The Mauritius Foundation: Characteristics and Uses
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The Mauritius Foundation: Characteristics and Uses
Introduced in 2012, the Mauritius Foundations Act was passed to further promote the jurisdiction as a platform for wealth management and estate planning. The legislation was a welcome addition to the Mauritius Trust Act introduced a decade earlier in 2001 and which was not very popular with civil law countries. As it stands, the Mauritius Foundations Act 2012 offers one of the most versatile and dynamic foundations private structure available from any jurisdiction and is especially appealing to francophone African countries where civil law is prevalent.
Main characteristics of a Foundation
Foundations have features of both a trust and a company. It is in many respects similar to corporate entities, but it benefits from the protection and continuity derived from the use of trusts. The Mauritius Foundations Act 2012 provides that a foundation can elect to have a legal personality and hence have a certificate of registration and hold assets in its own name. A Mauritius foundation can hold bankable assets (cash, bonds, securities, etc.), shares and stocks in both listed and private companies, insurance policies and most types of assets while maintaining the confidentiality of ownership.
A foundation is established through will or created when either a natural person or a legal entity referred as the Founder through a Foundation Charter makes a donation to be used for the Beneficiaries. The Founder may appoint a Protector to look after his interests. The foundation acts through the Members of the Council which are responsible for the administration of the Founder’s assets, ensuring that Objects of the Charter are met.
The Board of Council members provides for a proper framework for the decision-making process with all the necessary good governance. There is no restriction on the number of Council Members that can be appointed but at least one of the members must be resident in Mauritius. The Founder may consider nominating representatives of significant donors on the Board if desired, which can be more appealing from a donor’s perspective.
Foundations can be established for a fixed or indefinite period of time and can be used for charitable, commercial or family purposes. A foundation established under the law of another jurisdiction can make an application with the authorities to be redomiciled.
Uses of Foundations
A foundation can be used to protect a family business providing continuity to second and third generations. It is also used to protect against forced heirship rules. It can act as a sophisticated and efficient substitute of the testament or will thus avoiding complicated inheritance procedures.
As a versatile tool, a foundation can be used for all of the following:
- Private Family Wealth Holding Structure
- Succession Planning
- Tax and Estate Planning
- Asset Protection Planning
- Asset Financing
- Assistance to Charities
Advantages of Foundations
A foundation allows individuals an element of control over how assets are managed through the appointment of a Protector. A foundation also has separate legal personality so that it may enter into contracts in its own right and enjoy limited liability. Members of the Foundation Council are not accountable to the beneficiaries.
There is no requirement for complete confidentiality on the activities of the foundation and, as such, for the betterment of the foundation, it can be advantageous for the public to be aware of its activities.
For good governance, the annual financial statements of the foundation may be audited to ensure accountability.
Setting up of a Mauritius Foundation
One member of the Council has to be a Mauritian resident. Other members can be from any other jurisdiction and there is no limitation as to the number of Council Members that can be appointed.
A qualified Secretary also needs to be appointed which should be a management company licensed by the Financial Services Commission. As a licensed management company Nexus Global Financial Services Limited qualifies to be a qualified Secretary and has been regularly tasked with that responsibility.
A foundation has to be registered and will be issued with a certificate of registration by the Registrar of Companies which acts as the Registrar of Foundations. The following particulars extracted from its Charter will need to accompany the application for registration:
- The name of the foundation
- The date of the Charter; and any amendment made to the Charter before its submission to the Registrar
- The purpose and objects of the foundation
- The date of the Articles, if any, of the foundation and any amendments made to them before its submission to the Registrar
- Name and address of the Founder
- Details of beneficiaries or the manner in which the beneficiaries may be appointed or removed
- The name and address of the qualified Secretary
- The name and address of the Council Members
- The address of the registered office of the foundation
- The period, if any, for which the foundation is established
With the growing importance of Mauritius as a wealth management platform, the Mauritius Foundation is set to gain increasing popularity especially amongst the HNWIs of Africa.
Should you be interested to set up a foundation, please GET IN TOUCH. We are experienced in the setting up and administration of Mauritius Foundations and would be pleased to talk to you further about its advantages.