Variable Capital Company in Mauritius

March 20, 2024 - 14 min read


Mauritius offers an attractive environment for establishing Variable Capital Companies. With its flexible regulatory framework, favourable fiscal incentives, and robust financial services sector, Mauritius provides a conducive ecosystem for the growth and success of investment funds. Whether it is the flexibility in capital management, the limited liability protection, or the access to professional management, a Variable Capital Company in Mauritius is a structure that provides numerous benefits for both fund managers and investors alike.

Here is everything you need to know about the Mauritius Variable Capital Company.


Why choose Mauritius for Variable Capital Companies?

In recent years, Mauritius has emerged as a preferred destination for investment funds due to its strong yet flexible regulatory framework, and attractive tax incentives. The Variable Capital Company in Mauritius, a legal corporate structure introduced in 2022, gives investors greater flexibility and cost-effectiveness when setting up their funds, including open or close-ended funds, private equity structures, hedge funds, and venture capital funds.

The Mauritius International Financial Centre (IFC) is the ideal platform for setting up a Variable Capital Company (VCC). The IFC provides a robust ecosystem that supports the growth of the financial services industry, offering a wide range of services including banking, insurance, asset management, and more. Its political and economic stability, coupled with a robust legal system, make it a trusted and reliable jurisdiction for investment funds.

With its well-established infrastructure and favourable business climate, Mauritius puts forward key distinctive advantages.

Variable Capital Company in Mauritius, Africa's leading jurisdictionMost business-friendly and investment-friendly country in Africa
Advantages for a Variable Capital Company in MauritiusDual legal system, combining the advantages of Common and Civil Law
Law-IconAn International Arbitration Centre
Law-IconNo exchange control ; No Withholding Tax ; No Capital Gains Tax
Mauritius, ideal for Variable Capital Company investorsSecure and reliable investment destination, a regional hub for asset and wealth management
Law-IconGood governance and Compliance with international standards
Law-IconMember of various trade organisations
Advantages of choosing Mauritius for a Variable Capital CompanyA wide network of Double Taxation Avoidance Agreements (DTAs) and Investment Promotion and Protection Agreements (IPPAs)
Law-IconStrategic geographic location close to Africa and Asia, and convenient time zone (GMT +4) for international transactions
Skilles labour as determining factors of having your Variable Capital Company in MauritiusSkilled, qualified and bilingual (English and French) workforce at a competitive rate
Law-IconPresence of international service providers (banks, lawyers, accounting firms, etc.)
Law-IconCost-efficient company formation and registered local office accommodation
Law-IconFree repatriation of dividends, capital and profits
Law-IconPolitical and economic stability



Advantages, for fund managers, to setting up a Variable Capital Company in Mauritius

The VCC framework is a type of investment fund that has become increasingly popular in recent years. One of the key advantages is the flexibility it offers in capital management, as it allows for an umbrella VCC structure with multiple sub-funds, which can be used to pool together assets from different investors and create various investment strategies.

For fund managers, opting for a VCC structure offers more versatility in the management and segregation of investment projects. Although this quality may appear similar to a Protected Cell Company, a significant distinction is the additional advantage of segregating investment risks through various legal structure under the same umbrella.

This provides greater opportunities for diversification within the fund management industry. Another advantage is its legal framework, which offers significant tax benefits and operational efficiencies compared to traditional investment funds. For example, a VCC can be set up with no restrictions on the types of investments, allowing for more freedom in portfolio construction. Unlike traditional investment structures, a VCC allows for the issuance and redemption of shares, its capital structure providing the ability to adjust its share capital to meet the changing needs of the fund.

Furthermore, a VCC is highly attractive to investors due to its limited liability feature. By establishing a VCC, investors are shielded from personal liability in the event of any losses incurred by the company. This limited liability ensures that investors are protected and can invest with confidence.


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Benefits of the Mauritius VCC for investors

While a Mauritius VCC offers significant advantages to fund managers, it also provides benefits for investors. One such benefit is risk diversification. By pooling funds from multiple investors, Variable Capital Companies can spread their investments across a variety of assets, reducing the risk associated with a single investment. This diversification strategy helps to protect investors from market volatility.

The VCC regime is ideal as it allows for the segregation of assets and liabilities, offering two significant advantages for investors that were not previously accessible in Collective Investment Scheme, Close-Ended Funds, multiple funds, and/or Protected Cell Companies:

  • The underperforming or financially unstable sub-funds will not have any influence on the performance of other sub-funds or the overall performance of the VCC regarding other sub-funds.
  • The winding-up of any sub-fund or Special Purpose Vehicle (SPV) will not cause any negative effect on the VCC or other sub-funds.

By streamlining management and operational activities into a single entity, VCCs can achieve economies of scale. Moreover, they offer fiscal incentives that make them an attractive option for investors seeking long-term traditional and alternative investments, therefore allowing investors to maximise their returns while being tax efficient.

Another advantage for investors is the access to well-regulated fund services provided by professionals with extensive experience managing assets across different asset classes. These professionals manage the portfolio under strict regulatory guidelines, ensuring that investments are made prudently and responsibly.

