Banking & Finance 2024 Comparisons

Following the COVID-19 crisis of the past few years and the delisting of Mauritius from the non-compliant jurisdictions list of international supervisory bodies, including the Financial Action Task Force (FATF), the Mauritian jurisdiction has experienced welcome stability during 2023–2024. Despite global conflicts and the dependency of Mauritius on imports, which have impacted the economic environment, some positive signs of inflation regression have been seen.

Of relevance, the Bank of Mauritius has decided to reduce the Key Rate by 50 basis points from 4.50% to 4.00% per annum. The decision to reduce the Key Rate has been trigged by the downward trend of global inflation and the sturdiness of major Mauritian economic sectors which are expected to maintain robust performances in 2024. The monetary policy committee of the Bank of Mauritius felt that this environment creates space for a lower policy rate, without compromising on other macroeconomic objectives.

However, despite the recent reduction of the Key Rate, 2024 has been marked with a high inflation rate in Mauritius. The repercussions of this inflation surge, combined with the concurrent rise in interest rates, have made their presence felt in the local loan market. The effects were particularly pronounced among certain borrowers, and lenders found themselves in a position of having to renegotiate their existing loan agreements. This has prompted substantial discussions aimed at recalibrating the loan landscape. A significant aspect of these talks involves negotiating adjustments to the loan’s tenure and repayment terms to better align with the new economic reality. Against this backdrop, lenders are displaying a willingness to engage in these restructured arrangements. However, their co-operation is contingent upon a key condition involving the inclusion of new assets into the existing collateral pool, thus providing an additional layer of assurance for lenders.

In essence, the recent economic shifts have set in motion a series of negotiations between borrowers and lenders, where the aim is to find a harmonious middle ground amidst the evolving financial landscape.

Inflation took a notable leap, surging from 4% in 2021 to a substantial 10.8% in 2022, marking the most remarkable surge in over a decade. This sharp rise has been primarily attributed to external supply shocks stemming from global conflicts. These events triggered a chain reaction, leading to amplified prices in energy and essential food products. The impact on Mauritius was particularly noteworthy due to its status as a net importer of these goods.

The repercussions of this inflation surge, combined with the concurrent rise in interest rates, have made their presence felt in the local loan market. The effects were particularly pronounced among certain borrowers, and lenders found themselves in a position of having to renegotiate their existing loan agreements. This has prompted substantial discussions aimed at recalibrating the loan landscape. A significant aspect of these talks involves negotiating adjustments to the loan’s tenure and repayment terms to better align with the new economic reality.

Against this backdrop, lenders are displaying a willingness to engage in these restructured arrangements. However, their co-operation is contingent upon a key condition involving the inclusion of new assets into the existing collateral pool, thus providing an additional layer of assurance for lenders.

In essence, the recent economic shifts have set in motion a series of negotiations between borrowers and lenders, where the aim is to find a harmonious middle ground amidst the evolving financial landscape.

The ability of corporates to raise finance by issuing high-yield corporate bonds has made them less reliant on banks for funding. Some corporates also leverage on high-yield bond structures to refinance existing bank loans via bond issuance.

The domestic bonds market has been very active recently. From an international perspective, Mauritius has also been a popular platform for the issuance of these types of instruments, either through Mauritian special-purpose vehicles or through foreign corporates listing their high-yield bonds on the Mauritian stock exchange.

Peer-to-peer lending has proved very popular among start-ups and sole traders who seek microfinancing or financing of their working capital, supply chain or business expansion.

This platform has also gained an increased interest among lenders who are currently incentivised by benefiting from an 80% tax exemption on interest derived from a qualifying peer-to-peer lending platform.

Peer-to-peer lending and crowdfunding are still, however, in their infancy and require time for mass adoption. Consequently, despite their growing popularity, the volume of funds raised on peer-to-peer lending platforms is not significant enough to disrupt the traditional lending market, which remains the favoured financing route.

