The Foundations Act 2012 of Mauritius (the "Act") was proclaimed and is effective since 1 July 2012. The legislation caters for the incorporation of foundations in Mauritius and clearly sets out the provisions for the establishment of the vehicle, the role and responsibilities of the members of the council of the foundation (the “Council”), the role of the founder, the secretary and the protector of the foundation, the rights of beneficiaries and provisions for the winding up of the foundation. 

Foundations are appealing to clients from civil law countries and who may not be familiar with the concept of trust. A Mauritius foundation is an incorporated body, able to transact, and to sue and be sued in its own name. It acts through its Council, which is the body charged with the administration of the foundation’s assets and for the attainment of its objects. 
 

Charitable foundations

A foundation established in Mauritius is classified as a charitable foundation if its exclusive purpose or objective is to benefit the public at large or privately benefit one or more individuals or entities within a class of persons not resident in Mauritius as outlined below :

• the relief of poverty; 
• the advancement of education; 
• the advancement of religion; 
• the protection of the environment; 
• the advancement of human rights and fundamental freedoms; or 
• any other purpose beneficial to the public in general.

Such charitable objects can be pursued within Mauritius or other locations and which can be beneficial to the Mauritian community and beyond. 

A foundation in Mauritius can be established for such purposes as outlined in its charter or testamentary instrument. It can pursue both charitable and non charitable objects and benefitting a person or class of persons or fulfilling a specified purpose. A Mauritius foundation can only acquire legal personality when it is registered with the Registrar of Foundations (the "Registrar") and it has obtained a certificate of registration. It can thus exercise all the functions of an incorporated body: it has the capacity of carrying on or undertaking any business or activity in or outside Mauritius, entering into any transactions and holding assets. It may also upon application with the Financial Services Commission of Mauritius (the "FSC") be eligible to hold a global business licence. 

 

Foundation established by will

A foundation can be established through a legally recognized will under Mauritian law or the laws of any other jurisdiction. If it is established through a will, only one founder is necessary who shall be the testator. Where 2 or more testators have made concurrent wills establishing a foundation taking effect simultaneously the testators shall be deemed to be one founder. 

The executor designated in a will to execute its instructions is responsible for the appointment of a Council as outlined in the will. Upon the foundation’s registration, the executor is required to keep the Council updated on the progress of the will at regular intervals with no more than 60 days between the updates. 

If following 12 months after the death of the founder, the foundation remains unregistered, it becomes the duty of the executor to make an application to the Supreme Court of Mauritius (the “Court”), for the appointment of an administrator. The administrator’s role is twofold :

• to ensure the endowment of the assets designated as initial property of the proposed foundation aligns with the stipulations of the will; and 
• to oversee the registration of the proposed foundation under the Act.

The Court may accordingly appoint an administrator who shall, at all times, be under the supervision of the Court. 

Once appointed, the administrator shall appoint a Council in accordance with the will’s directives. In the absence of a Council the administrator must take such actions, including the institution of legal proceedings in Mauritius or elsewhere, to ensure that the initial assets are duly acquired by the proposed foundation. Furthermore, the administrator is entrusted with the prudent administration, conservation and enhancement of the initial assets in accordance with the terms of the will ensuring their proper management and improvement without exposing them to undue risk. 

The appointment of the administrator will be terminated by the Court once the application for the registration of the foundation has been properly lodged by the administrator along with the necessary documents. 

The expenses incurred by the administrator, including his remuneration as approved by the Court, shall be met by the executor:

• out of the property specified in the will as being the initial assets of the foundation; or 
• in the event that the foundation is not registered, out of the property of the estate of the founder. 

The registration of a foundation established by will may be contested on the death of the testator only on the ground that the will purporting to establish it was not duly executed within a period of 3 years from the date when probate of the will was granted. 

 

Key features of the Act

Registration of a foundation

A Mauritius foundation intending to l hold a global business licence will fall within the purview of the Financial Services Act 2007 of Mauritius (the “FSA”). Thus, an application for the incorporation of such a vehicle must be channeled through a licensed management company. As part of the incorporation process, an extract of the charter of the foundation must be submitted to the Registrar. It is not necessary under the law to submit the full charter. The extract must contain the following information:

• the name, address, period (if any) for which it was established, purpose and objects of the foundation;
• name and address of the founder in Mauritius for the service of documents;
• details of the beneficiary (if any) or the manner in which the beneficiary may be appointed and the manner in which he may be removed;
• where the beneficiary is a nominee, the full name and address of the beneficial owner or ultimate beneficial owner;
• name and address of the secretary and the members of the Council;
• list of names and addresses of the first officers of the foundation;
• the date of the charter and any amendment made to the charter before its submission to the Registrar; and 
• the date of the articles of foundation (the “Articles”), if any, and of any amendment made to them before its submission to the Registrar.

The application for the establishment of a foundation necessitates a certificate from a legal practitioner, legal consultant or a law firm, affirming the compliance of the application with the relevant sections of the Act. This certificate serves a adequate evidence of compliance for the Registrar to rely upon.

The application must also be accompanied by a declaration of the applicant that the information provided in the application is true.

