Introduction to the Country
1,288,000 (2008 estimate)
Constitutional democracy with a president and elected assembly
Based on French civil law system with elements of English common law in certain areas. Bilateral investment treaties currently in force with 18 countries including South Africa, UK, France and Germany. Mauritius is a signatory to The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the Convention), but applies the Convention only to recognition and enforcement of awards made in the territory of another contracting state.
Mauritius gained its independence in 1968 and since then has developed from a largely agricultural based economy to embrace the financial, tourist and industrial sectors. Since independence, annual gross domestic product growth has averaged around 4% per annum.
Finance and Tax matters
(a) Financial assistance
(i) Are there prohibitions or restrictions on the ability of a company to guarantee and/or give security to support borrowings incurred to finance the direct or indirect acquisition of shares of a project company; or any company which directly or indirectly owns shares in a project company; or shares in a sister subsidiary?
Subject to the provisions of the CA 01, a company may provide such assistance in terms of guarantees and/or securities as mentioned above.
(b) Lending restrictions/banking monopolies
(i) Please indicate whether there are any restrictions or requirements applicable to the importation of capital by lenders to the Project.
There are no restrictions.
(ii) Is there a requirement for the lenders/security agent to be registered in the jurisdiction?
There are no requirements.
(iii) Can foreign lenders lend into the jurisdiction?
(c) Restrictions relating to repatriation of dividends
(i) Are there any restrictions relating to repatriating dividends?
There are no restrictions in relation to the repatriation of dividends. It must be noted that, under Mauritius law, a Mauritius company may only pay dividends out of retained earnings after having settled any accumulated losses at the beginning of the accounting period and dividends must be paid in respect of all the shares in a class but not in respect of some only.
(i) Are there any restrictions on the convertibility of the jurisdictions currency?
There are no such restrictions. It must be noted that all exchange control regulations have been suspended in Mauritius and such suspension of these exchange control regulations may be lifted at any time.
(e) Interest payments
(i) Are there any restrictions on the payment and compounding of interest? If so, does this also affect both local and foreign lenders?
Other than the prohibition on capitalising interest which has been overdue for less than one (1) year under article 1154 of the Mauritius Civil Code, there is no applicable usury or interest limitation law in Mauritius. This prohibition does not affect local lenders.
(i) Withholding tax: are there any withholding tax issues in relation to interest payments and fees to foreign lenders on loans used by a project company; payment of principal on debt; or payments received under any agreements (other than any referred to above)?
There is no withholding tax under the laws of Mauritius.
(ii) Double taxation treaties: please note the existence of any double taxation treaties.
Mauritius is party to double taxation treaties and a list of such treaties may be consulted on the website of the Mauritius Revenue Authority
(iii) Lender issues: are there any risks that lenders should be aware of in respect of tax liabilities/tax domiciliation as a result of providing debt to the project or project company and/or taking/enforcing security interests?
Foreign lenders will not become (or deemed to have become) resident, domiciled, engaged in the carrying on of business, or subject to taxation in Mauritius as a result of providing debt to the project or project company and/or taking/enforcing security interests.
(iv) Repayment and enforcement: please advise whether loan repayment / enforcement proceeds could be treated negatively from a tax perspective for the lenders.
There is no withholding tax or other tax or duty imposed by the laws of Mauritius on any payment to be made to the lenders.
(g) Stamping costs
Please advise whether stamp duty or similar applies in respect of finance and security documents and security interests (and if so advise on the rate thereof), including the registration of immovable property or vehicles; security documentation, or transfer of assets on enforcement of security; or increase in share capital.
Registration of documents with the Mauritius Registrar General is relevant if it is intended (a) to give a âdate certaine thereto, which date, cannot as a matter of evidence, be disputed in the Mauritius courts, and (b) to make such documents opposable against third parties as from the date of such registration.
Moreover, if the documents are not drawn up in Mauritius, they must be registered with the Registrar General if it is intended to make use of such documents in Mauritius.
Registration duty payable in respect of any deed containing the creation of a fixed or floating charge, or a pledge vary between about US$ 34 to US$ 1660 depending on the value of the loan.
Registration duty payable in respect of a transfer of deed of immovable property not exceeding about US$ 3321 is payable at rate of 5%.
Finally, no registration duty is payable in respect of transfer of movable assets on enforcement of security or increase in share capital.
Security, Enforcement and Insolvency
(a) Overview of security regime
(i) Nature of security: can a security interest be obtained over a companys assets, e.g.:
(A) accounts receivable (book debts);
(B) inventory (stock in trade);
(C) shares of a company (issued and authorised);
(E) real property;
(F) insurances; and
(G) project contracts.
Security interests may be taken in respect of the above in accordance with the laws of Mauritius.
(ii) Shares: can shares of a project company validly be pledged and enforced under an English law share charge?
The shares of a project company may be validly pledged and enforced according to the requirements specific to Mauritius law.
(iii) Debt obligations: can a company grant a security interest in order to secure its obligations (i) as a borrower under a credit facility, and (ii) as a guarantor of the obligations of other borrowers and/or guarantors of obligations under a credit facility?