From a corporate lending perspective, a clear trend in more sophisticated lending structures has surfaced. Mezzanine financing and quasi-equity instruments are being used with the aim of creating long-term value for local projects.

Local banks have also showed robust participation in syndicated financing on local and outbound projects, as well as cross-border financing.

In recent years, Mauritius has acknowledged that sustainable finance is a catalyst for change. In June 2021, the Bank of Mauritius published a guide for the issue of sustainable bonds in Mauritius and in December 2021, the Financial Services Commission issued a guideline for issue of corporate and green bonds in Mauritius.

To embed ESG standards across the financial sector, on 18 January 2024, the Financial Services Commission issued a draft rule for a Mauritius Green Fund for public consultation. In essence, the Mauritius Green Fund must meet one of the green criteria that is endorsed by the Financial Services Commission and must be established with the objectives of spreading risk and seeking a return for investors whilst mitigating environmental damages. While this rule is not yet legislated in Mauritius, it is a step forward to the adoption of ESG principles in the financial sector.

Local banks have been partnering with several agencies to promote green loans at preferential interest rates and, by the same token, offering borrowers the possibility of receiving investment grants, depending on the specificities of their projects.

The government has also expressed its firm intention of decreasing its carbon footprint, by introducing several incentives for the financing of projects in the renewable energy sectors.

From a retail perspective, the acquisition of fast chargers for electric vehicles, rainwater-harvesting systems and photovoltaic systems for domestic use are fully tax-deductible. To make electric vehicles more accessible, hybrid and electric vehicles benefit from a reduced excise duty.

A guideline on Climate-related and Environmental Financial Risk Management has been published by the Bank of Mauritius and made effective as of 1 April 2022, with a view to assisting local financial institutions in embedding sound governance and risk management frameworks for climate-related and environmental financial risks within their existing risk management frameworks.

Banks

According to the Banking Act 2004, no person is allowed to engage in banking business in Mauritius without a banking licence issued by the BOM.

Banking business is defined under the Banking Act 2004 as:

• the business of accepting sums of money, in the form of deposits or other funds, whether or not those deposits or funds involve the issue of securities or other obligations howsoever described, withdrawable or repayable on demand or after a fixed period or after notice; and
• the use of those deposits or funds, either in whole or in part, for:
1. loans, advances or investments, on their own account and at the risk of the person carrying on that business;
2. the business of acquiring, under an agreement with a person, an asset from a supplier for the purpose of letting out the asset to the person, subject to payment of instalments together with an option to retain ownership of the asset at the end of the contractual period;
• paying and collecting cheques drawn by or paid in by customers and making other payment instruments available to customers; and
• includes other such services as are incidental and necessary to banking.

Procedures

An applicant wishing to be authorised to operate as a bank must be a body corporate and must apply to the BOM using the prescribed form, accompanied by a non-refundable processing fee of MUR1,000,000 (approximately USD21,450). Among other AML, cybersecurity and related prescribed procedures and requirements, including the minimum capital adequacy ratio which the applicant needs to adhere to, the applicant must show adequate substance in Mauritius by having a principal place of business in Mauritius. In terms of staffing requirements, the applicant must have at least ten suitably qualified full-time officers, including the CEO, the Deputy CEO and key functional heads. The estimated operational costs of the applicant must not be less than MUR25 million (approximately USD536,250). Prior to start of operations, the proposed bank must have in place a core banking system and a full-fledged AML/CFT transaction monitoring system and software. 

Non-banks

Moneylending activities are regulated by the Financial Services Commission of Mauritius. The Financial Services Act 2007 provides that, subject to certain exemptions as provided under the Fifth Schedule of the Financial Services Act 2007, any person, other than a bank or a non-bank deposit-taking institution, whose business is that of moneylending or who provides, advertises or holds themselves out in any way as providing that business, whether or not they possess or own property or money derived from sources other than the lending of money, and whether or not they carry on the business as a principal or as an agent, is required to apply for a licence with the Financial Services Commission.

