Mauritius FSC To Streamline Licensing Conditions For Financial Institutions

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

23 November 2004

The Mauritius Financial Services Commission (FSC) on Friday issued a consultation paper on the development of new licensing conditions for non-bank financial institutions.

In a statement, the Commission explained that:

"The standardisation of documents for the non bank financial institutions operating in the domestic sector is one of the main projects of the FSC. This project forms part of the general review of the working methods within the Licensing Directorate with an aim to streamline the licensing process in order to achieve greater transparency, consistency and efficiency in the delivery of licences."

According to the FSC, the exercise only includes entities which have been licensed under the Financial Services Development Act 2001. Institutions and persons excluded from the provisions of the proposed licensing conditions include:

• Insurance companies, insurance agents, insurance brokers and insurance salesman operating in the domestic market which are governed by the provisions of the Insurance Act 1987;
• Stockbrokers, dealer’s representatives, stockbroking companies, investment clubs and investment institutions which are licensed/ registered/ approved under the Stock Exchange Act 1988; and
• Other financial institutions governed by other Acts, for example unit trusts authorised under the Unit Trust Act 1989.

Under the new licensing conditions, all licensees will be required to notify the Commission of any material change in their purpose or working principle, and all licensees, except for management companies and corporate trustees, will be obliged to notify the Commission of any new issue or transfer of shares which results, directly or indirectly, in a shareholder holding 20% or more of the licensee’s shares or its voting power.

In addition, licensees operating as portfolio and investment managers and investment advisers will be required to have Professional Indemnity Insurance for a minimum amount of Rs. 5,000,000. However, this requirement does not extend to directors, managers and senior officers of the licensee.

All licensees will be obliged by the new rules to devise and set up appropriate corporate governance measures for their sustainability, and must ensure that whenever they delegate or outsource any of their functions, the delegatee is competent, capable and fit.

Comment is invited on the proposed licensing conditions until December 6.

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