Taking your business offshore entails numerous formalities and local obligations, which often deter entrepreneurs or investors from taking the leap. But that’s not always the case. Jurisdictions such as Mauritius have distinct entities, such as an authorized company, that support full-fledged foreign ownership with limited local obligations.
That said, setting up a Mauritius authorized company helps you expand globally without stringent local requirements holding you back. So, if you are looking to move forward with offshore company formation, let us explore how establishing an authorized company in Mauritius can be a lucrative option.
What is an Authorized Company in Mauritius?
Renamed from the Category 2 Global Business License (GBL2) following international pressure from the Organization for Economic Co-operation and Development (OECD) and the European Union (EU), a Mauritius authorized company (AC) is a business structure for non-residents only.
Defined under Section 71A of the Financial Services Act, an authorized company in Mauritius is an ultimate offshore vehicle that can only be set up by non-residents. It cannot operate domestically or have a place of management or control within Mauritius.
This company structure is governed by the Companies Act, 2001, and is authorized under the Financial Services Act, 2007. To register an authorized company, one must obtain formal authorization from the Financial Services Commission.
Features of a Mauritius Authorized Company
An authorized company enjoys distinct features that make it a top choice for non-residents:
- Only non-residents can register
- Cannot operate domestically
- No minimum capital requirement
- No local directors required
- No company secretary required
- Must have a registered office in Mauritius
- Must appoint a registered agent or a management company to begin incorporation formalities
How to Structure an Authorized Company in Mauritius?
Similar to other business entities in the region, a Mauritius AC can be structured in the following ways:
- Company limited by shares
- Company limited by guarantee
- Company limited by both shares and guarantee
- Unlimited company
Note: An authorized company in Mauritius must be a private company and may choose one of the structures mentioned above to proceed with further formalities.
Benefits of Setting Up an Authorized Company in Mauritius
An authorized company in Mauritius offers numerous advantages that make it a prized vehicle for Mauritius company formation:
Suitable for Multiple Purposes
An authorized company in Mauritius can be set up as an offshore holding company, an international trading company, a re-invoicing center, or a cross-border consultancy. However, it cannot be used to provide banking, financial, or trusteeship services as per the 4th Schedule of the FSA Act.
Limited Liability of Shareholders
The shareholders of an authorized company enjoy limited liability up to any amount unpaid on shares, distributions received, or any other liability as mentioned in the Act or constitution of the company. Their personal assets remain safe from the company’s debt repayments or other obligations.
No Resident Director Requirement
Unlike a global business corporation (GBC), an authorized company in Mauritius need not have local directors as per Section 132 of the Act. Nonetheless, the director must meet other eligibility requirements such as being 18 years of age and of sound mind. Additionally, there are no restrictions on corporate directors, giving considerable administrative flexibility.
Mauritius’ legal framework clearly distinguishes the owner from the company. A Mauritius AC is a separate legal entity and can act in its own name without hurdles. It can enter into contracts, open a bank account, or buy real estate in its own name.
No Company Constitution Required
Similar to the Memorandum and Articles of Association, a company’s constitution outlines the duties and responsibilities of both directors and shareholders. As per Section 39 of the Companies Act, a Mauritius authorized company need not have or keep a company constitution. In such a case, the directors’ and shareholders’ duties remain the same as outlined in the Act.
In jurisdictions such as the British Virgin Islands, anyone with a legitimate interest can access the company and BVI beneficial owner details, given they file a special request with the authorities. However, that’s not the case with a Mauritius authorized company. Under Section 14(7) & (8) of the Companies Act, 2001, the general public cannot request complete details of the company. Only the company’s directors, shareholders, and the registered agent can access these details.
That does not mean Mauritius provides complete anonymity. Upon the payment of the prescribed fees, a person can still obtain details of the registered agent and the office address of the authorized company.
No Currency Restrictions for Capital
Section 48(4) of the Act allows an authorized company to issue share capital in any currency other than the Mauritian Rupee (MUR). Prohibiting MUR share capital ensures that offshore companies remain separated from the domestic monetary base regulated by the Bank of Mauritius. This prevents local nexus implications for the firm and provides complete freedom to invest or raise capital from across the globe without exchange restrictions.