Procedures

An applicant wishing to be authorised to operate as a non-banking financial institution conducting moneylending activities must be a company and must apply to the Financial Services Commission using the prescribed form, accompanied by a non-refundable processing fee, which varies depending on the type of licence being applied for. Among other AML, cybersecurity and related prescribed procedures and requirements, including the minimum paid-up and unimpaired capital (normally around MUR30 million or an equivalent amount (approximately USD644,000) that the applicant needs to adhere to, the applicant must show adequate substance in Mauritius by having a principal place of business in Mauritius and complying with other prescribed requirements.

There is currently no restriction on foreign lenders to grant loans from their foreign jurisdiction. However, if those foreign lenders intend to carry on the business of moneylending in Mauritius, they should first obtain the appropriate licence from the Financial Services Commission or the Bank of Mauritius, depending on the activities that they wish to conduct.

There are generally no rules restricting the granting of security or guarantees to foreign lenders in Mauritius. However, when a security involves the taking of a fixed and/or floating charge, certain elements of the activities of the charge-holder will need to be considered.

Under the Mauritian Civil Code, a fixed and/or floating charge can only be granted in favour of an Institution Agréée (the Civil Code Restriction).

An Institution Agréée is, effectively, an approved institution, as listed in the Institution Agréées Regulations 1988, which lists those entities or category of entities approved to hold a fixed and/or floating charge, and include “any body corporate not registered in Mauritius and having no place of business in Mauritius”.

Although the description of that approved body may appear broad, the Civil Code Restriction has been interpreted narrowly by the Supreme Court (vide Atelier Etude Limousin & others v BPCE International et Outremer & another 2014 SCJ 166).

Given this ruling, the prevailing market perspective has been that a foreign entity can reap the advantages of a fixed and/or floating charge only if it qualifies as a “financing institution”. This stands in contrast to a scenario where the foreign entity might not be directly engaged in financing activities.

The Foreign Exchange Control Act was suspended in 1994. As a result, there is currently no exchange control requiring approval for payments outside Mauritius or repatriation of profits, dividends or capital gains earned in Mauritius.

While Mauritian laws do not impose any legal constraints on how borrowers can utilise funds from loans or debt securities, it is common to observe contractual limitations on such usage. These limitations are typically established through mutual agreement between the lender and the borrower.

Mauritian laws acknowledge the notion of a trust. Additionally, the Civil Code offers broader concepts that can serve as substitutes for the trust including the mandat (which corresponds to agency) and the tiers convenu (where a third party is jointly appointed by the involved parties to hold the security).

It is a regular occurrence for domestic banks to be appointed as security agents acting on behalf of and for the benefit of foreign lenders when assets used as collateral are situated in Mauritius.

The most common loan transfer mechanisms include:

• loan assignments;
• debt consolidations;
• refinancing;
• loan sales or sell-down; and
• secondary market participation.

In bilateral financing, where the security is held directly by the lender, the security cannot be transferred without involving a prior release and the creation of a fresh security in favour of the new lender.

In certain circumstances, a security agent can be appointed to mitigate the impact of a loan transfer on the existing security.

The laws of Mauritius do not restrict a debt buy-back by the borrower or sponsor. However, it is recommended that the borrower or sponsor consider the appropriate structuring and address potential tax liabilities.

There are no specific rules applicable to “certain funds” in respect of public acquisition finance transactions. However, when dealing with a potential takeover, the law requires that an offeror give a firm intention to acquire the target, containing confirmation by the board of the offeror that sufficient financial resources are available to satisfy the acceptance of the offer. Similarly, where the offer includes a non-cash consideration, the confirmation should provide that all reasonable measures have been taken to secure full payment of the shares acquired. 

The transition away from Libor has brought about changes in the existing facility documentation, which have necessitated certain adjustments to existing legal documentation.

The concept of usury laws is not catered for by Mauritian laws. However, the Mauritian courts have the discretion to review downwards the interest amount if it is deemed excessive.

