Mauritius: Variable Capital Companies; A game changer for the Mauritius IFC

by | Jul 19, 2022 | blog

In his budget speech for the period  2020 to 2021, the Minister of Finance in Mauritius announced that they would be creating new vehicles to enhance financial service sector competitiveness. One such vehicle is a project known as Variable Capital Companies or VCCs for short.

The introduction of VCCs is a significant development in the financial services landscape and will go a long way towards enhancing the competitiveness of the Mauritius IFC.

What are VCC’s?

The VCC Act is a landmark piece of legislation for those looking to create different types of funds within one legal entity.

They allow for the setting up of Sub Funds (SF’s) and Special Purpose Vehicles (SPVs), within the same legal entity, however instead of assets and liabilities being pooled together here they are separated under each sub entity.

There is no limit to the number of sub entities that can be created but each such entity needs to have prior approval from the FSC.


  • A VCC is a separate legal entity
  • It should be made clear in the name that this is a VCC
  • With a legal personality of their own, the SFs and SPVs are able to access capital markets and engage in transactions. The FSC also grants each fund an individual license which gives them more flexibility when it comes down to how they want to operate financially.

It is important to note that a SPV operates as a vehicle ancillary to the VCC but cannot operate as a fund. The SPV should be named accordingly  : “VCC Special Purpose Vehicle”

Why set up a VCC?

Diversity: Instead of functioning under one umbrella fund with sub funds the VCC gives business the opportunity to streamline by having Sub Funds acting as their own entities with their own objectives allowing for a wider range of investors. The Sub Funds allow for far more diversity in the investment portfolio that is then available by way of the VCC.


VCC’s are allowed to pay dividends out of their capital instead of retained earnings.


Assets and liabilities are segregated to each Sub Fund meaning that non-performing Sub Funds liabilities will not affect the assets of performing or solvent Sub Fund under the same VCC.


There is a fantastic protection feature which specifies that no VV can be wound up voluntarily unless there is an approved plan by the FSC and that approval will not be given unless the FSC is satisfied that the participants or affected parties interests have been sufficiently protected.


The tax for the VCC or sub-funds can be filed separately.


The VCC may share the same board of directors as the Sub Funds and the SPV which is excellent for cost saving. They may share the same functionary roles across all levels of the VCC which is far more efficient and cost effective.

How are the VCC and PCC different from each other?

A cell within the PCC is not a separate legal entity.

The business activities within a cell of the PCC has to be the same whereas in a VCC the business activities of a Sub Fund may differ from the VCC.

Assets within the PCC – although attributed to the various cells still fall under the PCC itself whereas the assets of each Sub Fund are the exclusive property of that Sub Fund and not the VCC at large.

A PCC may be wound up without the prior approval of the FSC but a VCC needs approval and needs to show that the best interest of all involved parties has been considered.

The addition of the VCC to the bouquet of business and investment opportunities in Mauritius really is exciting.

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