Security may be granted by a company to secure its debt obligations and provided that it is in the best interests of the company, as a guarantor of the obligations of other borrowers and/or guarantor of obligations under a credit facility.
(iv) Revolving credit facility: if the borrowings to be secured are under a revolving credit facility, are there any special priority or other concerns?
There are no special priorities or concerns in respect of a revolving credit facility.
It must be noted however that under the laws of Mauritius secured claims are repaid in order of the following priority:
- Costs of liquidator
- Amounts due to Government and its Agencies
- Wages or salaries due to employees
- Costs of compromise with creditors
- Payments made pari passu with first ranking fixed and floating charges and mortgages (hypotheque conventionelle) inscribed for more than three years
- a landlords special privilege in respect of a rent
- First ranking, fixed and floating charges and mortgages (hypotheque conventionelle) inscribed for less than three years
- Claims of victims of an accident
- Other privileges, securities and creditors
- Amounts due to the Government of Mauritius and its agencies in relation to amounts due and unpaid for over three months
- Claims of all other unsecured creditors who have proved in the bankruptcy or winding up
(v) Security agent/trustee: can the relevant security interests be granted to a security agent or trustee on behalf of the lenders from time to time under a credit facility agreement, where the identity of the lenders may change from time to time because of transfers (effected either by assignment or novation) by certain lenders of their interests in the credit facility?
This is permissible under the laws of Mauritius.
Are any steps required to ensure that a transferee of a lender will receive the benefit of the relevant security interests?
Under Mauritius law, upon the assignment of a secured claim, the security relating to such secured claim is automatically transferred to the assignee. The assignment of interests in respect of a facility between lenders will thus necessarily include the assignment of the relevant security interests to the relevant assignee. It is advisable however to enter into specific assignment documentation witnessing the assignment of the benefit of the relevant security interests
Depending on the nature of the assigned security, relevant notifications and filings will have to be made.
By way of example an assignment of a pledge over shares of a company will have to be notified to the secretary of a company in order to enable the latter to update the records on that company.
(vi) Preferred creditors: please indicate the claims that would have priority over the relevant security interests.
Please refer to the response given in paragraph 1.4 (iv) above in respect of the priority of claims.
(vii) Public registry: please confirm if there is a public registry that can be searched to confirm whether a project company has any security documents or any document dealing with any finance arrangement in place, such as guarantees, indemnities or suretyships given by or for the benefit of a project company.
Searches may be effected at the Registrar General in respect of a charge, mortgage and privilege and also at the Registrar of Companies for domestic companies provided that all returns and filings are up to date.
(viii) Formalities: in connection with the creation of a security interest in shares or other assets:
(A) are any governmental or other consents or filings (consider exchange control and similar regulations, perfection, etc.) required;
(B) are any other formalities (for example, notice to creditors, shareholder approvals, notarisations, etc.) required; and
(C) what steps are required to register or otherwise perfect security in the jurisdiction and how long do these steps typically take ?
(D) are there any significant financial costs (including stamp tax, registration, notarial fees, etc.) or significant time delays which would be required in order to create and perfect the relevant security interest?
The filings and perfection steps required depends on the nature of the security interests to be created.
By way of example, a pledge over shares will be perfected immediately upon completion of the following:
(a) the share certificates representing the pledged shares have been remitted to the pledgee;
(b) the company secretary of the company whose shares are pledged have provided written evidence that the pledge has been duly inscribed in the share register; and
(c) an undated share transfer form signed by the transferor only has been remitted to the pledgee.
On average the time taken to perfect a security interest does not take more than 1 week.
(b) Insolvency and enforcement regime
(i) Public register: is there a court or similar register that can be searched in respect of proceedings and insolvency actions?
There is only a public register kept by the Director of Insolvency Service in respect of the discharged and undischarged individuals who have been adjudicated as bankrupt and persons who are subject to a summary instalment order.
(ii) Insolvency process: please provide a summary of the different options for an insolvency related process.
Pursuant to the Insolvency Act 2009, a company may be:
(a) wound up by way of intervention of court or its members or by creditors to the company; or
(b) put into receivership; or
(c) put into administration.
(iii) Expedited proceedings: are summary or expedited proceedings available based on the existence of a note, perhaps governed by the laws of the jurisdiction, or is there any other documentation or are there any steps that could be taken to gain the availability of expedited proceedings (or other priority) in the jurisdiction?
There are none.
(iv) Governmental or other consents: are any governmental or other consents (consider exchange control and similar regulations) required in connection with:
(A) the enforcement of a security interest in shares;
In the event that a security interest in shares is enforced in favour of a non-citizen, permission from the relevant authorities in respect of acquisition of immovable properties in accordance with the Non-Citizens (Property Restriction) Act is required.
(B) the enforcement of a security interest in other assets; or
In the event that a security interest in immovable property is enforced in favour of a non-citizen, permission from the relevant authorities in respect of acquisition of immovable properties in accordance with the Non-Citizens (Property Restriction) Act is required.
(C) the enforcement of a guarantee (sovereign or otherwise)?
No consent is required.
(v) Environmental liabilities: do lenders inherit all environmental liabilities when they become owner of the shares upon enforcement (or at any other time)?