Except when a court order is issued directing the disclosure of such financial contracts, there are no rules and/or laws regarding the disclosure of financial contracts under Mauritian laws.

Withholding tax at a rate of 15% may apply on interest payable in certain circumstances. However, there is no withholding tax for any payment made by a company holding a global business licence in Mauritius to lenders not carrying out business in Mauritius.

Value-added tax (VAT) is applicable at a flat rate of 15% to VAT-registered entities on all goods and services supplied by them in Mauritius, subject to certain supplies being exempted under the Income Tax Act 1995 and the various income tax regulations.

Registration duty is payable on the registration of a document, either based on a proportional duty or as a fixed amount depending on the nature of the transaction witnessed by the document.

A Mauritian law-governed fixed and/or floating charge, mortgage and a bordereau pursuant to an assignment agreement are required to be registered (and inscribed for fixed and/or floating charges and mortgages), while registration of finance documents and security documents other than those aforementioned are at the option of the lender.

Some of the tax concerns will involve the following:

• withholding tax;
• transfer pricing;
• foreign exchange risks; and
• permanent establishment.

Withholding tax could be mitigated by optimising the use of existing tax treaties.

Transfer pricing risks could be mitigated by looking at the rates applied in comparable transactions or using the arms’ length principle.

Foreign exchange risks could be mitigated by making use of currency hedging instruments or ensuring that the loan as well as the principal and interest repayments are made in the lender’s currency.

Permanent establishment risk could be mitigated by ensuring that the lender’s activities in Mauritius do not create a permanent establishment.

The assets available as collateral to lenders in Mauritius consist of:

• shares;
• land/buildings (immovable property);
• contractual rights and receivables;
• bank accounts;
• intellectual property and other intangible and tangible rights;
• equipment/material, stocks and outillage (tools of trade);
• future assets; and
• business undertakings.

The common forms of security granted are as follows.

• Security over shares:
1. a commercial pledge when the shares of a company that holds a licence issued by the Financial Services Commission are pledged in favour of a financial institution;
2. a civil share pledge when the pledged shares relate to a domestic company; and
3. a fixed and/or floating charge can also be granted as security over the shares.
• Security over land or building (immovable property):
1. a mortgage under the Mauritian Civil Code; and
2. a fixed and/or floating charge.
• Security over contractual rights and/or receivables:
1. an assignment of contractual rights and/or receivables by way of security; and
2. a pledge under the Mauritian Commercial Code.
• Security over bank accounts:
1. pledge under the Mauritian Commercial Code; and
2. a fixed and/or floating charge.
• Security over intellectual property and other intangible and tangible rights:
1. an assignment of rights by way of security; and
2. a fixed and/or floating charge.
• Security over equipment/material, outillage (tools of trade) and stocks are:
1. a special pledge under the Mauritian Civil Code; and
2. a fixed and/or floating charge.
• Security over future assets:
1. a pledge or an assignment by way of security under the Commercial Code; and
2. a floating charge.
• Security over a business undertaking (fonds de commerce): a pledge of the business undertaking.

Perfection Requirements

A share pledge

In addition to the execution of the share pledge, the pledgor is required to procure the delivery of the following to the pledgee:

• a signed and undated blank share transfer form;
• share certificates or other instruments evidencing or representing the pledged shares; and
• a transfer-in-guarantee instrument signed by the pledgee, the pledgor and the secretary of the company in which the shares are being pledged in respect of the pledged shares.

Fixed and/or floating charge

The fixed and/or floating charge agreement is required to be prepared in a prescribed format and must be registered with the Registrar General and inscribed with the Conservator of Mortgages of Mauritius.

A memorandum setting out details of the charge must be affixed to the deed prior to the inscription. The chargor must deliver the registered deed of fixed and/or floating charge and provide satisfactory evidence of registration and inscription to the secured party.

Mortgage

The deed of mortgage, with the requisite memorandum (bordereau) annexed, must be inscribed in the registers of the Conservator of Mortgages.

