone to failure; (b) protection of its information technology systems from damage, tampering, misuse or unauthorised access; and (c) the integrity of data forming part of, or being processed through, its information technology systems; and
  • have in place adequate arrangements to identify, manage, mitigate and report on conflicts of interests.

Operational requirements

In addition to Know Your Customer checks to be conducted under the AML/CFT legislation on the issuers and investors, a crowdfunding operator shall conduct a fitness and propriety check and legal due diligence on each issuer prior to allowing the issuer to raise funds using the crowdfunding platform as provided in the Rules.

A crowdfunding operator is required to enter into appropriate agreements with the issuer and investor to govern the main terms of the client-platform relationship.

An issuer shall offer to raise an amount not exceeding MUR 15 million on a crowdfunding platform over a 3-year period or such other period as may be approved by the FSC. The operator shall take reasonable steps to restrict an issuer from seeking funding on another crowdfunding platform during the commitment period.

A crowdfunding operator shall maintain effective systems and controls to ensure that, over a 12-month period, a retail investor[1] does not invest an amount exceeding MUR 350,000 on the crowdfunding platform. No investment limit shall apply to expert investors.[2]

[1] retail investor means any person who is not an expert investor.

[2] expert investor has the same meaning as in Regulation 78 of the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008.

A crowdfunding operator may handle funds on behalf of investors. In case a crowdfunding operator acts as an intermediary in the collection of funds from investors, it shall keep and maintain separate bank accounts from its own accounts.

A crowdfunding operator shall disclose prominently on its platform:

  • the main risks of using the crowdfunding platform;
  • key information about how its services operate.
  • relevant information about each issuer and material changes affecting an issuer
  • the actual and expected failure rate of issuers who use the crowdfunding platform

All the disclosures to be made by the crowdfunding operator have been detailed in the Rules.

How can Sanne assist?

Let's talk...

Should you require our expert services and need assistance on the implications of above new developments, we would be delighted to speak with you to discuss how Sanne can assist. Please contact Rubina, Bimal or Varounen directly.

Our Expertise
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Rubina Toorawa Head of Sanne Mauritius - Mauritius
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Varounen Goinden Director, Head of Business Development, Mauritius & India - Mauritius
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