Crowdfunding

The Crowdfunding model is generally based on three types of parties – the issuer who proposes the idea or project to be funded, investors who support the idea by providing financial support, and the Crowdfunding operator who offers the platform where the project is hosted, bringing the parties together to launch the idea, allow investors to contribute financial support, and allow the issuer to access the funding. Through Crowdfunding, investors are able to provide funding to issuers through the purchase of an investment in the issuer’s business on the Crowdfunding platform.

Investments will be in the form of unlisted shares, debentures or other equity-like instruments or revenue sharing in a business.

Issuer

The entity seeking funding through the Crowdfunding platform.

Investor

The person providing funding to the issuer through the purchase of an investment in the issuer’s business on the Crowdfunding platform.

Crowdfunding operator

A Crowdfunding operator must be licensed by the FSC Mauritius to operate a Crowdfunding platform, in order to facilitate solicitation of funds (from issuers) and investments (from investors) for investment purposes.

Retail investors can invest a maximum of MUR 350,000 over a period of 12 months.

There is no limit of investment applicable for expert investors.

An issuer can raise up to MUR 15 million on a crowdfunding platform over a 3-year period.

• o Disclosure about issuers;
• o Crowdfunding risk disclosures;
• o Issuers’ default or failure rates; and
• o Information on the crowdfunding services.

The main risk disclosures inter-alia include the following:

o Investors may lose all or part of their money or may experience delays in being paid;

o Issuers on the platform may include new businesses and, as many new businesses fail, an investment with such an issuer may involve high risks;

o The investors may not be able to sell their investment, when they wish to, or at all; and

o The investors or issuers may lose their money, incur costs or experience delays in being paid if, for any reason, the Crowdfunding operator ceases to carry on its business.

The crowdfunding operator may be remunerated by way of fees and charges. Investors and issuers will need to sign agreements governing their respective rights and obligations.

A Crowdfunding operator shall ensure that investors who have committed to provide funding to an issuer may withdraw the commitment, without any penalty other than reasonable administrative costs and without giving any reason, within a period of not less than 48 hours following the end of the commitment period.

The Crowdfunding operators are subject to the requirements set out in the Financial Services Act 2007, Crowdfunding Rules and other legislations which may include the following:

• o A Crowdfunding operator will be required to establish an office to carry out its business activities within Mauritius.
• o The Crowdfunding operator is required to have a robust and resilient information technology infrastructure in place.
• o A Crowdfunding operator is required to have a minimum unimpaired stated capital of MUR 2 million or equivalent in another currency or such higher amount as the FSC Mauritius may determine.
• o The board of a Crowdfunding operator must consist of a minimum of 3 directors of which 30% must be independent directors and one resident in Mauritius. In addition, a Crowdfunding operator must employ fit and proper staff with adequate competence.

Application for a licence as Crowdfunding Operator must be submitted online, i.e. through the FSC One Platform. Details of the licensing criteria are published on the website of the FSC Mauritius.