Mauritius Offshore Companies Complain About FSC Questionnaires

by Lorys Charalambous, Tax-News.com, Cyprus

19 June 2003

The Mauritius' Financial Services Commission recently issued the text of two proposed questionnaires for consultation, and it is being sharply attacked by financial services' companies for over-regulation.

Last November the FSC issued a 'Guide to Fit and Proper' under Section 14 (2) of the Financial Services Development Act, which requires the Commission to satisfy itself that an applicant is "fit and proper" before it issues a licence to that person. Paragraph 10 of the Guide referred to the collection of the information deemed necessary to enable FSC to determine whether an applicant is "fit and proper", and the FSC's questionnaires are the result.

Although financial services operators welcome the steps takes to regulate their sector, they are disputing the need for the two ‘voluminous’ questionnaires. There are two Personal Questionnaire Forms, one of 8 pages and the other 18. They are meant for directors, secretaries, controllers, officers, managers and senior members of staff and even…shareholders. The procedure requiring the questionnaires will come into force as from next month.

What this means is that any investor wishing to acquire a share in an offshore company has to answer a probing series of questions; and anyone looking to obtain a Global Business Licence (Category One) will have an obligation to meet 37 conditions in the questionnaire. Furthermore, the person will have to authorise the FSC to obtain information pertaining to his/her bank accounts.

Financial services companies deplore ‘the administrative heaviness, the direct intrusion in private life’ and complain of the cost that this procedure will impose on them. For example, in order to be able to confirm if he has ever been a shareholder in a company which faced public criticism, punitive or disciplinary action from a Regulatory Authority, an applicant must have recourse to a legal adviser who will have authority to conduct such an enquiry.

‘An investor isn’t necessarily aware of everything that goes on in the companies in which he has invested…A director if need be, but for a shareholder, it’s asking too much’ says one director of an offshore company indignantly.

A representative of the offshore companies said: ‘Over-regulation can make Mauritius much less competitive for offshore business. Competition is severe in this market. We should do everything to improve our image and demonstrate that we can maintain a balance between regulation and good conduct of business.’

The text of the FSC's two proposed questionnaires is available in the Tax-News
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