fivehundred magazine > Practice area spotlight: M&A > Laying the foundations for growth in Mauritius

Laying the foundations for growth in Mauritius

Combatting the threat of money laundering, while having the flexibility to take on new work, is the biggest challenge for Mauritian firms, write Appleby’s Malcolm Moller and Sharmilla Bhima

Please give us an overview of the current legal market in Mauritius and how any recent developments have impacted your practice?

There are three recent developments that will impact the Mauritian offshore commercial market.

First, the introduction of GDPR.

Second, the termination of the 2011 joint venture between the London Court of International Arbitration and the government of Mauritius to set up the LCIA-MIAC arbitration centre for international arbitration. As of 28 July 2018, the Mauritius International Arbitration Centre (MIAC) will operate as an independent arbitration centre with rules built on the UNCITRAL model. It is built on a three-tier system, namely the government of Mauritius, an advisory board headed by Professor Emmanuel Gaillard and a secretariat which will be advised by the advisory board. The MIAC will also derive support from the Permanent Court of Arbitration, which has an established presence in Mauritius. The withdrawal of such a prestigious institution as the LCIA from the Mauritian jurisdiction will attract mixed views on the reasonableness of the Mauritian government’s ambition to establish Mauritius as a hub for international arbitration within the African region given the volatile nature of the global economy and the ferocious competition within the global village. The challenge for Mauritius will be to prove that it has the dynamics and stamina to weather the challenge ahead of it.

Third, recent announcements regarding the National Budget 2018/19 will no doubt have an impact on the corporate and dispute resolution aspects of offshore commercial practices. The changes will mean the judiciary is strengthened so that cases heard by the Supreme Court will be streamlined. A fiscal regime is being specifically tailored for banking and non-banking (i.e. offshore) institutions. For offshore practices, the taxation regime will be reviewed so as to bring it in line with prevailing international best practices. The Financial Services Commission (FSC), the regulator of offshore global business activities, will have extended powers so it may regulate custodian services, global shared services and compliance services and remove all restrictions applicable to dealings in Mauritius. Furthermore, the FSC will issue a single harmonised global business licence to be known as a ‘global business licence’ and the category 2 global business licence will be abolished by 2021, but there will be grandfathering provisions for companies incorporated before 16 October 2017. Also, a new framework will be developed to supervise management companies (i.e. companies licensed by the FSC to provide fiduciary services to global business companies).

Finally, in order to promote the growth of the FinTech sector, a National Regulatory Sandbox License Committee will be set up. In this regard, the FSC, as regulator, will be called upon to create new licensable activities, namely a custodian of digital assets licence and a digital asset marketplace licence. Through these licences, the government seeks to establish a regulated environment for the safe custody of digital assets by investors and enable the exchange of digital assets. In the same breath, the FSC will put in place guidelines on investment in cryptocurrency as a digital asset. It will ensure as well that applicants for FinTech activities have appropriate cyber-security and cyber-resilience policies and capacities.

 

What significant trends exist in the M&A market presently? Are you seeing these just domestically or internationally as well? The Mauritian market closely follows international trends in order to retain its competitive edge and while the rapid development of FinTech and blockchain globally has not yet affected the market, it is definitely being tracked by the industry so that we are ready to get started when needed. The Appleby Mauritius and Cayman offices were involved in the setting up of the revolutionary digital identity token sale by SelfKey, which is a transformative blockchain-based digital identity solution.

 

What are the three biggest challenges to practising M&A in Mauritius at the moment? The challenge is to remain competitive and be up to date with global trends. The market is highly dynamic and our laws need constant monitoring to ensure that in the interests of our economy and our ambition to be an international financial hub for the African region, we are in a position to offer the right standard of services to the international business community. Achieving a balance between the need to have a solid legal system amid the non-stop threat of money laundering and a certain flexibility to accommodate novelty is a tough challenge.

 

What are your predictions for M&A in Mauritius over the next five years? If adopted as outlined here, the measures of the National Budget 2018-2019 will lay the foundations for the next stage of Mauritius’ growth into a solid international financial centre with an increased amount of activity on its M&A landscape and a solid legal structure to support this growth and combat the threat of money laundering.