Variable Capital Company (VCC)
Flexible share capital for investment funds and collective investment schemes.
The Variable Capital Company (VCC) is a specialised corporate structure in Mauritius designed specifically for investment funds and collective investment schemes. Unlike a standard company — where the share capital is fixed and changes require formal shareholder approval and regulatory filings — a VCC can issue and redeem shares continuously at the current net asset value (NAV) without requiring shareholder resolutions or amendments to the share capital. This operational flexibility makes the VCC the preferred vehicle for open-end investment funds in Mauritius, where investors regularly subscribe and redeem their interests.
The VCC is recognised by the Financial Services Commission (FSC) as an appropriate corporate vehicle for collective investment schemes, and must be licensed by the FSC under the Financial Services Act 2007. A VCC can be structured to hold multiple sub-funds under a single corporate umbrella, with each sub-fund operating its own investment strategy, maintaining its own NAV, and issuing its own share classes to distinct investor groups. The assets of each sub-fund are segregated from those of other sub-funds, providing structural protection for investors.
The VCC structure is particularly well-suited to global managers seeking to establish a Mauritius-based fund platform that can accommodate multiple strategies, asset classes, or investor programmes over time. As a GBC, the VCC can access Mauritius's network of over 45 Double Taxation Agreements and may benefit from the partial exemption system on qualifying foreign-source income, subject to meeting substance requirements and individual circumstances.
Key Features of a Variable Capital Company (VCC) in Mauritius
Variable Share Capital at NAV
A VCC can issue and redeem shares continuously at the current net asset value without requiring shareholder approval for capital changes, making it operationally efficient for open-end funds where investor subscriptions and redemptions occur regularly.
Purpose-Built for Investment Funds
The VCC's constitutional framework is specifically designed for fund operations, including provisions for NAV calculation, subscription and redemption processes, management fee structures, and investor reporting — features not available in standard company constitutions.
Multi-Sub-Fund Architecture
A VCC can be structured with multiple sub-funds under a single corporate entity, each with its own investment strategy, NAV, share classes, and investor register. This 'umbrella fund' structure allows managers to efficiently launch and manage multiple strategies on a single platform.
Sub-Fund Asset Segregation
The assets and liabilities of each sub-fund are legally segregated from those of other sub-funds, providing structural protection for investors in each sub-fund against the liabilities or losses of other sub-funds within the same VCC.
FSC-Licensed Fund Vehicle
A VCC operating as a collective investment scheme must be licensed by the FSC, providing regulatory credibility, investor confidence, and compliance with the Financial Services Act 2007 and applicable FSC rules for collective investment schemes.
DTA Access as a GBC
Structured as a GBC, the VCC is tax resident in Mauritius and can access the country's 45+ Double Taxation Agreements, potentially reducing withholding taxes on income received from portfolio investments in treaty partner jurisdictions, subject to substance requirements.
Partial Exemption on Fund Income
Qualifying foreign-source income of the VCC — including foreign dividends, interest, and gains on disposal of certain securities — may benefit from an 80% partial exemption under the Mauritius tax system, subject to meeting substance requirements and individual circumstances.
Flexible Share Classes
Each sub-fund within a VCC can issue multiple share classes with different fee structures, distribution policies, currency denominations, or investor eligibility criteria, enabling the fund manager to tailor terms for different investor groups within the same sub-fund.
Operational Scalability
New sub-funds can be added to the VCC over time without incorporating a new legal entity, enabling the fund manager to grow the platform efficiently. Sub-funds can also be liquidated independently without affecting other sub-funds or the VCC umbrella.
International Investor Familiarity
The VCC structure is conceptually similar to SICAV and VCC structures in other established fund jurisdictions including Singapore, Luxembourg, and Ireland, making it familiar to international institutional investors and facilitating cross-border fund marketing.
How to Set Up a VCC in Mauritius
Fund Design and Strategy Review
We advise on the VCC structure, including the umbrella framework, initial sub-fund strategy or strategies, share class structure, and investor eligibility. We review the investment strategy to determine applicable regulatory requirements and DTA considerations.
KYC and Due Diligence
We collect and verify KYC documentation for fund promoters, proposed directors, investment managers, and other key personnel. Enhanced due diligence is conducted in accordance with FSC requirements for fund licences.
VCC Incorporation
We incorporate the VCC under the Companies Act 2001 with a fund-specific constitution that includes provisions for variable share capital, sub-fund creation, NAV calculation, subscription and redemption procedures, and director authority.