The register of foundations (the “Register”) is established and maintained by the Registrar which maintains a record of every foundation registered under the Act and all documents filed in relation to the foundation. It is important to note that the charter itself does not need to be filed with the Registrar and therefore remains a confidential document. Furthermore, the records maintained by the Registrar are not available for public inspection. However, a person authorised by the secretary of the foundation or by the FSC can have access to the file of the foundation at the Registrar’s office and will be entitled to inspect the file records. Also, the Registrar may share, with Mauritian and foreign law enforcement agencies and institutions involved in the prevention of money laundering and combating of terrorism financing and proliferation financing information which the Registrar obtains pursuant to the Act.

Also, the records and copy of documents required to be kept by a foundation at its registered office can be inspected by any founder, officer, supervisory person, the Registrar or the FSC.

The Registrar has the power to remove the name of the foundation from the Register if the foundation fails to comply with certain statutory requirements.

The Founder

The founder is defined in the Act as a person who endows a foundation with its initial assets. It is important to note that a person who endows assets in a foundation after its registration does not make that person a founder or confer founder's rights upon that person, unless otherwise provided for in the charter or Articles. One aspect of the Mauritius foundation which differentiates itself from other jurisdictions is that the foundation cannot come into existence without endowment of the initial assets. There is no limitation or restriction on the value of such initial assets.

The charter may include provisions in relation to the rights to be given to the founder. 

A founder may also be a beneficiary of the foundation and does not need to be resident in Mauritius. Under the Act, where the founder is not a citizen of Mauritius and endows property to a foundation, the transfer of such property shall not be set aside, avoided or otherwise declared invalid or ineffective by virtue of any rule or law of his domicile or nationality relating to inheritance or succession or of any rule or law of a similar nature restricting the right of a person to dispose of his property during his lifetime so as to preserve the property for distribution at his death. 


The Foundation Council

A foundation shall have a Council which shall be constituted in accordance with its charter or Articles. The duties of the members of the Council are to conduct the affairs of the foundation in accordance with its charter, its Articles and with the Act. The Council has the duty to supervise the management and conduct of the foundation’s operations and activities and to promote the best interests of the foundation.

The appointment of members of a Council shall be subject to the charter of the foundation. In case where the charter is a will, the Council is appointed by the executor or administrator of the will. Nonetheless, the Council must include at least one member who shall be ordinarily resident in Mauritius. Council members can be individuals but they must not fall into certain categories : minors, a bankrupt individuals, those with physical or mental impairment, individuals convicted of an offence involving fraud or dishonesty by a court of Mauritius or elsewhere and in the case of a corporate body, if such a body corporate is subject to proceedings in Mauritius or elsewhere and as a result of which that body corporate can be wound up or dissolved. Furthermore, if the charter or Articles provide that the appointment of the members of the Council is to be made by a person who has been empowered by the founder, the said person shall not appoint any officer or his spouse or a person in a direct or collateral line of relationship with him.

The members of the Council are required to act honestly and in good faith with a view to promoting the best interests of the foundation, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. A Council may appoint such officers as may be necessary for the effective discharge of its duties and obligations under the Act, the charter and Articles, if any. The Council will supervise those officers in the performance of their duties and the officers shall act in accordance with the instructions of the Council. A charter, or Articles, if any, may specify the duties and powers of a Council mentioned above and provide for other additional duties and powers which shall not be in contravention with the Act or the law in general. A defect in the appointment or qualification of a member of a Council shall not invalidate any act of the Council.

An officer of the foundation or a member of the Council is not relieved, released or excused from any liability arising from any fraud, wilful misconduct or gross negligence committed by such person.

A person shall cease to be a member of a Council on -

• his discharge as a member of the Council, in accordance with the charter or the Articles, if any;
• the Foundation ceasing to be registered under the Act; 
• the liquidation or winding-up, as the case may be, of the foundation; or 
• the occurrence of any other event which disqualifies him from being a member of the Council.

The Beneficiary

A foundation may have one or more persons or classes of persons as beneficiaries and there are no restrictions on the identity of the beneficiaries. The Act provides that the beneficiary of a foundation is entitled to obtain information as regards the fulfilment of the objects of the foundation. A beneficiary is also entitled to inspect and have a copy of the charter and Articles, audit reports or report on the financial position of the foundation and the annual accounts and the minutes of proceedings of any meeting of the Council.

Upon winding up, any remaining assets of the foundation are transferred to the beneficiaries as provided for in its charter and Articles if applicable. 



The Secretary

Every foundation shall have as secretary a management company duly licensed by the FSC or such other person resident in Mauritius as may be authorised by the FSC and qualified under the Act. Notwithstanding the fact that a person has ceased to act as secretary to a foundation, he shall remain liable for any liability he may have incurred as secretary during his tenure and such liability may be enforced against him by the foundation. Any defect in the appointment or qualification of a secretary shall not invalidate the acts of the secretary. 
The Protector

A Mauritius foundation may elect to have a protector or a committee of protectors and unlike most foundations in other jurisdictions, there is no restriction on the appointment of such a protector who can fulfil this role. The Act also provides flexibility in terms of accountability of the Council as the role, duty and powers of a protector or a committee of protectors are only as provided in the charter of the foundation.

