Mauritius has successfully established a name for itself as a hub for foreign investment. The country has taken several steps to attract foreign investors, including the establishment of investor protection agreements. These agreements are designed to provide a secure and stable investment environment for foreign investors, which in turn helps to promote economic growth and development in Mauritius and the whole of Africa.

Popularly known as Africa’s own International Financial Centre, it offers legal certainty to investors through its hybrid legal system and the availability of dispute resolution mechanisms via the Mauritius International Arbitration Centre (MIAC) and the Mauritius Chamber of Commerce and Industry (MCCI) Mediation and Arbitration Centre (MARC). Where economic opportunities and political stability exist, a legal system that has a high respect for the rule of law draws foreign investment and international business.

The Supreme Court of Mauritius has constantly asserted that the rule of law is the underlying principle of the Constitution of Mauritius; one of its fundamental tenets. It has been described as the citadel, which guards the people against despotism and guards the Government against anarchy.

Available to investors are also a wide network of Investment Promotion and Protection Agreements (IPPAs) and a hybrid legal system which combines both civil and common law practices that are governed by principles drawn from both the French Napoleonic Code and English Common Law.

Investor protection agreements (IPAs) are bilateral or multilateral treaties that provide legal protection to foreign investors in a host country. These agreements typically cover a range of issues, including the protection of property rights, the right to fair and equitable treatment, and the right to repatriate profits and transfer funds. IPAs are intended to provide foreign investors with a level of legal certainty and protection that they would not otherwise have in the host country.

Mauritius has signed a number of IPAs with other countries over the years. As of April 2023 Mauritius had signed 46 IPAs with 29 countries. Some of the countries that Mauritius has signed IPAs with include France, Germany, India, Italy, Japan, South Africa, and the United Kingdom. These agreements cover a wide range of sectors, including finance, tourism, information technology, and renewable energy.

One of the key benefits of IPAs for foreign investors is the ability to rely on international law to settle disputes with the host country. Most IPAs include provisions for the settlement of disputes through international arbitration, which provides a neutral forum for resolving disputes between foreign investors and the host country. This helps to provide foreign investors with a level of legal certainty and protection that they would not otherwise have in the host country. The rule of law is important to the market economy because it is the common basis on which parties can make agreements as it provides parties with confidence and assurance that disputes can be resolved efficiently and fairly.

Mauritius has one of the most flexible and trusted legal framework for carrying activities through global businesses companies (GBCs). The jurisdiction was originally meant to enable Indian investment to the rest of the world, via a beneficial a Double Taxation Avoidance Agreement provision but later turned out to be the reverse which saw Foreign Direct Investments pouring into India in the 90s, through Mauritius.

The overarching thought in Mauritius at the time which restructured and reshaped the global business sector in Mauritius, was to create a flexible framework within which foreign investors could play and stay with the assurance of security for their investment through the Mauritian vehicles. The Companies Act 2001  for example aims to provide a sophisticated framework for domestic and international investors to invest in and from Mauritius with confidence. It equips the jurisdiction with the necessary instruments to compete globally and face the daunting challenges of a fast-liberalising world order.

It contains a number of flexibilities, namely that of allowing a unanimous shareholders agreement to override the ‘by default’ provisions of the Companies Act, which include the form of constitutive documents, decision-making processes, admission and exit of shareholders and transfers, thereby providing for the operating mechanism of partnerships. Furthermore, companies can be structured as limited life companies, limited by shares, or by guarantee and can replicate the carry structure of investment partnerships.

One noteworthy exemption to flexibility and business protection is that of Section 178 of the Companies Act. Section 178 deals with the protection of prejudiced shareholders. This article is the basis of the main protection made available to minority shareholders faced with an unjustified management of their company being oppressive, unfairly discriminatory, and/or unfairly prejudicial towards them. This section further provides that the prejudiced shareholder may apply to the Supreme Court of Mauritius to seek redress, such as the acquisition of their shares or the appointment of a receiver.

The Act takes into account rights of the shareholders both in their individual capacity and as a group. The shareholders as a group enjoy the privilege of exercising control over the working of the company. The Act provides for the flexibility to modify a number of provisions by a shareholders agreement, however, there are certain mandatory provisions which will apply notwithstanding anything stated in the constitutive documents. Such mandatory provisions include:

• Minority shareholder protection, e.g. the right of shareholders holding at least 5% of the capital to requisition a meeting or the ability to apply for a minority buy-out;
• The right to comment on management and make recommendations to the board at a meeting of shareholders;
• The right to receive accounts and inspection of books and records of the company;
• the right to bring injunctive actions against the management of the company for breach on ‘just and equitable’ grounds;
•  The ability of shareholders to prevent a course of action which is ‘ultra vires’ the company’s articles;
• The requirement to have the consent of 75% of a share class to be able to vary any class rights.

The reason for minimum rights stems from the view that a share in a company is considered to be a type of ‘property’, which can be enforced against the company or any third party, as opposed to a contractual nature of a partnership interest, or a beneficiary’s interest, which is enforceable only against parties to a contractual arrangement. The fact that a share is ‘property’ means the shareholders often have a wider range of recourses and remedies to vindicate their interest.

Mauritius has also taken steps to strengthen its domestic legal framework for investor protection. The country has enacted several laws and regulations that are designed to provide greater protection to foreign investors. For example, the Investment Promotion Act of 2000 provides for the establishment of an Investment Promotion Agency, which is responsible for promoting and facilitating investment in Mauritius. The agency provides a range of services to investors, including information on investment opportunities, assistance with investment applications, and aftercare services to help investors establish and grow their businesses in Mauritius.

In addition, Mauritius has established a number of free trade zones (FTZs) that are designed to attract foreign investors. These FTZs provide a range of incentives to foreign companies, including tax holidays, duty-free imports and exports, and streamlined procedures for company registration and licensing.

Overall, Mauritius has taken several steps to establish itself as an attractive destination for foreign investment. The country’s network of IPAs, coupled with its domestic legal framework and FTZs, provides foreign investors with a level of legal certainty and protection that is unmatched in many other developing countries. As a result, Mauritius has attracted significant foreign investment over the years, particularly in the financial services, tourism, and information technology sectors.

 To learn more about Mauritius, contact Órama Corporate Services for more information.