- April 7, 2023
- Posted by: Aurélie
- Categories: Investment funds, Mauritius
Located in the Indian Ocean, at the crossroads of Africa and Asia, Mauritius is a favorite destination for foreign investors from around the world for a number of reasons besides its unparalleled setting. Below, we will explain the benefits of setting up African Investment Funds in Mauritius.
What is an investment fund?
An investment fund is a type of financial vehicle that pools money from various investors to invest in a diversified portfolio of assets such as stocks, bonds, commodities, and real estate. They come in different forms, including mutual funds, exchange-traded funds (ETFs), closed-end funds, and hedge funds. Mutual funds and ETFs are open-ended – which means that they can issue new shares to investors and redeem shares as investors sell them. Closed-end funds, for their part, issue a defined number of shares and trade on an exchange like a stock. Hedge funds are more complex investment vehicles typically available to high-net-worth individuals or institutional investors.
Investment funds are managed by professionals with the knowledge and expertise to select and manage investments with the goal of generating returns for investors. Some of the benefits of investments are access to a broad range of securities that individual investors may not have access to, as well as diversification and professional management of assets. They also provide liquidity, which means that investors can buy and sell shares in the fund at any time as long as they comply with any restrictions in the fund’s prospectus. Let us now look at the reasons why Mauritius is the preferred jurisdiction for African Investment Funds.
Five reasons for setting up African Investment Funds in Mauritius
African investment funds registered in Mauritius can market their funds to investors globally under certain conditions. It’s worth noting that the island has a well-developed financial services sector, with a range of service providers offering fund administration, custodial, and legal services. Investment funds can thus raise capital from institutional and individual investors, with a minimum investment requirement set by the fund manager.
African Investment funds in Mauritius can benefit from a range of exit strategies. One of the options is to sell the investment to another party or to a public company through an initial public offering (IPO). Another option is to liquidate the investment fund and distribute the proceeds to investors. Investment funds can also merge with other funds to create larger and more diversified investment portfolios.
African Investment funds operating in Mauritius are required to comply with the regulatory framework set out by the Financial Services Commission (FSC). One of the tasks of the FSC is to ensure that investment funds comply with the relevant laws and regulations, such as the Securities Act 2005, the Financial Services Act 2007, and the Global Business Act 2001. Investment funds also have to submit annual financial statements and regular reports to the FSC – these must be audited by a qualified auditor.
Mauritius offers many investment incentives to attract investment funds. Tax incentives and double taxation treaties are just some of them. African Investment funds registered in Mauritius can benefit from tax exemptions on dividends, interest, or capital gains. Thanks to the country’s extensive network of double taxation treaties, the tax burden on African investment funds and investors is reduced. These tax incentives make Mauritius a cost-effective jurisdiction for African investment funds. Besides, Mauritius provides a corporate tax of 15% – which is proof of its tax-efficient environment.
African investment funds have access to a range of sectors, including financial services and information and communication technology, as well as real estate, tourism, and renewable energy. By investing in these sectors, African investors can also benefit from local knowledge and expertise. In fact, Mauritius can boast a highly skilled and multilingual workforce from which African investors can benefit.
In short, Mauritius provides a safe and stable framework for African investors. The country’s legal system, based on English common law, the political stability, the level of democracy, excellent air and sea connectivity with Africa and the rest of the world, as well as the reliable telecommunications infrastructure, are other reasons why Mauritius is a great place for setting up an African investment fund.