The Financial Services Industry in Mauritius is growing at a fast pace. According to the Financial Services Commission, 2006 Annual Report the Non Banking Financial Industry Sector ("NBFI") already contributes to 4% of the GDP and the growth rate is at present some 10% or more. Incidentally the number of Licensed Service Providers is also increasing. More and more global players are considering operating from within Mauritius. With the low taxation regimes, attractive Property Residency Schemes and the natural and tropical climate of the island which is located in an interesting time zone, more players will opt for Mauritius to conduct business in the Financial Services Sector and this with a view to planning solid and attractive tax efficient structures to route investments into the various countries with which Mauritius has a DTA as well as with non-treaty countries. However, as in any country, starting an operation can be an expensive and administratively cumbersome exercise apart from the fact that a promoter also has to overcome other difficulties in obtaining substantial key resources to start up with.
The setting up of a management company involves a major capital outlay for the following reasons:
- It requires a management team in place to start operations.
- It requires an office space, properly equipped and connected, which can be costly and not easy to locate and hire.
- It requires experienced personnel
- A client base can prove to be difficult to acquire outright.
- It takes quite some time to acquaint oneself with all the existing laws and regulatory requirements and the risks in a particular business environment.
One way of avoiding heavy pre-operational expenses, reducing risks and starting on the right footing is by making use of a managed operation, very often termed as cubicle and defined under the practice notes issued by the Financial Services Commission as a Managed Corporate Service Provider ("MCSP")
At the outset, the promoters should choose a Licensed Management Company to prepare their application for consideration by the Financial Services Commission. This will comprise a business plan which will set out the way the business is intended to be run, the network which will be issued to source clients, a cash flow which will indicate the income and expenses of profitability of the operation over a three year period, the names and addresses of Directors of the proposed company and a draft Management Agreement between the promoters and the host Management Company and the respective due diligence effected on them. The application is submitted to the Financial Services Commission jointly by the Management Company and the proposed MCSP.
Operating the MCSP
The operations of the MCSP can be started by using the Brand name of the company and its portfolio of clients will be segregated from the hosting Management Company’s portfolio. In the same vein, all billings and administrative issues are dealt with, by a dedicated team. Arrangements can be put in place for marketing materials under the Brand name of the MCSP and utilized accordingly.
It is important to note that such a license, when issued by the Financial Services Commission may last for a period not exceeding three years. The reason is that the Financial Services Commission expects the MCSP to acquire its critical mass of business within these three years. In the event that this target is not achieved and that it is not economically viable for the operations to go on its own, an application can still be made to the Financial Services Commission for an extension of the license of the MCSP to be housed by the Management Company. Otherwise, in normal circumstances, the MCSP can move out with its portfolio of clients and switch to operating as a stand-alone Company, operating smoothly in new premises with trained personnel.
How Multiconsult Limited can assist
So far, Multiconsult Limited has assisted several MCSP’s, which today are operating as very successful Management Companies in Mauritius. Multiconsult Limited has the expertise, experience, resources and capabilities to house MCSP’s. Quite apart from setting up and running the day-to-day operations of an MCSP, we can also recruit and train the right people who can move along with the MCSP when it decides to move out and operate as a stand-alone operation after having reached a critical business mass. The MCSP can benefit from Multiconsult’s support services, for example, IT, its online Company Secretarial Software, its World Check database to ensure customer due diligence and its on-line knowledge base.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.