Setting Up a Mauritius VCC Sub-Fund at Low Cost: A Comprehensive Guide
Introduction:
The Mauritius Variable Capital Company (VCC) has emerged as an attractive jurisdiction for setting up investment funds due to its favorable regulatory framework, tax benefits, and cost-effective structure. In this article, we will delve into the process of establishing a Mauritius VCC sub-fund at a low cost, highlighting its benefits and the potential savings it offers.
1. Understanding the Mauritius VCC Sub-Fund:
The Mauritius VCC is an open-ended investment vehicle that allows for the creation of sub-funds, each with its own distinct investment strategy and portfolio. This structure provides investors with the flexibility to invest in specific sub-funds based on their risk appetite and investment objectives.
2. Low-Cost Setup Process:
Setting up a Mauritius VCC sub-fund can be achieved at a relatively low cost. The approximate cost breakdown includes:
a. Legal Fees: The cost of drafting the necessary legal documents for establishing the fund is estimated to be around $30,000 USD. It is crucial to engage experienced legal professionals to ensure compliance with regulatory requirements and the drafting of robust fund documentation.
3. Annual Administration Fees:
a. Administration fees for a Mauritius VCC sub-fund, including monthly Net Asset Value (NAV) calculations and audit fees, are estimated to be around $50,000 USD. These fees cover essential administrative tasks such as maintaining records, preparing financial statements, and ensuring compliance with regulatory reporting obligations.
4. Management Fees:
a. As per the regulatory requirement, a local fund manager should be appointed for the Mauritius VCC sub-fund. A reputable fund management company, can be engaged as the fund manager. The management fees charged by fundmanager company are either 0.30% per annum on Assets Under Management (AUM) or a minimum of $20,000 USD. This cost-effective option ensures professional fund management while minimizing expenses.
Benefits of a Mauritius VCC Sub-Fund:
1. Tax Benefits:
a. Mauritius offers a favorable tax regime for investment funds, including VCC sub-funds. Dividends, capital gains, and interest income derived from investments made by the fund are typically exempt from tax in Mauritius. This tax efficiency enhances the fund's returns and benefits investors.
2. Investor Flexibility:
a. The VCC sub-fund structure allows investors to choose specific sub-funds based on their investment preferences, risk tolerance, and objectives. This flexibility enables investors to diversify their portfolios and tailor their investments according to their individual needs.
3. Regulatory Compliance:
a. The Mauritius Financial Services Commission (FSC) regulates VCCs, ensuring investor protection and maintaining the integrity of the jurisdiction. The robust regulatory framework enhances investor confidence and ensures compliance with international standards.
4. Cost-Effective Structure:
a. The Mauritius VCC sub-fund offers a cost-effective structure for fund establishment and administration. The low setup costs, combined with competitive management fees, make it an attractive option for fund managers seeking to optimize their operational expenses.
Conclusion:
Setting up a Mauritius VCC sub-fund at a low cost provides numerous benefits for fund managers and investors alike. The tax advantages, investor flexibility, regulatory compliance, and cost-effective structure make it an appealing jurisdiction for investment funds. By carefully navigating the setup process and engaging reputable service providers, fund managers can establish a successful VCC sub-fund that meets their investment objectives while minimizing expenses.
Setting up quick numbers:
Mauritius VCC sub-fund
Open-ended fund with monthly NAV calculations
Setting up a fund: ~30,000 USD including legal fees for drafting the documents
Annual fees for administration: ~50,000 USD including monthly NAV and audit fees
Management fees – as the fund should have a local fund manager, we appoint Amicorp as a FM: 0.30% p.a. on AUM or min 15,000 USD
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