The Financial Services Commission (the “FSC”) has launched the Regulatory Framework on Crowdfunding on 25th of November 2021. The event was held at the FSC House in the presence of the Honourable Mahen Kumar Seeruttun, Minister of Financial Services and Good Governance, Mr Mardayah Kona Yerukunondu, Chairperson of the FSC and First Deputy Governor of the Bank of Mauritius, Board Members of the FSC and Mr Dhanesswurnath Thakoor, Chief Executive of the FSC.
Mauritius is determined to regulate the process of crowdfunding. As Mauritian companies increasingly seek alternative financial solutions to obtain access to capital, the Government has decided to provide a conducive environment for Fintech entrepreneurs to provide their services to local businesses.
The Minister of Financial Services and Good Governance, Honourable Mahen Kumar Seeruttun is persuaded that the Government’s strategy on financial services will undoubtedly transform the financial landscape of the country. The regulatory framework is part of a series of other initiatives that aim at providing business operators with the regulatory framework that enables them to provide their services inland.
The Honourable Minister dwelt on several initiatives implemented to that end by his Ministry; namely the setting up of the Financial Services Consultative Council that has become an invaluable platform to facilitate public-private initiatives and dialogue.
According to the World Bank, crowdfunding in developing countries alone will reach nearly $100 billion by 2025. Mauritius, through its worldwide financial services network, seeks to enable business operators to raise funds from various parts of the world to fuel and finance both private and public initiatives inland.
The Chairperson of the Financial Services Commission, Mr. M. K. Yerukunondu pointed out that the FSC has introduced the regulatory framework for investment-based crowdfunding with the objective of diversifying what Mauritius has to offer as an International Financial Centre. He urged stakeholders to make the maximum use of this new framework which presents numerous opportunities for new start-ups. ”. Furthermore, he stated that, as a “forward- looking and responsible” regulator, the FSC will ensure that businesses will comply with all necessary rules and regulations which will “spur growth in the Fintech sector, thus transforming it into a new pillar of the Mauritian economy. It is of paramount importance.
Mr Dhanesswurnath Thakoor, the Chief Executive of the FSC, underlined that the Regulatory Framework on Crowdfunding is aligned with “the FSC’s Fintech strategy to foster an increased access and adoption of digital financial services in Mauritius”. He stated that “the FSC has taken all reasonable care to establish a robust regulatory framework to ensure that the interests of stakeholders of crowdfunding platforms are adequately protected”. He mentioned the ongoing plans for the Commission to tap into “SupTech/RegTech opportunities with a view to developing and consolidating our image as a leading, innovative and data-centred regulator within the region”.
Crowdfunding platforms already exist in Mauritius. Crowdfund.mu is one of these platforms that dedicates its crowdfunding activities to social fundraising to finance sustainable development initiatives such as Trash to Music, a project that aims at inspiring people to re-use discarded materials into music instruments.
Another crowdfunding platform is Olive Crowd, dedicated to equity crowdfunding. It was the first equity crowdfunding to receive a license in Mauritius and has recently launched a royalty crowdfunding scheme. Under this scheme, the investor receives a percentage of the turnover of the company on a quarterly basis over a period of five years. In total, the investor receives 1.5 to 2 times more than he/she invested in the company in return for fast disbursement.
With the enactment of the Crowdfunding Rules complementing the Peer-to-Peer Lending Rules, Mauritius is positioned to be a reputable Fintech hub. Furthermore, with the Regulatory Framework on Crowdfunding, investors will contribute to the growth of Small and Medium Enterprises operating in or from Mauritius and participate in crowdfunding activities that are being conducted in a regulated landscape.
Here is the full speech of Mr Mardayah Kona Yerukunondu, chairman of the Financial Services Commission.
