MAURITIUS: AMENDMENTS TO THE SECURITIES (PREFERENTIAL OFFER) RULES 2017
The Financial Services Commission (FSC) recently made certain amendments to the Securities (Preferential Offer) Rules 2017 (Rules) through the issue of the Securities (Preferential Offer) (Amendment) Rules 2021 (Amendment Rules) on 3 April 2021.
The Rules regulate preferential offers, which are defined as:
- an offer or issue of securities that is a private placement;
- an offer or issue of securities that is made only to sophisticated investors; or
- an offer or issue of securities only to related corporations of the issuer of securities.
The Rules also set out the specific requirements applicable to a preferential offer, which include approval by the shareholders of the issuer of securities; prescribed information to be included in the preferential offer document; notification to be made to the FSC; and the period of time for the allotment of the securities.
In light of the new developments in the market, the Rules have been subject to several amendments. Some of the key provisions of the Amendment Rules are as follows:
- The definition of issuer has been amended to consist of (i) any issuer that issues securities to 25 investors in Mauritius or more; or (ii) any reporting issuer. This implies that an issuer which will make a preferential offer exclusively to investors residing outside of Mauritius will fall outside of the scope of the Rules and no longer be required to comply with its provisions.
- In addition to the above, the Amendment Rules set out that, going forward, the Rules shall not apply to any issuer which is incorporated or established outside of Mauritius.
- Shareholders’ approval will not be needed for a preferential offer of debt securities, unless such approval is required under the constitutive documents of the issuer. Nonetheless, the requirement for shareholders’ approval has been maintained for a preferential offer of equity securities.
- The Rules formerly provided that an issuer of debt securities which is targeting 25 investors or more, must either seek a listing on a securities exchange or be rated by a credit rating agency licensed under the Financial Services Act 2007. The Amendment Rules now provide that the issuer of debt securities may henceforth be rated by an authority which is identified in Appendix A of the International Organisation of Securities Organisation Multilateral Memorandum of Understanding (IOSCO MMoU) as a signatory to the IOSCO MMoU, thus offering a wider choice of credit rating agencies and international recognition to issuers.
- The content that needs to be included in a preferential offer document has been reduced. Effective from the date of the Amendment Rules, there is no prescribed requirement to include the following information in the document:
- Unaudited financial statements of the previous quarter and the projected financial statements for the following three year period, where the first set of audited financial statements of the issuer are not required to be prepared under the Companies Act as at the date of the offer;
- The group financial statements where the issuer forms part of a group/holding structure;
- Summarised financial statements and dividends declared and paid for each of the three previous years prior to the date of the preferential offer document, together with the auditors’ report; and
- Interest of directors and persons who hold 15% or more of the share capital of the issuer on the date of the preferential offer document.
These amendments aim at promoting Mauritius as a capital market destination by simplifying preferential offers to be made in or from Mauritius, and facilitating capital raising, particularly in the current times of general uncertainty and economic disruptions caused by COVID-19 and aligning the regulatory framework with international best practices.