Lenders may assume liabilities if they enforce security and acquire the assets as environmental liabilities attach to the property right in a given project.
(vi) Enforcement of security: can security interests be enforced by both private sale and public auction, and is it necessary to appoint a court or other official to carry out the enforcement?
Except where the enforcement must be mandatorily carried out by public auction or court intervention, a security under a security agreement may be validly enforced in accordance with the terms of the security documentation without the need for any judicial intervention.
Corporate, Insurance and Employment matters
(a) General corporate issues
(i) Is a private company free to lend and/or issue guarantees?
Private companies have the capacity to lend and/or issue guarantees subject to the provisions of the CA 01.
(ii) Are there any restrictions on dividend distribution?
Dividend distribution may be effected provided that it is made out of retained earnings and that the relevant company satisfies the solvency test prescribed by the CA 01.
(i) Mandatory insurance: are there any insurances which the project company or the Project is required to have by law (or regulations or similar)?
There are no mandatory insurances to be placed under the laws of Mauritius in the present case.
(ii) Placement of insurance: is there any minimum requirement to place the insurance with local insurers or any other similar restrictions? If so, can reinsurance be lawfully placed internationally?
There is no minimum requirement.
(iii) Security over insurances: are there any restrictions in respect of granting security rights over the insurances or reinsurances? For instance, can a local insurer or reinsurer grant security (by way of assignment or otherwise) over its policies of insurance or reinsurance?
There are no restrictions in respect of granting security rights over the insurances.
(i) Legislative/regulatory issues: is there any legislation or regulation impacting on foreign employees, in particular the conditions relating to work and residence permits? Please give an indication of the process and costs in relation to obtaining work and residence permits.
Except for an investor, a self-employed non-citizen or a professional (a Professional) who has applied for an occupation permit through the Board of Investment, a non-citizen must apply to the Ministry of Labour, Industrial Relations and Employment who shall issue the work permit within 2 weeks of the effective date of the application for the permit if the application is approved.
Otherwise in respect of an application made through the BOI by a Professional, the application takes three days to process and to issue an occupation permit which is issued for a maximum period of three years.
(ii) Foreign restrictions: are there any restrictions that apply to foreign employees and foreign contractors/subcontractors and if so what do they need to do in order to comply with local legislation?
Please see the above.
(a) Land registry: is there a land registry (or similar) in the country that can be searched to confirm whether a project company has granted of any mortgage, charge, option assignment, lien or other encumbrance over the whole or part of the properties or assets of a company?
There is no land registrar as such, but if a company creates a charge or mortgage over landed properties in Mauritius, the name of such company will appear in the registers kept and maintained by the Conservator of Mortgages and it will be possible to check whether such company has any encumbrances on its landed properties.
(b) Landlordâs rights: please indicate whether there are any rights which accrue to the landlord (or the government or any other bodies) that may override the terms of a land lease or threaten the rights of a project company particularly any right of repossession or acquisition.
Except for the right of the Government to compulsorily take possession of a property in, for example, the interests of the public in accordance with the Constitution of Mauritius, landlords are bound by the terms of their written lease agreements.
(c) Direct agreement: are you aware as to whether a direct agreement in respect of a lease has been previously been provided to lenders on other transactions?
Direct agreements may be entered into by the Government of Mauritius although we are not aware of any such agreements entered into by the Government in other similar transactions.
(d) Forfeiture rights: do relief from forfeiture rights exist and would the lenders be entitled to rely on such rights?
To be updated.
(e) Legislative requirements: is there any additional legislation governing property rights? If so, please advise the nature of the requirements thereof.
The Non-Citizenâs (Property Restriction) Act which govern the acquisition of properties in Mauritius by foreigners.
There is also the Mauritius Civil Code which governs the civil ownership aspects of a property.
(f) Enforcement formalities: are there any formalities with which lenders need to comply when enforcing security over land?
There are no enforcement formalities with which lenders need to with when enforcing such securities.
International law and arbitration
(a) Supra-national treaties
(i) Please list the Bilateral Investment Treaties to which the country is party.
Mauritius has entered into Investment Promotion and Protection Agreements with the following countries:
Barbados, Benin, Botswana, Burundi, Cameroon, China, Comoros, Czech Republic, France, Finland, Germany, Ghana, Guinea Republic, India, Indonesia, Korea, Madagascar Mauritania, Mozambique, Nepal, Pakistan, Portugal United Kingdom, Romania, Rwanda Senegal, Sweden, Switzerland South Africa, Singapore, Swaziland, Chad and Zimbabwe.
(ii) Please confirm whether the country is a signatory to the Energy Charter Treaty.
(i) Please advise any requirements and restrictions applicable to the choice of arbitration roles and place of arbitration etc.
A final award delivered by a foreign arbitration tribunal is enforceable in Mauritius, in accordance with the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act 2001 which gives effect to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards signed at New York on 10 June 1958.
(ii) Please confirm whether foreign arbitral awards / decisions are enforceable in the country (i.e. is the country a party to the New York Convention on the Recognition of Foreign Arbitral Awards)?
Yes. Please see the previous response.