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Mauritius: A Guide to Security Interests and Guarantees

Port Louis, Mauritius - In a move to attract foreign investment and strengthen its financial sector, the government of Mauritius has introduced new regulations governing security interests and guarantees. The changes aim to provide clarity and predictability for lenders and borrowers alike.

Security Interests

According to Article 5.2 of the Mauritian Civil Code, a floating charge is allowed over all present and future assets of a company as security. This type of security interest is particularly useful in situations where the borrower’s asset base is expected to fluctuate or grow over time.

• Other forms of security interests permitted under Mauritian law include:
  • Mortgages
  • Pledges
  • Assignments
  • Fixed and/or floating charges
• These securities can be granted by companies, individuals, or partnerships, subject to certain conditions and restrictions.

Guarantees

Downstream, upstream, and cross-stream guarantees are generally permitted under Mauritian law, provided they do not amount to financial assistance. However, there are specific restrictions in place regarding the provision of loans or guarantees for the acquisition of a company’s own shares.

Release of Security Interests

A security interest is typically released when the secured obligation has been paid in full and all facilities that gave rise to the secured obligation have been terminated. However, in cases involving mortgages and fixed and/or floating charges, an additional procedure is required to erase the security from public registers.

• The erasure of a mortgage or fixed and/or floating charge is formalized by a letter from the secured party to the Conservator of Mortgages confirming:
  • The discharge of the secured obligation
  • The release of the security
  • Requesting the erasure of the security from the registers
• In cases involving pledges and assignments, the secured party must return all documents delivered at the time of perfection of the security.

Priority of Competing Security Interests

In the event of insolvency, the Mauritian Insolvency Act 2009 provides a ranking of claims for preferential creditors. The ranking is as follows:

1. Cost of the liquidator
2. Costs of compromises by the company with its creditors under the Companies Act
3. Payments made pari passu with first-ranking fixed and floating charges and mortgages inscribed for more than three years
4. First-ranking fixed and floating charges and mortgages inscribed for less than three years
5. Other secured creditors
6. All other unsecured creditors who have been proved in bankruptcy or winding-up

Timing and Costs

The timing and costs involved in registering security interests vary depending on the type of entity involved.

• Registration must be affected within:
  • Eight days for companies holding a global business licence, except for pledges of business undertakings, which must be registered within 15 days from the date of the security document.
• The registration process takes around three business days to complete and incurs a fee of around MUR50,700 (approximately USD1,200) per document.
• Inscription of charges also incurs an additional fee of around MUR1000 (approximately USD23).

Conclusion

Mauritius has established itself as a premier financial hub in the Indian Ocean region, with its new regulations governing security interests and guarantees providing a boost to foreign investment and economic growth. The country’s favorable business environment, skilled workforce, and modern infrastructure make it an attractive destination for investors seeking to establish a presence in Africa or Asia.

For more information on security interests and guarantees in Mauritius, please contact [insert name of law firm or financial institution].