In addition, a VCC provides transparency and reporting to investors, as it has the obligation to provide regular updates on its financial performance, ensuring that investors have access to accurate and timely information about the fund’s activities.


Process for setting up a Variable Capital Company in Mauritius

Setting up a VCC in Mauritius involves meeting some essential requirements as outlined in the Variable Capital Companies Act 2022 (VCC Act):

  • A minimum of two directors is required, who can either be individuals or corporate bodies.
  • At least one director should reside in Mauritius.
  • Every VCC shall have a company secretary appointed within six months of incorporation.
  • No minimum share capital requirement: the flexible share capital structure allows the VCC shares to be created upon investments and implies that the capital of the VCC shall be equal to its net assets.
  • The Memorandum and Articles of Association (MAA) must specify that it is a Variable Capital Company:
    • the name of a VCC must include the terms “Variable Capital Company” or “VCC”; and
    • the name of an incorporated sub-fund or SPV should include the phrase “incorporated VCC sub-fund” or “incorporated VCC Special Purpose Vehicle”.
  • Engaging a licensed Management Company such as Sunibel.

The VCC can be formed as a private company limited by shares, but will be considered as a public company if the shareholders exceed the number of 50.

Once the requirements are met, the next step is the submission of application documents to the Financial Services Commission (FSC), the local regulatory body. The FSC plays a crucial role in the approval process and ensures that all regulatory guidelines are adhered to.

The timeline for approval may vary depending on the complexity of the proposed VCC structure and the completeness of the application. Hence, the need to engage a licensed and experienced Management Company, familiar with local regulations can ensure smooth compliance with laws governing this type of entity.


Regulatory framework for VCC in Mauritius

The establishment of a Mauritius VCC is governed by the VCC Act, which serves as the legal framework for incorporating, converting, or re-domiciling funds as VCCs. This serves as a supplement to the current structures employed by asset and wealth managers, such as trusts structures, partnerships, and corporations.

Such structure must comply with the following legislations:

  • VCC Act 2022
  • Companies Act 2001
  • Securities Act 2005
  • Financial Services Act 2007
  • The Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008
  • FSC rules and Guidelines

The FSC is responsible for their approval and supervision, ensuring compliance with all relevant regulations. The organisation oversees compliance with international standards such as Anti-Money Laundering regulations, data protection laws, and securities exchange rules, as well as the adherence to best practices governing investment vehicles.

Adhering to the regulatory framework can help businesses avoid costly penalties while fostering trust between investors and stakeholders involved in VCC transactions.


Tax considerations for the Variable Capital Company in Mauritius

Being a legal corporate structure, a VCC has to comply with the same statutory requirements as a company. It is therefore important to understand the tax implications associated with this type of entity under the Income Tax Act:

  • VCCs enjoy favourable tax treatment on their income derived from foreign sources.
  • Dividends paid by a VCC to non-resident shareholders are exempt from withholding tax.
  • Capital gains realised by a VCC on the sale of its shares or securities are not subject to any taxation.

If a sub-fund or Special Purpose Vehicle chooses to have its own legal identity separate from the VCC, it must prepare independent financial statements. Additionally, each sub-fund and SPV that has opted for separate legal personality will need to submit separate tax returns to the revenue authorities (the Mauritius Revenue Authority). Consequently, the tax obligations under the Income tax Act will be relevant to each sub-fund and SPV individually if they make this choice.

Variable Capital Companies in Mauritius are exempt from taxes on dividends, withholding tax and capital gains tax earned through their investments. They are also eligible to claim the partial exemption of 80% on certain specific incomes and avail the benefits of the country’s network of Double Taxation Avoidance Agreements (DTAA).


Common structures for VCC in Mauritius

When setting up a Mauritius VCC, various structures can be utilised based on the specific requirements of the fund. One common structure is the umbrella fund with multiple sub-funds. This umbrella structure allows for the creation of separate sub-funds, each with its own separate legal entity, its own investment strategy and its own risk profile, while being managed under a single VCC fund.

Alternatively, a Special Purpose Vehicle fund structure can be used. This structure is often employed for specific investment projects or transactions, allowing for a clear ring-fencing of assets and liabilities. The implementation of ring-fencing measures guarantees that the liabilities of each sub-fund or the VCC as a whole cannot be paid off using the assets of another sub-fund within the VCC.

Another option is a Collective Investment Scheme (CIS), which provides investors with the opportunity to pool their funds and invest in a diversified portfolio, managed by a professional fund manager.


Variable Capital Company responsibilities towards investors

A Variable Capital Company, namely the fund manager in charge of the VCC, has several responsibilities when it comes to its investors, which include:

  • effectively deploying the capital to generate returns and efficiently managing any liabilities incurred by the VCC.
  • making investment strategies and decision-making: includes researching investment opportunities, analysing risks, and determining the appropriate allocation of funds across different investments. The goal is to maximise returns while mitigating risks to the best of their abilities.
  • ensure transparency and provide regular reporting to investors: includes the preparation of annual financial statements, auditing and independent valuations of the fund’s assets, and fulfilling regulatory reporting requirements. These reporting obligations provide investors with the necessary information to evaluate the performance of the VCC and make informed investment decisions.


