The Mauritius foundation is an increasingly compelling structuring vehicle for high-net-worth individuals and businesses seeking to channel their philanthropic and charitable endeavours, explains Kenny Curpen, Unit Head - Corporate and Private Client Services and Leevyn Isabel, Associate Director.
Mauritius continues to attract the attention of a growing regional high-net-worth market segment thanks to its innovative private wealth offerings, robust regulatory landscape and compelling domestic and international tax regime.
Introduced with The Foundations Act 2012 (the "Law"), the Mauritius foundation provides a versatile, robust, and personalised solution to what is often a complex problem, protecting wealth and ensuring it is working for the greater good. Below we consider its main features and benefits as a structure for charitable purposes.
Features and benefits of a Mauritius foundation
- A hybrid vehicle: The Mauritius foundation is a hybrid between a company and a trust. As an independent legal entity, like a company, it holds the assets bestowed by the founder in its own name, separate from the founder's personal wealth. These assets are managed by the foundation's council (similar to a company's board of directors) in accordance with its charter (the founding documents), either in support of a cause or to benefit the foundation's beneficiaries.
- Strong governance framework: A Mauritius foundation is a legal entity and is issued with a Certificate of Registration by the Registrar of Companies. It is therefore administered as a company, with its Board of Council providing an effective framework for governance and the decision-making process. The foundation's annual financial statements can also be audited to ensure accountability and transparency.
- A tax efficient method to achieve philanthropic goals: An attractive feature of the Mauritius foundation is that it is automatically exempt from tax if the founder and all beneficiaries are non-residents in Mauritius, or the foundation's objective is being carried out overseas. To qualify as charitable, a Mauritius foundation must have one of the following as its exclusive purpose: the relief of poverty; the advancement of education, religion or fundamental human rights; environmental protection; or any other purpose beneficial to the general public. With this tax benefit, the value of the foundation shall continue to grow, even as it releases money in the form of donations. And as foundations are designed to exist in perpetuity, the impact of this charitable work can continue well beyond the founder's own lifetime.
- Flexibility: Robust enough to withstand external challenges, the foundation is also extremely versatile. It has the capacity to undertake any business or activity, including entering into transactions and holding assets, in Mauritius or beyond. This is an important feature which distinguishes the Mauritius Foundations Law amongst others, as it permits founders to merge charitable and non-charitable objectives within the same foundation.
- Succession and estate planning: Mauritius foundations are the perfect way for high-net-worth individuals (HNWIs) and businesses to create lasting philanthropic legacies. Crucially, the foundation offers the founder continued agency and participation which enables them to remain closely involved with their charitable interests. With trusts, settlors are legally obliged to hand over control of their assets.
- Control: The level of control offered by foundations can be particularly attractive to HNWIs from civil law regions such as the Middle East, Africa and Asia, who are often uncomfortable with the common law concept of a trust. In fact, for anyone seeking to maintain control over their assets while keeping running costs to a minimum, the Mauritius foundation is a compelling choice.
- Appeal to donors: As there is no restriction on the number of members that can be appointed to a foundation council, founders may consider nominating representatives of significant donors to the board, thus giving them a say in how their donations are utilised.
- Privacy: The foundation offers strong privacy protections, particularly when it comes to wealth planning, with the founder and beneficiaries not appearing in any public records.
Structuring with the right partner
With 1,250 professionals operating across 16 international financial centres, our specialism in private and corporate wealth structuring enables us to optimise your foundation's operations with confidence. Mauritius is no exception.
We have a team of over 300 in our Mauritius office who work closely with our clients' advisers to tailor structures that most effectively manage, preserve and distribute wealth. We're licensed to offer a full range of services for the establishment and administration of foundations, facilitating tax management and reporting, asset protection and succession planning.
We can help by:
- Establishing the structure
- Providing a business address and council members
- Maintaining statutory records
- Executing obligations
- Performing accounting and financial reporting
- Providing cash management and compliance services.
- Structuring the corporate governance framework specifically for charitable purposes
- Designing a criteria checklist to select the proposals which will meet the objectives of a charitable foundation
- Reporting needs of donors
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.