Structuring your Private Equity Fund in Mauritius: choosing the right Fund Administrator
The notion of effective fund administration over the life of a Private Equity Fund (‘PE Fund’) is critical. Over and above the role of the Fund Manager (inclusive and its relative sub-committees), the expertise and robustness of the effective Fund Administrator definitely helps in achieving value creation.
By appointing a good Fund Administrator, the Fund Manager can primarily focus on the core management of the portfolio companies. On the over hand, the Fund Administrator is also independent and provides third party protection in the best interests of the investors.
Moreover, it is fair to say that Fund Managers rely highly on their respective Fund Administrators to deliver superior Internal Rate of Return (IRR), as well as non-financial quality end-results.
The list that follows describes the detailed role of the typical Fund Administrator.
1. Fund registration and licensing
For instance, the incorporation and application for licensing for the PE Fund will require carrying out client acceptance procedures, as required by law and by the company’s own compliance requirements. This involves the application of due diligence and ‘Know Your Client’ (KYC) procedures, and holding preliminary discussions concerning the business of the Client, tax and other regulatory information.
2. Compliance, Anti-Money Laundering and due diligence
The Fund Administrator, through its appointed Compliance Officer and Money Laundering Reporting Officer, also ensures that the Fund complies with its licensing conditions and applicable laws. The Fund Administrator also adopts, enforces and re-assesses its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) framework on an annual basis.
The Fund Administrator will also carry out all necessary due diligence on the investors of the PE Fund as required by the regulations in Mauritius.
3. Provision of resident directors and bank signatories if required
The Fund Administrator will designate the resident directors and bank signatories the PE Fund should appoint. They will also provide independence in terms of fulfilling their responsibilities.
4. Company secretarial services
The Fund Administrator acts as secretary to the PE Fund. It also ensures that the Fund complies with the laws, including without prejudice to the generality of the following:
- the convening of board meetings and shareholders’ meeting, and the taking of minutes thereof;
- the keeping and safe-keeping of the statutory books and records of the PE Fund, including, without limitation:
- the minutes of the meetings of the directors and the shareholders,
- financial statements,
- official letters,
- and statutory filings with the Mauritius Registrar of Companies;
- performing all the duties of a secretary to a PE Fund under the laws and under the Constitution;
- drafting all Directors’ Resolutions and Shareholders’ Resolutions as required for the PE Fund; and
- applying for all such authorisation or notifying the relevant bodies as required under the laws, amongst others.
5. Money Laundering Reporting Officer and Compliance Officer
A Fund Administrator also caters for the provision of a Money Laundering Reporting Officer, a Deputy/Alternate Money Laundering Reporting Officer and a Compliance Officer according to the law.
A Money Laundering Reporting Officer (MLRO) is the person responsible for reporting suspicious transactions (money laundering or terrorist financing) to the local authorities. The key responsibilities of a MLRO include:
- examining reports received from employees concerning activities and transactions raising suspicions of money laundering or terrorist financing;
- reporting to and acting as liaison with the Financial Services Commission (FSC), the Financial Intelligence Unit (FIU) and other law enforcement agencies;
- maintaining proper and formal records of all Suspicious Transaction Reports, correspondence sent or received, reports made to the relevant law enforcement agencies.
A Compliance Officer forms part of a company as employee. He/she helps the company maintain policies and procedures to remain compliant with the regulatory framework of the industry within which they operate. The duties of a Compliance Officer include:
- working with all employees to identify and manage regulatory risk;
- inspecting facilities to make sure they are accessible and safe;
- drafting or updating internal policies and disciplinary measures to mitigate risks;
- setting standards for outside communications (e.g. disclaimers in emails); and
- Leading internal audits of policies and procedures.
6. Fund Administration services
The Fund Administration services provided by the Fund Administrator include:
- liaising with the investment manager, investors and banks regarding general administration of the PE Fund;
- receiving and managing applications, notices and correspondence on behalf of the PE Fund, opening bank accounts, and renewal of licences;
- handling and processing subscriptions to shares in the PE Fund and, subject to the law, dealing with requests for repurchases and re-sales of repurchased shares and taking such actions as shall be necessary in order to effect such sales and repurchases;
- attending to all administrative work concerning capital calls;
- payment of Fund’s expenses relating to the operation of the PE Fund and its constitutive documents;
- processing of instructions and maintenance of a creditors’ ledger system for the PE Fund;
- maintenance of internal control procedures for verification and payment of invoices in line with budget of the PE Fund;
- acting as signatory to the PE Fund’s bank account if required;
- carrying out Know-Your-Client and Due Diligence work on investors and parties having a business relationship with the PE Fund;
- reporting with regulators and Investors; and
- handling the processing of subscriptions to shares in the PE Fund and, subject to the Laws, dealing with requests for repurchases and re-sales of repurchased shares and taking such actions as shall be necessary in order to effect such sales, repurchases and preparing distribution calculations and follow up with investors.
7. NAV computation
The Fund Administrator is responsible for the Net asset value (NAV) computation. The NAV is the value of a fund’s assets minus the value of its liabilities. The formula is , where:
- Fund assets represents the value of all the securities in the portfolio; and
- Fund liabilities represents the value of all liabilities and fund expenses (e.g. salaries, management and operational expenses, audit fees, etc.)
8. Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS)
As part of its role, a Fund Administrator assists its clients for FATCA assessment and CRS reporting.
FATCA is a US tax initiative. An initiative of the Internal Revenue Services (IRS), its objective is to prevent tax evasion by promoting cross-border tax compliance through the implementation of international standards for the automatic exchange of information relating to US citizens.
Wide reaching CRS is a global reporting standard for the automatic exchange of information introduced by the OECD. Its objective is to allow tax authorities of a country to have a better view of financial assets held abroad by their residents.
Why choose Sunibel Corporate Services as your preferred Fund Administrator
Our clients are our only focus. Our multidisciplinary team provides professional cross-border investment structuring and fund administration services.
Our competitive advantage resides in:
- Provision of high-end Tailor-made solutions;
- Robust team of fully-fledged fund administrators and fund accountants;
- Highly responsive team;
- International expertise, arising from our Swiss origins;
- Pro-active and strong Investor Relations;
- Advanced technology;
- Continued and valuable relationships; and
- Robust Internal Controls Systems.
Collaborating with the right Fund Administrator is of essence in this ever evolving and dynamic world. We need to keep pace through expertise and continuous learning.
“Risk comes from not knowing what you’re doing.” – Warren Buffet.
- Professional Adviser – The role of the hedge fund administrator
- Systemic – The Evolving Role of the Fund Administrator: Requirements by Management Companies & Investment Managers
- Invest Europe – What private equity offers investors
- Corporate Finance Institute
- Mauritius Revenue Authority
- Thomson Reuters – Tax & Accounting