 

The Charter

The Act outlines the mandatory information which must appear in the charter. The charter of a foundation is the constitutional document of the foundation and specifies amongst others the name of the foundation, its registered office, details in respect of the founder and beneficiaries (if any), the purposes, objects and duration (if any) of the foundation, the endowment of the property which shall be the initial assets of the foundation and the procedure for the appointment of the Council or of a protector or committee of protectors and its or his powers and duties.

The charter of a foundation may also provide various other provisions concerning the foundation, such as the rights and authorities of the founder, the appointment, tenure and termination of officers of the foundation, auditors, protector or committee of protectors, members of the Council, additional beneficiaries, for the circumstances, if any, in which the foundation may be redomiciled and the conditions to be satisfied in this respect. 

The charter of a foundation must be documented in writing. If the founder is a natural person, it must be signed by him; if the founder is a corporate entity, it must be signed on behalf of the founder by a person or persons authorised for that purpose.

The charter can be amended provided the Registrar is notified accordingly about the proposed amendments in the manner prescribed and such notification is accompanied by a certificate from a legal practitioner, legal consultant or a law firm, that such proposed amendments comply with the relevant sections of the Act on which the Registrar shall rely as sufficient evidence of that compliance. Upon receipt of those documents, the Registrar shall update the Register accordingly.
 

Articles of Foundation 

Where the charter of a foundation so provides, the Council may have Articles which may include provisions in respect of distribution of assets, identification of any initial or additional beneficiary of the foundation, identification of the remaining beneficiary on a winding-up of the foundation and the distribution of assets to the remaining beneficiary and provisions as to how the affairs of the Council should be regulated. Such Articles made by the Council shall be signed by each member of the Council. 

Property of the Foundation

Upon establishment, any property transferred to the foundation by the founder shall be considered the initial assets of the foundation and shall cease to be the property of the founder except in cases of fraud. The property shall become that of a beneficiary only after any distribution made in accordance with the provisions of the charter or Articles, if any, and the Act. The property of a foundation shall be managed and administered in accordance with the charter or Articles, if any, and the Act, for the purposes and objects described in the charter. 
Removal of the foundation from the Register 
The name of the foundation can be removed from the Register by the Registrar if:

• the Registrar reasonably believes that the foundation no longer serves the purpose and objects for which it was established;
• the foundation has failed to pay any fees due under the Act;
• where the foundation, Council member, former Council member, secretary or former secretary fail to comply with the provision of the Act. 

The beneficiary or the founder may request the Registrar to remove the foundation from the register by submitting a request in a format approved by the Registrar. This request must include a written confirmation from the Director-General of the Mauritius Revenue Authority and the Chief Executive of the FSC indicating that there are no objections to the removal of the foundation from the register. However, even after a foundation has been removed from the Register, it remains liable for all claims, debts, liabilities and obligations. The removal does not absolve a Council member or any officer from their obligations to the foundation.

After removal from the register, neither the foundation, its officers, its Council nor a protector or committee of protectors are permitted to engage in any business activities or handle the the foundation’s assets. They are prohibited from initiating or defending any legal proceedings, asserting any claim or claim any right on behalf of the foundation or otherwise intervening into the affairs of the foundation. 

Upon removal of the name, the foundation or a creditor or liquidator may continue to defend proceedings which were commenced against the foundation prior to the removal date. Additionally, they may proceed with any legal actions which were instituted on behalf of the foundation before the removal date. 

The foundation, a creditor or a liquidator are entitled to apply to the Court to have the name of the foundation restored to the Register. The Court will consider all relevant factors to decide whether it would be fair and reasonable for the name of the foundation to be restored to the register.

 

Termination of a foundation

A foundation can be either terminated by winding up order of the court or by voluntary winding up. 

A petition to wind up a foundation may be presented to the court by the foundation itself, a beneficiary, a creditor, a liquidator, the Registrar or the FSC under the following circumstances especially if the foundation is licensed by the FSC :

• the foundation has, by unanimous resolution of its Council, resolves to be wound up by the Court;
• the foundation is unable to pay its debts;
• the Council members have conducted the foundation’s affairs in their own interests rather than in the interests of the beneficiaries as a whole, or in any other manner which is unfair or unjust to any beneficiary;
• the court finds it just and equitable to do so; or
• the foundation is licenced by the FSC and has conducted its business in Mauritius in contravention of the FSA the Securities Act 2005(as amended) or the Insurance Act 2005 (as amended) of Mauritius.

Voluntary winding up will occur at the expiry of the period fixed for the duration of the foundation, on the occurrence of any event provided for in the charter of the foundation on a unanimous resolution of the Council to that effect or where the foundation in unable to pay its debts. 

 

Migration 

In addition to establishing new foundations in Mauritius, it is also possible to migrate existing foreign law foundations to Mauritius and thereafter continue as Mauritius foundations. 

 

This briefing is for informational purposes only and should not be construed as legal advice.