Assignment under the Commercial Code

A memorandum, known as a bordereau, which witnesses the assignment and forms part of the perfection requirement thereof under the Commercial Code, must be executed by the assignor and must be registered in the interest of the assignee with the Registrar General. The registered bordereau must thereafter be delivered to the assignee by the assignor.

Account pledge

A notice of pledge must be sent to the account bank.

Pledge of business undertaking (fonds de commerce)

The pledge of business undertaking is created under a deed prepared by a notary public or a deed under private signature and must be registered with the Registrar General of Mauritius. The registration with the Registrar General must be made within 15 days of the signing date of the pledge agreement.

Timing and Costs Involved

Depending on the type of entity involved, registration must be effected within eight days or up to three months for companies holding a global business licence (except for the pledge of business undertaking which must be registered within 15 days from the date of the security document). The registration process takes around three business days to complete. Registration duty and administrative fees (formerly stamp duty) payable to the Registrar General, amount to around MUR50,700 (approximately USD1,200) per document. Inscription of charges would also incur an additional inscription fee of around MUR1,000 (approximately USD23).

The Mauritian Civil Code allows for the creation of a floating charge over all present and future assets of a company as security.

Downstream, upstream and cross-stream guarantees are generally permitted. This type of security is generally granted by way of a corporate guarantee, as provided under the Mauritian Civil Code. However, giving such a guarantee could be restricted where it amounts to providing financial assistance.

The laws of Mauritius restrict a target from providing a loan or guarantee or any form of security where the purpose of such a loan, guarantee or security is for the acquisition of the target’s own shares. In these circumstances, specific conditions must be adhered to by the target before it is permitted to provide any such financial assistance.

Except for the aforementioned restrictions, there are generally no other restrictions in connection with, or significant costs associated with, or consents required to approve, the grant of security or guarantees.

A security is generally released only when the secured obligation has been paid in full and all facilities which gave rise to the secured obligation have been terminated. However, when dealing with the release of mortgages and fixed and/or floating charges, an additional procedure is required to ensure that the security is erased from the public registers of the Conservator of Mortgages. The erasure is formalised by a letter from the secured party to the Conservator of Mortgages confirming the discharge of the secured obligation, the release of the security and requesting the erasure of the security from the registers of the Conservator of Mortgages.

In respect of pledges and assignments, the secured party is required to return all documents delivered to it at the time of perfection of the security (which include share certificates, blank transfer forms or, in some instances, the bordereau), and counterparties will update their internal records to reflect the discharge and release.

By way of exception, the parties can also mutually agree to release the security before the discharge of the secured obligation. This can be done by way of a release agreement entered into between the parties providing for the release of the security. The same procedures as discussed above will apply for the release of that security.

In the event of insolvency, the Mauritian Insolvency Act 2009 provides the following ranking of claims of preferential creditors:

• cost of the liquidator;
• costs of compromises by the company with its creditors under the Companies Act;
• payments made pari passu with first-ranking fixed and floating charges and mortgages inscribed for more than three years;
• first-ranking fixed and floating charges and mortgages inscribed for less than three years;
• other secured creditors; and
• all other unsecured creditors who have been proved in the bankruptcy or winding-up.

When competing security interests arise, they are treated equally unless the lenders and the same borrower contractually vary their priority over the security by way of a subordination or intercreditor agreement. The subordination or intercreditor agreement will generally provide that the junior lender will not receive payments from the borrower until the senior lender has been paid.

The contractual provisions of a Mauritian law-governed subordination agreement will survive the insolvency of the borrower and will be recognised and given right in an insolvency procedure.

Under the laws of Mauritius, the most material security interests that arise by operation of law are special liens. These special liens confer a right on a creditor to be preferred above other creditors, including creditors under a mortgage deed. The most material special lien is the one which is granted to any bank established in accordance with the provisions of the Banking Act. Following a loan, an advance, or other banking facility provided by the bank, a special lien will be granted to the bank on the sum standing to the credit of all accounts of the borrower.