No Economic Substance (ES) Requirements
ES requirements are mandatory in every jurisdiction if a firm engages in certain relevant activities, such as banking, holding businesses, and more. The firms that have to meet these requirements are either tax residents or operate domestically.
Mauritius ACs, by statutory default, do not meet the above criteria. Section 71A of the FSA Act clearly states that an AC cannot be a tax resident or have an effective place of management in Mauritius. Thus, even if an AC operates as a pure equity holding company, it need not fulfill any ES requirements.
Transition to Fractional Shares
Section 54 allows an authorized company in Mauritius to split the shares into various fractions such as 0.25, 0.5, 0.75, depending on the requirement via the feature called ‘fractional shares’. The firm must explicitly permit the issuance of fractional shares in its company documents to address share allocation issues arising during mergers, investor onboarding, or capital raising.
How to Register a Mauritius Authorized Company?
Setting up an authorized company in Mauritius is streamlined and straightforward. To begin incorporation, you can follow the steps below:
Appoint a Management Company
Appoint an FSC-licensed management company or a registered agent to begin the formalities as a non-resident. The management company is the point of contact with the authorities and takes care of all the formalities.
Draft a Business Plan
Both the management company and the FSC require a business outline to ensure that your firm meets the regulatory guidelines of an authorized company in Mauritius. Moreover, as per the FATF guidelines, the management company is required to establish the nature of the business and ensure the entity is not used for illegal activities or tax evasion.
Fill Out the Form
Your management company will fill out the Form B-AC on your behalf. It will confirm that the firm meets all the requirements related to an authorized company in Mauritius as established in the law.
Compile & Submit Key Documents
With the above form, you must submit the following documents:
- KYC documents including passport and utility bills
- Bank reference letter
- Source of wealth and fund
- Director's or secretary's consent
- Shareholder's agreement
- Name reservation notice
- Company's constitution (if available)
Obtain Certificate of Incorporation
When the registrar is satisfied that the firm complies with the legal requirements, it will enter the company's particulars in the company register and assign a unique number upon payment of the prescribed fees.
Once done, you can obtain the certificate of incorporation.
Meet Post-registration Requirements
Upon successful registration, you must meet the following requirements:
- Submit annual financial summary to FSC (within 6 months of year-end)
- Submit annual income tax return to the Mauritius Revenue Authority (MRA)
- Maintain proper accounting records at the registered office
- File changes in directors/shareholders with the Registrar of Companies and FSC
- Accounting records and shareholders’ registers of the last 7 years must be kept at the registered office in Mauritius.
- Accounting records can be in English or French. Submit a translation within 7 days if any other language is used.
- Minutes of meetings and copies of resolutions must be maintained
- Must maintain a register of mortgages with accurate details of charges and amounts.
- The constitution and the company seal must be kept at the registered office.
Should You Choose a Global Business Corporation or an Authorized Company?
Global Business Corporation (GBC) is another popular company structure for setting up a business in Mauritius. Given its popularity, the choice between an AC and a GBC can be downright confusing for foreigners. The table below highlights the reasons why a Mauritius AC is a better choice than a GBC.
Comparison Factor | Authorized Company (AC) | Global Business Company (GBC) | Why Choose an AC? |
Tax Rate in Mauritius | 0% (Non-tax resident) | 3% to 15% (Tax resident) | Pay zero local tax. |
Local Directors Required | Must be non-resident | At least 2 resident directors required | No need to hire local directors |
Local Office Staff | None required | Mandatory local spending and substance | Save thousands in yearly local operational costs. |
Financial Audits | Not required (Only submit a simple financial summary) | Mandatory annual audited accounts | Save money and hassle on annual audit fees |
Company Owner Privacy | High (Shareholder details are not on public records) | Moderate (More disclosure requirements) | Keep ownership and director details private from the general public. |
How Can BSW Help?
Designed with non-residents in mind, an authorized company in Mauritius is a popular structure with strong advantages. Moreover, the company structure is easier to maintain with fewer local obligations, making it suitable for holding businesses. That said, a Mauritius AC can also access the region’s robust banking sector and set up a multi-currency account in one of the best banks in Mauritius.
As a complete package, setting up a Mauritius authorized company solves the dilemma of global entrepreneurs and is an efficient pathway to global expansion. Nonetheless, meeting the formalities can be tedious for anyone venturing into this realm, and that’s where the experts at BSW can be of assistance. Contact us to begin!
