Variable Capital Companies

By Shianee Calcutteea, Partner; Sahirun Subadar, Associate and Vartika Sahai, Legal Executive at Bowmans Mauritius

The concept of variable capital company (VDC) was first presented by the Minister of Finance in his budget speech for the period 2020 to 2021. The Minister discussed the need to improve the competitiveness of the financial services sector by introducing new vehicles such as the VCC.

The Open-Ended Companies Act (Law) was passed by the National Assembly on April 12, 2022 and received Presidential Assent on April 14, 2022. The Act will come into force on a date to be fixed by proclamation.

What are VCCs?

VCCs are a new type of vehicle that will complement the type of fund structuring available in Mauritius. A VCC allows the creation of subfunds (SF) and special purpose vehicles (SPV), within the same entity, facilitating the segregation and separation of the assets and liabilities of each of the sub-entities.

In addition, the Financial Services Commission (FSC) may approve the operation of a sub-fund in the form of a collective investment scheme or a closed-end fund. Thus, under the same entity, that of the VCC, fund managers can manage a UCITS compartment and a closed compartment. There are no restrictions on the number of sub-entities that can be created under the VCC structure, but the creation of any sub-entity requires prior approval from the FSC.

A VCC, although governed by the Act, must be incorporated in accordance with the provisions of the Companies Act of Mauritius and is also bound to comply with them, except for the provisions of the Companies Act expressly excluded under of the law.

The law further requires that the Mauritian Financial Intelligence and Anti-Money Laundering Act be amended to include VCCs within the definition of “financial institutions” and as such VCCs must be fully compliant with the laws. AML/CFT of the country.

Regulation of CCTVs

  • Sub-entities – there is no limit to the number of sub-entities that can be created by a VCC under the Act. However, the creation of any sub-entity must be approved beforehand by the FSC. An SPV established by a VCC is not permitted to operate as a fund, but rather is required to operate as an ancillary vehicle of the VCC or a sub-fund of the VCC.
  • Dividends – there are solvency test requirements to be met under the Companies Act 2001 which do not apply to VCCs. VCC’s board of directors determines its solvency prior to distribution of dividends and VCC may pay dividends out of its capital
  • Disclosure – A VCC is required to inform anyone with whom they do business that they are a VCC, along with other disclosure requirements set out in the Act.
  • Reduction of share capital – A VCC requires permission from the Registrar of Companies of Mauritius to be able to reduce its share capital or that of any of its sub-entities.
  • Legal Proceedings – Any order or judgment regarding a Sub-Entity will be limited to that Sub-Entity only and will not apply to any other VCC Sub-Entity and/or the VCC itself.
  • Record Keeping – A VCC is required to maintain additional records in respect of each of its sub-entities in accordance with the Act. The records should sufficiently explain the transactions and financial position of the VCC and its sub-entities.
  • Separation of Assets – The creation of a VCC provides the benefit of segregation of the assets and liabilities of each of its sub-entities, and the law provides that the assets of a particular sub-entity cannot be used for discharge the liabilities of another sub-entity. Further, each asset attributable to a sub-entity may only be made available to creditors of VCC who are creditors to that sub-entity, and as such will be protected from other creditors of VCC. , that a creditor is a statutory, regulatory or governmental body.

Uses of a VCC

While conventional business structures in Mauritius have proven effective, VCCs offer greater flexibility and efficiency by streamlining management and operations through a single entity.

They have been a huge success in Singapore, with around 160 VCCs created in the first year of the VCC framework’s introduction in Singapore. CCVs are typically used for both open and closed-end fund structures.

VCCs established in Mauritius offer great flexibility for various types of investments and can be particularly useful for the creation of private equity businesses, open or closed-ended investment funds and special funds, such as hedge funds and venture capital funds.

VCCs can also be used for multi-family offices, which are currently being incorporated as protected cell companies (CCP), as they offer greater flexibility in that compartments can have separate legal personality, and the type of services provided by a VCC are not limited by law.


The biggest distinction between already existing PCCs and new VCCs is that while a PCC is a similar structure to a VCC in that it aims to separate the assets and liabilities of its “cells” from each To create greater flexibility in terms of how each cell operates, the compartments of a VCC can have a separate and distinct legal identity from that of the VCC.

Benefits of a VCC

While conventional business structures allow a single fund or an umbrella fund made up of multiple sub-funds to operate, a VCC offers a range of additional features, including efficient management costs; streamlining management and operations into a single entity made up of separate units; the possibility of incorporating a collective investment undertaking and a closed-end fund within the same structure; and flexibility in dividend distribution, taxation, capital variation and management.

If the constitution of a VCC allows it, the VCC can appoint different administrators for each sub-entity, providing a flexible management structure. Furthermore, there are no restrictions on the types of activities that can be carried out by a VCC, unlike, for example, a PCC, which can only carry out activities provided for by the Protected Cell Companies Act 2000 of Mauritius. .


Mauritius is one of two jurisdictions to legislate on this vehicle, with Singapore being the only other jurisdiction to do so. With the introduction of the Act, Mauritius is increasing its competitiveness vis-à-vis other jurisdictions and consolidating its reputation as a strong and sound international financial centre.

Regulations regarding fees to be paid under the law and explanatory guidelines regarding the nuances of operation and application of the law have yet to be issued by the FSC, but we are confident that the VCC structure will prove to be an initiative revolutionary. regarding the position of Mauritius in the global financial industry.

About Charles D. Goolsby

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