Other NBFIs

Other NBFIs

Prior to the enactment of the Financial Services Development Act 2001 (FSD Act 2001), certain financial business activities were regulated whilst others, either through gaps in or sheer absence of legislation escaped regulatory oversight.

The FSD Act 2001 has brought all non-banking financial services under the purview of the Financial Services Commission, such that no financial activity or business may now be carried out unless licensed by the Commission. The FSD Act 2001 has also eliminated the fragmentation of regulation of financial services by bringing all regulated financial services under its purview. Section 14 gives the necessary powers to the FSC to license those financial businesses or activities which are not, at present, covered by any specific legislation.

The activities are listed in Part II of the first schedule and comprise of:

· Asset management

· Collective investment schemes

· Custodial services

· Factoring business

· Financial services providers and intermediaries

· Investment advisory services

· Leasing business

· Mortgage finance

· Retirement benefits schemes

· Services provided by a qualified trustee under the Trusts Acts 2001

The FSC ensures, prior to licensing any non banking financial institution (NBFI’s), that the applicant meets the “fit and proper criteria” and fulfils certain prudential requirements and conditions of operations. Different conditions are set for the different business activities according to the nature and risks of the business.

The FSC ensures inter alia that applicants have in place the necessary compliance functions, there exists appropriate internal control measures and continuous internal audit and monitoring system; it has adequate resources in terms of qualified personnel and equipment etc. Applicants are required to apply rules of corporate governance and adopt clear measures to prevent conflict of interest and to prevent financial crimes and money laundering

In addition to licensing the activities listed under Section 14 of the Financial Services Development Act 2001, the Commission is empowered to authorize the conduct of certain activities under other enactments.

Fiscal Regime applicable to NBFI’s licensed by the FSC

The Income Tax Act was amended on 13 August 2002 to provide for incentive tax rate of 15% to companies which formerly qualified for the Pioneer Financial Services Schemes, provided they have obtained the authorization of the Financial Services Commission. These activities have been listed in the Income Tax Act and include:

Actuarial services and related activities
Investment management expertise and services
Investment management and advisory services
Investment management, pension fund management, investment advice and portfolio and asset management
Investment advisory and management services to funds and other corpus in relation to portfolio investments
Treasury management within the same group

In addition to these activities, the Income Tax Act also provides for an incentive tax rate to a company whose main activity is to provide lease financing, as may be approved by the Financial Services Commission and to equity funds.

The Income Tax (Amendment of Schedules) Regulations further provide for a concessionary rate of income tax for expatriate employee or a specified Mauritian Employee of a company duly authorized by the Financial Services Commission to carry out the above activities and a company which manages an Equity Fund, which is 50% the normal rate, provided that the period of exemption does not exceed, in the aggregate, 4 income years. A specified Mauritian employee means an employee who is a citizen of Mauritius and who has, immediately before taking up employment in Mauritius, been abroad for a period of, or an aggregate period of, 270 days or more in each of the 10 income years immediately preceding the income year in which he is employed in Mauritius.