Another special lien that arises by operation of law is the special lien granted to the seller of an immovable property, and which will secure the outstanding payment to be effected by the buyer.

The circumstances for a secured lender to enforce a security will depend on the contractual provisions of the financing and security documents and on the type of security granted to the lender. In general, an event of default must have occurred under the finance and security documents, which will trigger the enforcement of the security.

Enforcement of a Fixed Charge

A secured lender can enforce a fixed charge that it holds over assets by appointing a public or private registered usher to seize the assets, without the need to serve a commandement (notice) on the debtor. If the debt remains unpaid, for three weeks following the date of seizure, the creditor can then sell the seized assets by public auction (in the case of movable assets), or by serving a notice in the same manner previously described (in the case of immovable assets).

Enforcement of a Floating Charge

The floating charge must first be converted into a fixed charge. This is known as the crystallisation of the floating charge. This requires the appointment of a court usher to draw a memorandum of inventory, which will then be transmitted to the Conservator of Mortgages to be inscribed in its registers, whereupon the charge is converted to a fixed charge. This process may entail further costs in terms of taxes or fees.

Enforcement of a Special Civil Pledge Over Shares

The bank must serve notice on the debtor, stating its intention to proceed with the transfer of the pledged shares. The bank can then cause the pledged shares to be transferred seven days after the notice is served.

Enforcement of a Pledge of Shares Under the Commercial Code

The pledgee must realise the pledged shares by completing and executing the share transfer form. No other formalities are required.

Enforcement of Mortgages

The creditor can enforce a mortgage by serving the debtor a commandement (notice) notifying the debtor that, if it fails to pay the amount claimed, a seizure will be effected on the mortgaged property. The service of the commandement is effected through a public or private registered usher. The seizure of the mortgaged asset cannot be effected until at least ten days have elapsed since the date on which the commandement was served. The usher will then draw up a memorandum of seizure that must be registered and transcribed with the Conservator of Mortgages/Registrar General of Mauritius. A creditor enforcing a mortgage must also register and transcribe a memorandum of charges with the Conservator of Mortgages/Registrar General of Mauritius, containing the desired conditions of sale. The property may then be seized and sold, before the Supreme Court of Mauritius, to the highest bidder.

The choice of a foreign law as the governing law of the contract will be upheld in Mauritius.

A foreign judgment or arbitral award against a Mauritian company will be enforceable in Mauritius without a retrial of the merits of the case, subject to fulfilling the necessary exequatur procedures to recognise that foreign judgment or arbitral award.

When a foreign lender does not own any immovable property in Mauritius, the debtor (as defendant) can apply for an order for the foreign lender (as plaintiff) to provide security for its costs before proceeding further with any claim in court.

Where the security involves immovable property in Mauritius, the foreign lender will require approval of the Prime Minister’s office if it were to transfer title of that property in its own name.

The facility agreement will generally treat an insolvency event as an event of default and will usually include mechanisms where, upon the occurrence of such an event, the lender may have recourse to claim repayment of the loan and to enforce the security or guarantee which was provided to secure the loan.

The lender may appoint a receiver to secure all the assets provided as collateral to avoid disposal by the grantor.

In certain circumstances, a company may begin administration procedures under the Insolvency Act 2009. During the time that a company is in administration and upon the appointment of an administrator, a lender cannot enforce a charge on the property of the company except with the written consent of the administrator or with the permission of the court and on terms that the court thinks appropriate.

This restriction, however, does not apply to a secured creditor; ie, a person who holds a charge on or over the property of the company and includes the holder of a “gage”. The secured creditor may apply to the court for an order granting leave to them to enforce their security within a specified period after the company has been put into administration.

The restriction does not further apply to those secured creditors who have already taken steps to enforce their rights to recover the property before the beginning of the administration of the company.

