Mauritius makes key amendments to its Securities Act

In addition to the Stock Exchange of Mauritius (SEM) and the Central Depository and Settlement Co. Ltd (CDS), other exchanges and clearing and settlement agencies will be allowed to establish and operate in Mauritius.

The definition of “sophisticated investor” has been revised and shall now also include:

• a collective investment scheme;
• a pension fund or its management company;
• a closed-end fund;
• an investor that warrants, at the time of entering into a securities transaction, that –
  
  (i) its ordinary business or professional activity includes the entering into securities transactions, whether as principal or agent;
  
  (ii) in case he is a natural person, his individual net worth or joint net worth with his spouse exceeds one million USD, or its equivalent in another currency; or
  
  (iii) it is an institution with a minimum amount of assets under discretionary management of 5 million USD, or its equivalent in another currency.

The SA Act permits a CIS established in a foreign jurisdiction to market its shares or units to sophisticated investors in Mauritius.  A definition of “Permitted CIS activities” has been added to the Act as follows: “the marketing to a sophisticated investor in Mauritius of units or shares of an entity that carries out the activities of a collective scheme and that is established in a foreign country where such marketing is undertaken – (a) by a CIS manager established in Mauritius; (b) by a person carrying out the activities of an investment dealer outside Mauritius; or (c) in accordance with such other provisions as the Commission may determine.

The concept of “retail investors” has been introduced under the Act and would mean such category of investors, other than sophisticated investors, as the FSC may determine.

The SA Act provides that no person, other than the holder of an investment dealer licence or investment adviser licence or his agent, shall solicit a retail investor in Mauritius to enter into a securities transaction. It has also been clarified that a foreign investment dealer and a foreign investment bank that is not soliciting a retail investor in Mauritius will not be required to be authorized by the FSC to provide underwriting services.

The definition of “reporting issuer” has been amended and shall mean an issuer (a) who by way of a prospectus, has made an offer of securities either before or after the commencement of this Act or (b) who has made a takeover offer by way of an exchange of securities or similar procedure. It is also proposed to waive the requirement for foreign reporting issuers to be registered with the FSC.

• A prospectus shall not be needed for an offer or issue of securities by a corporation holding a Global Business Licence irrespective of whether the securities of the corporation are listed on a securities exchange in another jurisdiction.

• No prospectus is required for an offer or issue of securities by an issuer to persons residing outside Mauritius.

• On application, the FSC shall recognize foreign funds whose securities are marketed to retail investors in or from Mauritius.

• Material Changes in a reporting issuer’s affairs, as approved by the Commission shall as soon as practicable, be published on the website of the issuer and the appropriate securities exchange and be made available along with the prospectus when sent or given to a potential investor.

• Section 106 of the Act relating to disclosure requirements by CIS and CIS managers have been repealed.