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Variable Capital Company

A Variable Capital Company (VCC) is a company incorporated under the Companies Act which carries its activities through its sub-funds and Special Purpose Vehicles (SPVs). A VCC needs to be authorised by the Financial Services Commission (FSC).

A sub-fund of a VCC Fund, subject to the approval of the FSC, operates as a Collective Investment Scheme (CIS) or a Closed-End Fund (CEF) of any category, and may elect to have a separate legal personality from that of the VCC Fund. For example, a sub-fund can be approved to operate as a CIS and an Expert Fund. The sub-fund shall comply with all requirements under the legal framework listed below, and other relevant FSC Rules and Guidelines:

  • The Financial Services Act 2007
  • The Variable Capital Companies Act 2022
  • The Securities Act 2005
  • The Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008

Key Features of a VCC

  • A company incorporated in Mauritius may be converted into a VCC.
  • A company incorporated in other jurisdictions may be redomiciled in Mauritius as a VCC.
  • A VCC enables a Fund Promoter to carry out business through one or more sub-funds and SPVs within one structure providing for economies of scale; each sub fund or SPV may opt to have a legal personality distinct from the VCC.
  • A sub-fund or SPV shall have the same Promoter as the VCC Fund.
  • A sub-fund of a VCC Fund can also act as a feeder fund or a master fund. It is noteworthy that there is no restriction on the number of sub-entities that can be created under the VCC structure.
  • The sub-funds can be set-up as a stand-alone (single) fund, or an umbrella structure with multiple sub-funds that can be incorporated as CIS and CEF all within one structure.
  • Each sub fund or SPV shall incur liability on its own and shall be segregated ensuring ring-fencing of the assets and liabilities of each sub fund in case of insolvency.
  • A VCC may issue shares of varying amounts.
  • The variable capital basis allows for issuance, redemption or repurchase of shares at NAV except for shares issued during initial offers and shares of closed-end funds listed on a securities exchange.
  • Investors shall be entitled to refund in accordance with the number of shares they own in the sub-funds or SPVs, where shares are redeemed or brought back.
  • Cross sub-fund investments and cross SPV investments are permitted within the same VCC. The board of the VCC shall determine solvency prior to distribution of dividend.
  • Investors may apply to the Registrar of Companies to reduce the share capital of the sub-fund or special purpose vehicle in which they hold shares subject to the requisite corporate resolution.
  • A VCC Fund which meets the criteria provided under Section 71 of the Financial Services Act 2007, will be required to hold a Global Business Licence (GBL). A GBL company is tax resident in Mauritius and is eligible to benefit from the network of Double Taxation Agreements that Mauritius has entered into with other countries.
  • A single GBL will be required by the VCC Fund irrespective of whether its sub-funds or SPVs have separate legal personality.
  • The FSC expects a VCC Fund to appoint the same Company Secretary (Management Company in case it holds a GBL) for all of its incorporated sub-funds/SPVs.
  • Economies of scale exist for umbrella structures with multiple sub-funds, including:
    • Common service providers
    • Sharing a board of directors
    • A single Money Laundering Reporting Officer or Compliance Officer for all sub funds