Foundations

The Mauritius Foundation is governed by the Foundations Act 2012 and is administered and regulated by the Registrar of Companies (ROC), described in the legislations as the Registrar of Foundations.

Key features of Mauritius Foundations:

  • A foundation is the dedication of property to an entity to be used for a specific purpose. To create a foundation, ownership of the relevant asset is transferred to the foundation by the founder(s) to achieve a specific purpose or purposes

  • The Foundation could be set-up intervivos (by charter) or by will, could be set-up to benefit persons, class of persons or to carry out a purpose which may be charitable, non-charitable or both.

  • The Foundation has to be managed by a Foundation Council which should comprise of at least one member ordinarily resident in Mauritius and would require a secretary and have its registered office in Mauritius

  • When a Foundation is registered, it would have separate legal personality.
    It would need to keep proper books of accounts and keep its records in Mauritius at its registered office.

  • Where the founder and all the beneficiaries are non-resident (or if set-up for a purpose and that purpose is being carried out of Mauritius) it would be exempt from tax in Mauritius.

Some of the main features are as follows:

  1. Name
    The proposed name of a foundation must end with the word “Foundation” and must not include the words limited, company, partnership, societe or any abbreviations or translations thereof.

  2. Charter
    The main constitutional document of a Foundation is its charter. The charter of a foundation must contain inter alia:

    • The name of the Foundation;

    • The name and address of the founder(s) including an address in Mauritius for service of documents;

    • The object for which the foundation has been established

    • The initial assets of the foundation, its purpose if applicable

    • Details of the beneficiaries or the manner in which the beneficiaries may be appointed or removed;

    • Period of establishment

    • Details of its secretary

    • The Foundation’s registered office

    The Charter shall be in writing and signed by the Founder or in case of a body corporate, by the representative of Founder. Most foundation jurisdictions today, require the charter to be filed and registered.

  3. Objects of a Foundation
    The objects of a foundation -

    • May be charitable, non-charitable or both

    • May be for the benefit of a person or a class of persons, or to carry out a specified purpose, or both

    • According to provisions of its charter

    • Shall be valid and enforceable except where contrary to the laws of Mauritius

  4. Objects of a Foundation
    Every Foundation shall have a Council which shall administer the property and carry out the objects and purposes of the Foundation.

    A foundation must have a board of councillors to manage the business and affairs of the foundation. The council shall consist of one or more persons (either legal/ body corporates or natural persons) known as a councillor(s). A council shall have at least a member who shall be resident in Mauritius. It may also be responsible for appointing new beneficiaries and determining the extent and nature of beneficial rights.

    Generally, the Founder has a fair amount of flexibility to tailor the degree of responsibility of the Council to his needs by establishing its duties in the Charter.

  5. Beneficiaries
    A foundation can have one or more individuals as “beneficiary”.

    A beneficiary means a person who is entitled to benefit under a Foundation; or in whose favour a power to distribute any Foundation property may be exercised.

    However, in contrast to shareholders of a company or beneficiaries of a trust, foundation beneficiaries have no legal or beneficial interest in foundation assets. That is, foundation assets do not become the assets of a beneficiary unless distributed in accordance with the foundation’s charter or regulations.

  6. Protector
    It is permissible for a foundation to appoint a protector or committee of protectors in accordance with and having such powers, duties, functions and remuneration as may be specified in the charter.

    The charter shall also mention the relationship of protector or committee of protectors with the Council whilst in office.

  7. Property of Foundation
    Assets transferred to or otherwise vested in a foundation shall -

    • be the assets of the foundation with full legal and beneficial title

    • cease to be the assets of the founder or founders, once transferred to or otherwise vested in the Foundation by or on behalf of the founder or founders; and

    • in the case of a Foundation with one or more beneficiaries, not become the assets of a beneficiary unless distributed to such beneficiary in accordance with the charter or regulations and the Act.

  8. Registration of Foundations
    The registered agent shall submit particulars extracted from the charter, accompanied by the registration fee set out (i.e. MUR 9,000 = USD 300) to the Registrar who shall retain and register it, if it is satisfied that all the requirements of the Act have been complied with and its objects are lawful. The Registrar shall allocate a registration number to the foundation and issue a certificate of registration.

  9. Annual Renewal Fees
    The annual registration fee (MUR 9,000 = USD 300) shall be due and payable not later than 20 January every year so long as the Foundation remains registered with the Registrar.

  10. Secretary
    Every Foundation shall have a secretary appointed by the Founder, with the Secretary being either a Management Company or who shall be such other person resident in Mauritius as may be authorised by the Commission.

  11. Registered Office
    A Foundation shall have a registered office situated in Mauritius to which all communications and notices shall be addressed.

  12. Accounts
    A foundation requires to keep proper books of account and records at its registered office. The books of account shall not be open to public inspection but shall at all times be open to inspection by the councillors, the founder, any supervisory person or the auditor of the foundation. The books of account should reflect the financial position of the foundation, with respect to:

    • all sums of money received, expended and distributed by the foundation and the matters in respect of which the receipt, expenditure and distribution takes place

    • all sales and purchases made by the foundation

    • the assets and liabilities of the foundation

  13. Register
    Each foundation has to keep, at its registered office, a register of its councillors, any founder and any person who may have endowed assets to the Foundation as well as records and copy of documents filed with the Registrar and the minutes of proceedings of any meeting of the Council.

  14. Tax exemptions and concessions
    A Foundation of which the founder is a non-resident or holds a Category 1 Global Business Licence under the Financial Services Act; and all the beneficiaries appointed under the terms of a charter or a will are, throughout an income year, non-resident or hold a Category 1 Global Business Licence under the Financial Services Act, shall be exempt from income tax in respect of that year.

    For the purpose of the exemption specified above, any Foundation which qualifies shall deposit a declaration of non-residence for any income year with the Director-General within 3 months from the expiry of the income year.

    Any distribution to a beneficiary of a Foundation shall be considered to be a dividend to the beneficiary.

  15. Potential uses of a foundation
    A foundation can be used for:

    • Accumulation & Preservation of Wealth

    • Succession planning

    • Asset Protection

    • Tax Planning

    • Off balance sheet transactions

    • Corporate finance/ asset financing

    • Securitization

    A foundation cannot be used to engage directly in commercial activities. However, only a charitable Foundation, under certain circumstances, may be subject to supervision by the Board of Investment.

    Commercial activities may only be undertaken when they serve to achieve a Foundation’s non-commercial purpose or where the type and scope of the investments being held require such activity to be undertaken.

  16. Foundations v/s Trusts

    • The Foundation is an independent legal person whereas the trust is not.

    • A Private Foundation has to be registered or recorded (usually publicly) which is not always an obligation with a Trust.

    • Assets may be held by a Foundation unlike a trust where the assets are held by the Trustee on trust.

    • Foundations generally cannot engage directly in commercial operations whereas Trusts may be used for certain commercial purposes.

    • Sham issues are less likely to occur with Foundations because of its corporate personality.

    • Taxation- Foundation is an entity so will be directly taxed where appropriate. No problem as with Trustee accidentally becoming resident in a high taxing country.

    • Foundation will own assets in its own name which may bring comfort to Settlor/ Founder

    • Duration of a Foundation is infinite whereas many trusts jurisdictions have perpetuity periods.