The Insolvency Act 2009 sets out the order of priority in which creditors are paid on a company’s insolvency. The order of priority is as follows:

• first, the liquidator or receiver for their fees and expenses and any indemnity to which they are entitled from the property of the company;
• second, costs of compromises by the company with its creditors under the Companies Act;
• third, payments made pari passu with first-ranking fixed and floating charges and mortgages inscribed for more than three years;
• fourth, first-ranking fixed and floating charges and mortgages inscribed for less than three years;
• fifth, other secured creditors; and
• sixth, all other unsecured creditors who have been proved in the bankruptcy or winding-up.

The Insolvency Act 2009, which is the principal legislation dealing with the insolvency of companies, sets out the typical insolvency procedures in view of enabling the creditors to recover their debt, which are the receivership procedure and the liquidation procedure.

Under the receivership, a receiver will be appointed by a secured creditor to take control and possession of the property in receivership (i) to protect the secured creditor’s position and (ii) to manage or realise the asset for repayment of the debt to the secured creditor. The Insolvency Act 2009 does not provide for any prescribed period of time for the completion of the receivership process. The length of the receivership procedure would generally take eight months to 16 months to complete but it may take longer if the affairs of the company are more complex.

Under the liquidation process, a liquidator will be appointed to take possession of, protect, realise and distribute the assets, or the proceeds derived from the realisation of the assets. Similarly for the receivership procedure, the Insolvency Act 2009 does not provide for any prescribed period of time for the completion of the liquidation process. The length of the liquidation process would generally take 12 months to 18 months to complete but may take longer if the transaction is more complex.

The Insolvency Act 2009 also sets out the formal mechanism for the rescue or reorganisation of a company, which is the voluntary administration of a company.

The aim of a voluntary administration is to enable a business, property and affairs of a company to be administered in a way (i) to provide an opportunity for the company and its business to continue to exist or, should the former scenario not be possible, (ii) to provide a better return for the company’s creditors and shareholders, compared to an immediate winding-up of the company.

The administrator may be appointed by the company in administration, by a secured creditor holding a charge over the whole/substantially the whole of the company’s property or a buy-order of the court.

The Mauritius Companies Act 2001 further provides other mechanisms for company rescue, which include:

• a compromise between the company and its creditors;
• amalgamation procedures; and
• a scheme of arrangement by a creditor or a shareholder in relation to the company.

Potential risk areas which the lender may face, upon a borrower, security provider or guarantor becoming insolvent, are as follows.

Voidable Preference

A voidable preference is a transaction which involves creating a charge over the debtor’s property and incurring an obligation, and which (i) has been entered into by the company as a debtor at a time when the company is unable to pay its due debts and which (ii) enables another person to receive more towards satisfaction of a debt by the company than that person would receive in the bankruptcy or liquidation. A voidable preference, which was made within two years immediately before adjudication or commencement of the winding-up, may be set aside by the court upon application by an official receiver or a liquidator making such an application.

Voidable Charge

A charge over a property or undertaking of a debtor, given within two years before the debtor’s adjudication or the commencement of the winding-up and where, immediately after the charge was given, the debtor was unable to pay its due debts, may be set aside by the court upon the application by an official receiver or a liquidator.

Energy

The government’s push for cleaner energy sources and the need to update or expand energy infrastructure has driven considerable investment in these projects. The main projects involve medium-sized to large-scale solar farms and wind farms.

Infrastructure

Large-scale infrastructure projects like roads, bridges and public transportation with the latest light railway system have been the main projects in this category.

Real Estate Development

Large real estate development projects, such as smart cities involving commercial complexes, residential communities, and tourism are driving projects in this specific sector.

The Mauritian government has promulgated the Public-Private Partnership Act 2004, which came into force on 1 March 2005 (the “PPP Act”).

The PPP Act provides for the implementation of PPP agreements between contracting authorities and private parties and establishes a set of rules governing public-private procurement.

Over the years, the main PPP projects have involved the energy sector, with the setting up of various power plants using fossil fuel and renewable sources, the development of the freeport zone and airport terminal, the setting-up of a waste-water treatment plant and road infrastructure projects.