Ongoing compliance for a VCC

Compliance is a crucial aspect of operating a VCC in Mauritius. One key requirement is the preparation of annual financial statements, which provide a comprehensive overview of the VCC’s financial performance. These statements must be audited by a qualified auditor to ensure accuracy and compliance with accounting standards.

In addition to financial statements, VCCs are also subject to regulatory reporting requirements. These reports must be submitted to the appropriate authorities, such as the FSC, within specified timelines. Compliance with these reporting obligations helps to maintain transparency and uphold the integrity of the VCC.

Here are three key elements required for ongoing compliance:

  1. Consistent record-keeping: Proper documentation ensures accurate reporting.
  2. Regular auditing: Audits help identify risks and mitigate non-compliance issues.
  3. Implementation of internal controls: Controls such as segregation of duties reduce the risk of fraud or errors.


Sunibel, your trusted partner

Are you looking to establish your Variable Capital Company in Mauritius? With a strong experience gained from serving international clients, we guide and accompany you in the setting up of your structure in Mauritius. Our specialist team takes time to understand your business, and has the experience and expertise to help you in maximising the value of your business through tailored services. Our offering includes:

  • Setting up and administration of your Mauritius VCC
  • Wealth structuring through Trusts and Foundations
  • Fund administration services
  • Outsourcing services
  • Finance, accounting and international taxation
  • Assistance in Listing on the Stock Exchange
  • Assistance with permits and relocation

With a robust IT system tailored to the needs of our business, we can provide a quality service, while ensuring the protection of your data. In addition, our international network of partners allows us to assist you in finding the best place to establish your operations. Real estate specialist PLEION Real Estate will be able to assist you throughout the process, whether you are looking for commercial premises or residential real estate in Mauritius. As part of the Probus Pleion Group, we are well positionned to provide you with a global approach to your requiements.



1. What is Variable Capital Company?

In Mauritius, a Variable Capital Company (VCC) is a specific type of company set up under the Companies Act. A VCC operates by carrying out its activities through sub-funds and Special Purpose Vehicles (SPVs). To operate, a VCC must first obtain authorisation from the Financial Services Commission of Mauritius (FSC).


2. What type of sub-funds can a VCC operate?

A VCC can establish sub-funds with the potential to operate as various types of investment vehicles. These sub-funds require approval from the FSC and can operate as a Collective Investment Scheme (CIS) or a Closed-End Fund (CEF). Notably, sub-funds can also have their own legal identity, separate from the main VCC.

For instance, a sub-fund could be approved to carry out its activities as both a CIS and an Expert Fund. It is important to remember that all sub-funds must adhere to the regulations set forth by the Financial Services Act (FSA), the Securities Act, the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008, and any relevant rules and guidelines issued by the FSC and which apply specifically to CIS/Expert Funds.

In addition to their primary function, a sub-fund can also play the role of feeder fund or master fund within a broader investment structure.


3. What are the differences between a VCC and a PCC?

A Protected Cell Companies (PCC) offer a way to manage multiple sub-funds under a single legal entity. However, a Variable Capital Company provides greater flexibility in sub-fund structuring.

Sub-fund flexibility: A VCC allows its sub-funds to be established as either CIS or CEF. A VCC can therefore hold both CIS sub-funds and CEF sub-funds within a single structure. In contrast, PCCs typically provide less flexibility in their sub-funds structuring.

Legal separation: VCCs allows for their sub-funds to have a separate legal identity from the VCC itself. This can offer additional protection to investors in case of issues with one sub-fund.


4. Who can promote a sub-fund or SPV?

The promoter of the overall VCC will be the promoter of a sub-fund or SPV.


5. Does a Variable Capital Company need a Global Business Company Licence?

A Variable Capital Company, that meets the requirements outlined in Section 71 of the FSA, must obtain a Global Business Company (GBC) Licence. This license applies to the entire VCC structure, regardless of whether its sub-funds or Special Purpose Vehicles have independent legal status.

However, the FSC recommends that a VCC appoints a single Company Secretary (or Management Company if it holds a GBC Licence) to oversee all its incorporated sub-funds and SPVs. This streamlines administration and ensures consistency across the fund’s structure.


6. Should a sub-fund or SPV appoint directors?

In cases where a sub-fund or SPV is legally recognised as a separate entity, the directors of the VCC will also serve as directors for each sub-fund or SPV, unless the governing documents of the VCC (its Constitution) state otherwise.


Set up your Variable Capital Company in Mauritius today, with Sunibel. Get in touch with us via the contact form below:

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This document has been prepared using sources believed to be reliable. However, their accuracy and completeness cannot be fully guaranteed. The statements and opinions it incorporates were formed after careful consideration and maybe subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to sell any services. The use of any information contained in this document shall be at the sole discretion and risk of the user.

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