FSC Fund Licence Application
We prepare and submit the FSC collective investment scheme licence application, including the business plan, offering documents, compliance manual, risk management framework, and service provider appointments. We manage all FSC correspondence.
Offering Document Preparation
We assist with the preparation or review of the prospectus, private placement memorandum (PPM), or other offering documents. These documents must comply with FSC disclosure requirements and accurately describe the fund's strategy, risks, fees, and redemption terms.
Service Provider Appointments
We coordinate the appointment of the custodian, fund administrator, auditor, investment manager, and any other required service providers. We ensure all agreements are in place before the fund is launched and investor subscriptions are accepted.
Sub-Fund Launch and Initial Subscriptions
We manage the formal launch process for each sub-fund, including the opening of dedicated bank and custody accounts, establishment of NAV calculation procedures, investor onboarding, and processing of initial subscriptions.
Ongoing Fund Administration and Compliance
We provide ongoing fund administration including NAV calculation, investor register maintenance, distribution processing, annual FSC filings, CRS/FATCA reporting, financial statements preparation, and regulatory compliance management for the VCC and each sub-fund.
Requirements for a VCC in Mauritius
- Detailed investment strategy and fund terms for each proposed sub-fund
- KYC documentation for promoters, proposed directors, investment managers, and key personnel
- Draft prospectus or private placement memorandum (PPM)
- Compliance manual and AML/CFT procedures
- Risk management framework
- Details of proposed service providers (custodian, administrator, auditor)
- Investment management agreement (draft or executed)
- Source of funds documentation for fund capitalisation
- Proposed share classes, fee structure, and investor eligibility criteria
- Evidence of substance arrangements for the GBC VCC (registered office, local staff or management)
Estimated Costs of a VCC in Mauritius
| Item | Estimated Range |
|---|---|
| VCC incorporation and FSC fund licence (year 1) | USD 8,000 – 15,000 |
| Annual fund administration and registered agent (per annum) | USD 5,000 – 12,000 |
| NAV calculation and investor register (per sub-fund, per annum) | USD 3,000 – 8,000 |
| Annual audit per sub-fund | USD 3,000 – 8,000 |
| Creation of additional sub-fund | USD 2,000 – 5,000 |
| Annual FSC compliance and regulatory filings | USD 2,000 – 4,000 |
Frequently Asked Questions About Variable Capital Company (VCC)
What is the main advantage of a VCC over a standard company for investment funds?
A VCC can issue and redeem shares continuously at NAV without requiring shareholder approval for capital changes, which is the essential operational requirement for open-end funds where investors regularly subscribe and redeem. A standard company requires formal shareholder resolutions and regulatory filings for every capital change, making it impractical for open-end fund operations.
Can a VCC have multiple sub-funds?
Yes. A VCC can operate as an umbrella fund with multiple sub-funds, each with its own investment strategy, NAV, share classes, and investor register. The assets of each sub-fund are segregated. New sub-funds can be added without incorporating a new legal entity, and individual sub-funds can be wound up independently.
Is FSC licensing required for a VCC?
Yes. A VCC operating as a collective investment scheme must be licensed by the Financial Services Commission under the Financial Services Act 2007. The licence type depends on the nature of the fund, the investor base, and the investment strategy. We guide clients through the appropriate licence category and application process.
Can a VCC be structured as a GBC?
Yes. A VCC structured as a GBC is tax resident in Mauritius, can access the country's 45+ DTAs, and may benefit from the partial exemption system on qualifying foreign-source income. This makes the GBC-VCC the preferred structure for international fund managers seeking to optimise tax efficiency on portfolio income, subject to meeting substance requirements.
What is the minimum fund size for a VCC in Mauritius?
There is no statutory minimum fund size for a VCC. However, the FSC may take into account the viability of the proposed fund when reviewing the licence application. In practice, fund economics — including administrator, custodian, and compliance costs — typically make smaller fund sizes challenging to operate cost-effectively.
Can a Mauritius VCC accept international investors?
Yes. A Mauritius VCC can accept investors from internationally, subject to the applicable investor eligibility criteria specified in the offering documents, FSC licence conditions, and applicable securities laws in the investors' home jurisdictions. We advise on distribution and marketing requirements in key investor markets.
How is a VCC different from a Protected Cell Company for fund purposes?
Both the VCC and the PCC can hold multiple sub-funds or cells with asset segregation. The VCC is specifically designed for open-end investment funds with variable share capital and continuous subscriptions and redemptions at NAV. The PCC has broader applications including insurance, multi-client operations, and closed-end fund structures. The optimal choice depends on the fund type and operational requirements.