There are currently ten active projects in the country, with active investments exceeding USD940 million.

Project documents are not required to be governed by local law, nor are disputes required to be resolved in local courts. The choice of a foreign law, as the governing law of the contract, will be upheld in Mauritius. Likewise, the choice of a foreign jurisdiction or international arbitration for settlement of disputes will be recognised.

Foreign entities (or any Mauritian company with a non-citizen of Mauritius as shareholder or ultimate beneficial owner) must seek approval of the Prime Minister’s Office if they intend to acquire immovable property within Mauritius.

Likewise, if a foreign lender intends to enforce any remedial rights on a security related to immovable property in Mauritius, leading to an eventual ownership of that property, obtaining the Prime Minister’s Office’s approval will be a prerequisite.

The ownership structure is the primary concern for a project – the type of vehicle used and how it is organised to “house” the investors and financiers. Traditionally, a private company limited by shares would be the favoured option, but other structures may be more appropriate, depending on the type of project.

Where immovable property would be owned or leased over a period by the project vehicle, approval from the Prime Minister’s Office would be required if non-citizens would be holding a direct or indirect shareholding or interest in the project company, except where certain exemptions are provided.

The financial structure would also be of relevance in determining how the project would be financed, which could involve equity, short-term and long-term loans, bonds (listed or unlisted), quasi-equity and the determination of the relevant revenue streams to service the debts. Each type of financing would require specific attention in order to comply with the regulatory environment.

The financing sources and structures can vary depending on the nature of the project, its scale, and the risk profile. The typical financing sources and structures would include:

• bank financing – with fixed or variable interest rates and repayment terms tailored to the project’s revenue generation;
• export credit agency (ECA) financing – particularly common in large infrastructure projects; and
• project bonds – generally issued by project companies to investors seeking long-term, fixed-income instruments.

Alternative sources of financing include:

• private equity – private equity firms may invest directly in projects in exchange for equity ownership seeking higher returns being more actively involved in project management and decision-making;
• public-private partnerships (PPPs) – private entities often finance or provide land for the development of a specific project. They may also design, build, operate and maintain the project over a defined period;
• multilateral and development banks – international institutions like the World Bank, Asian Development Bank and African Development Bank provide funding and support for development projects in emerging markets, including Mauritius; and
• crowdfunding and peer-to-peer lending – while not very common for project financing in Mauritius, smaller projects might use crowdfunding or peer-to-peer lending platforms to raise capital from a large number of individual investors.

Mauritius does not have extractive natural resources and exportation is not an issue.

The Environment Act 2024 stands as the main legal framework governing environment matters concerning various projects. The Environment Act has repealed the Environment Protection Act 2002, and replaced it with a modern legislative framework with a view to ensuring better protection, management and conservation of the environment. The Environment Act 2024 has established the National Environment and Sustainable Development Commission in view of, inter alia, setting national objectives for environmental protection, management and conservation, and targets regarding circular economy, green economy, and sustainable consumption and production.

Additionally, an Observatoire de L’Environnement has been established as an interface with stakeholders, including the public, on environmental protection and policy evaluation. A mechanism has also been put in place to enhance the management and protection of Environmentally Sensitive Areas (ESAs), with improved co-ordination among institutions and the creation of an ESA inventory and maps. The Environment Act 2024 also ensures transparency in the Preliminary Environmental Report (PER) and Environmental Impact Assessment (EIA) processes and introduces the Strategic Environmental Assessment (SEA) framework to integrate environmental considerations into early planning stages. This ensures a holistic evaluation of cumulative impacts, accounting for socio-economic factors to protect and conserve the environment. A completion certificate will be required before operations begin, confirming projects comply with their PER, EIA, or SEA approvals. Additionally, a National Oil Spill Co-ordination Committee has been established, as a response to the Wakashio disaster which occurred in 2020, to ensure a prompt and co-ordinated response to oil spills.