Crowdfunding is a way to raise money from a large number of people. Large groups of people pool together small individual investments to provide the capital needed to get a company or project off the ground. Individuals, charities or companies can create a campaign for specific causes and anyone can contribute.

Mauritius has introduced the Financial Services (crowdfunding) Rules 2021 to enable the operations of crowdfunding platform in the country by issuing crowdfunding licenses. The said license is being issued by the Financial Services Commission (FSC).

Crowdfunding operator shall be a legal person incorporated under the laws of Mauritius. As crowdfunding falls under Financial Business Activities under the Financial Services Act 2007, the application for a crowdfunding operator shall be made under Part IV of the FSA 2007. The application shall be accompanied by:

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• A business plan or feasibility outlining the proposed business activities

• Information/documents relating to customer due diligence of promoters, beneficial owners, controllers and proposed directors

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Place of Business

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The crowdfunding operator shall at all times, have its registered office and principle place of business in Mauritius.

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Capital

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The crowdfunding operator shall at all times, maintain a minimum unimpaired stated capital of MUR 2 million (USD 50,000)

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Outsourcing

A crowdfunding operator may outsource some of its functions to an experienced third party. In the event that a function is being outsourced to a third party, the operator shall have adequate documents in place to support the outsourcing in terms of outsourcing agreements, due diligence on the third party, process on communication flow and how to access relevant documents. At the end of the day, the operator shall still be responsible for the compliance with the requirements of the relevant Laws and Regulations as imposed by the FSC.

Due diligence on Issuers using the crowdfunding platform

Issuers are entities that are looking for funding through the crowdfunding platform. A crowdfunding operator shall carry out due diligence exercise on each of its issuer which will use the platform to raise funds. The due diligence requirements shall include the followings:

• Incorporation details, license, good standing and current standing

• Proof of identity and address of directors, officers and controllers

• Fitness and propriety of directors, officers and controllers

• Financial standards, financial strength, financial history by checking past financial statements, credit history and credit ratings

• Relevant experience and know how in the business & business proposal

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Due diligence on Investors using the crowdfunding platform

Investors means the person providing funds to the issuer through the purchase of an investment in the issuer’s business through the platform. A crowdfunding operator shall carry out due diligence on each investor. The due diligence requirements shall include the following:

• Identity and proof of address of natural person

• Licence, good standing, current standing of legal person

• Proof of identity and address of directors, officers and controllers

• Fitness and propriety of the investor and of its directors, officers & controllers

• Level of sophistication and risk assessment and rating

• Source of funds and wealth.

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Funds raising and maximum amount of investments

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• An issuer cannot raise more than MUR 15,000,000 (USD 375,000) on the platform over a 3-year period

• A retail investor cannot invest more than MUR 350,000 (USD 8,750) over a 12-month period on the platform.

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Fund Handling by the Crowdfunding Operator

The operator may act as intermediary and handle funds on behalf of the investors. Nevertheless, the funds must be deposited in one or more bank accounts separate from the operator’s bank account and such accounts shall not bear any interest.

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