The Securities (Preferential Offer) Rules 2017 (“Rules”) have been amended by the Financial Services Commission (“FSC”) on 3 April 2021. The Rules now provide for an amended definition of an ‘issuer’ which now only covers (i) an issuer which issues securities to 25 investors in Mauritius or above or (ii) any reporting issuer. Despite the slightly odd phrasing, the intention of the FSC is clear: going forward, the Rules will no longer apply to issuers which exclusively make preferential offers to investors outside Mauritius.

Further to the above, a new Rule 3 makes this new approach of the FSC even clearer and exempts a further category of issuers from the Rules by stating that “unless otherwise provided in these Rules, these Rules shall not apply to, nor shall they be applicable as a result of, an offer of securities by an issuer incorporated or established outside Mauritius or an issuer who exclusively offers its securities to persons resident outside Mauritius.” As a result, the Rules, in addition to being inapplicable to issuers which exclusively make preferential offers to investors outside Mauritius, will also not apply to issuers incorporated or established outside Mauritius.

The FSC has also wisely decided to remove the burdensome rule which required issuers of debt securities using the preferential offer route to mandatorily seek the approval of their shareholders. The Rules now provide that such issuers should only obtain such approvals as may be required by their constitutional documents. The requirement for shareholders’ approval has however been retained for preference offer of equity securities.

Another much decried provision of the Rules which has been amended by the FSC is the requirement which imposed on issuers of debt securities who target 25 investors or more to seek a listing on a securities exchange or be rated by a credit rating agency licensed under the Financial Services Act. This rule was widely criticized as being restrictive and imposed an unfair requirement on issuers to mandatorily seek a rating in Mauritius (which only has 1 licensed credit rating agency) when their investor base was more used to using ratings from international agencies.

The requirement for the rating agency to be licensed ‘under the Financial Services Act’ has therefore been changed to ‘by an authority which is identified in Appendix A of the International Organisation of Securities Organisation Multilateral Memorandum of Understanding (IOSCO MMoU) as a signatory to the IOSCO MMoU’ thus giving an issuer a choice from a much broader selection of international credit rating agencies.

These changes will be welcomed by the industry since they had been requested for quite some time. It is hoped that this amendment is a first of a series of changes which are required to modernise and update securities law in Mauritius.