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In terms of the Companies Act 2001, it is possible to incorporate a company and limit shareholder and/or member liability by shares and by guarantee. This type of Company is often referred to as a hybrid company and operates like a quasi-trust.

This is an effective means to protect assets during estate planning as members can make use of hybridised company structures to ensure that the benefits of privately held business assets are transferred to dependents.

Dale International performs a comprehensive range of trustee and quasi-trustee services (in the form of Companies limited by share or guarantee). Our consultative approach produces customised structures with individualised wealth management solutions to effectively mitigate risks, and protect your interests.

More information about Companies limited by share or guarantee

Limited Liability, Maximum Benefits

The underlying principle of a hybrid company is to limit the liability of certain members.

In the case of shareholders, their liability is limited to the unpaid amount on shares held while in the case of members who have given a guarantee, their liability is limited to the respective amount they have undertaken to contribute from time to time, or upon dissolution.

When this type of company is used like a quasi-trust, the company is structured with voting shares, which have no rights to dividends and no participation in the capital or income of the company in any way. Conversely, members with no voting rights may participate fully in the income and capital of the company. Thus control of the company legally rests with the shareholders, but all benefits flow to the members.

Benefits of Companies Limited by share and by guarantee

A member’s interest may be extinguished on death to eliminate succession problems, remove any probate requirements and therefore eliminate any inheritance tax/estate duty implications.

In addition, depending on how the Constitution of the company is drafted, the member may transfer his rights and duties to the Company, in part or in whole, to third parties. This enables the deceased members family to continue to benefit from the income and capital of the company.

In a typical scenario, shares are issued to DITCL or its nominee, having legal ownership of the Company and its assets but unable to receive financial benefit from holding the shares. All of the financial benefits flow to the members, placing them in a position similar to beneficiaries of a typical trust. In this way, Dale International acts like a quasi-trustee.

A private trust is a registered company connected to a group or family who holds interests in a business or property and that wants to retain direct control over these assets.

It’s a family affair

A private trust company offers an ideal means to hold family owned assets, where the owners are not ready to relinquish control of that asset to an independent third party.

Dale International Trust Company Limited is licensed by the Mauritius Financial Services Commission (FSC) to establish and manage Private Trust Companies under the laws of Mauritius.

More about Private Trust Companies

While a traditional trust company vests control of the assets with independent Trustees, a private trust company elects a board of directors, which includes members of the family or trusted advisors to run the business.

The underlying premise is that the owners (i.e. the family members themselves) have the most intellectual capital regarding the business operations and are therefore better qualified to take responsible and well informed decisions relating to business functions than an independent Trustee.

Benefits of a Private Trust

A private trust company is restricted to undertaking only business related to the private trust itself and cannot solicit trust business from, or provide trust business services to the public.

In addition a private trust company must maintain a minimum paid up capital of USD 5000 and can be set up as a GBL 1 (tax resident company) or as a GBL 2 (tax exempt company) in terms of Mauritian tax law.

Although Protected Cell Companies (PCC’s) can be formed in other prominent jurisdictions, like Nevada, the Isle of Man, Guernsey, and the Bahamas, Mauritian Protected Cell Companies have the following unique benefits;

A single corporate entity, multiple benefits:
  • In the event of a corporate reorganisation, each parcel of assets represented by a cell is treated separately
  • Better returns can be realised through the Mauritius tax treaty network. E.g. Capital gains tax may be avoided completely in the country where the investment is made
  • Mauritius legislation provides a more flexible platform for the establishment of Protected Cell Companies (PCC’s) compared to other jurisdictions
  • Dale International is well-versed in the Protected Cell Company Act and offers advisory and management services for both local and international organisations investigating the viability of Protected Cell Companies for your operation

A PCC can be incorporated to perform the following activities (i) asset holding (ii) structured finance services (iii) Collective Investment Scheme (iv) captive insurance business (v) operating as an external pension scheme.

More About Protected Cell Companies

The Protected Cell Companies Act 1999 (“the PCC Act”) came into effect in Mauritius on 1 January 2000 and provides for the formation of a single legal entity, which operates in two distinct parts namely, the Core and the Cells. While there is only one Core, there may be an infinite number of Cells, each regarded as a separate “entity” within the corporation as a whole.

Cellular shares are issued, as required, under different names or numbers so as to identify, and to represent, the particular Cells to which they are attributed. Each cell can be listed on the Mauritius Stock Exchange. As the Mauritius Regulator does not require the PCC to identify the names of the cellular shareholders, anonymity is possible. The connection between named cellular shares/identifying numbered cellular shares, and the Cells to which each is attributable, is enshrined in the constitution of the PCC and is mandated by the PCC Act.

Once a Cell has been created, all assets (including profits and reserves) and all matters and acts relating to that Cell must be identified by the Cell name (or number, if applicable). For example, separate accounting must be conducted, and each Cell’s assets must be identifiable from the assets of other Cells, and the assets of the PCC itself (the Core assets). Similarly, under the PCC Act creditors of one Cell have no recourse to the assets of any other Cell although creditors of a Cell may, in certain limited circumstances, have recourse to assets held within the Core.

Other features of the Protected Cell Company CC are as follows:

  • Single legal entity
  • Legal segregation and protection of assets and liabilities for each cell
  • No minimum capital requirement is imposed for the Protected Cell Company (although this may be required by the Financial Services Commission)
  • Creation of cellular and non-cellular assets
  • Unlimited number of shares in cells may be provided for, and each cell may have its own name or designation
  • A formal procedure is provided for the liquidation, receivership or administration order of any individual cell
  • An important feature of the Protected Cell Company Act is the provision on protection of creditors