Unclear when Mauritius will introduce planned crowdfunding regulations [Updated]

UPDATE (7 August 2019): Paul Perrier, the co-founder of Mauritian based crowdlending platform Fundkiss told Ventureburn in a call today that the new regulations had been sent to the state attorney’s office for final vetting before they could be published. The regulations are therefore likely to be published in the coming weeks, he said.

Mauritius’s Financial Service Commission (FSC) is looking to regulate peer-to-peer as well as equity crowdfunding platforms based in the island state, but it’s not clear when it will release new planned regulations.

Mauritius ‘s Minister of Finance Pravind Kumar Jugnauth announced in his budget speech (opens as a PDF) in June that the government aims to create crowdfunding as a new licensable activity.

Currently crowdfunding platforms are regulated by various other existing financial regulations.

It’s not clear when planned new regulations on crowdfunding announced in Mauritius’s budget in June, will be introduced

A senior FSC official — who asked not to be named as he said he wasn’t authorised to comment on behalf of the authority — told Ventureburn today that regulations around peer-to-peer lending were nearly completed and would be released in a framework shortly. He could not provide a date as to when the framework would be released.

He said while work on the framework predated the budget speech announcement that crowdfunding would be regulated, the FSC is now also looking at releasing a separate framework in the future, on equity crowdfunding.

“All the possibilities that can bring good and clean business to Mauritius will be looked at,” he added.

However Paul Perrier, the co-founder of Mauritian based crowdlending platform Fundkiss, told Ventureburn in a call that the new regulations had been sent to the state attorney’s office for final vetting before they could be published. The regulations are therefore likely to be published in the coming weeks, he said.

He said once the regulations are drafted there would likely be a transitional period, to give crowdfunding platforms time to comply with regulations.

Commenting last month in an email to Ventureburn, African Crowdfunding Association (ACfA) director and regulations lead Elizabeth Howard (pictured above) said she had last month met with the Mauritius FSC during the launch of the ACfA Label Framework, a regulatory framework for securities-based crowdfunding in Africa.

Howard, who is also the CEO and Co-founder of investment platform LelapaFund, said while the FSC was invited to speak on the regulatory panel at the event, as well as in a closed session to which eight African regulatory authorities were convened, the regulator pulled out at the last minute.

“Despite confirming their participation in both sessions, the FSC pulled out of the panel at the last minute and did not attend the closed session.

While the senior FSC official Ventureburn spoke to said he couldn’t comment on the matter, Howard pointed out that the move “likely means that the authority do not yet have a regulatory framework on crowdfunding in place.

She said from her understanding, the FSC’s current planned crowdfunding framework will affect only peer-to-peer or crowd lending platforms, not equity crowdfunding ones.

“This is probably because the only platform that urgently needs a licence to replace their current RSL (sandbox) licence is Fundkiss, which is a crowdlending platform,” she said.

Perrier’s company is one of 9 that have been granted a regulatory sandbox license in Mauritius, according to the Mauritius’s Economic Development Board (EDB).

Perrier told Ventureburn that Fundkiss in 2017 was the first to get such a license. He said Fundkiss’s license was renewed in November last year and that currently the company is in the process of renewing it again.

Said Howard: “As it happens in so many jurisdictions, it is the platforms themselves that drive the process of setting up sandboxes and writing regulations”.

She said when it comes to regulating equity crowdfunding, the FSC might opt to do what South Africa’s FSCA has decided to do and simply apply a FAIS-like licence to equity CF platforms.

“We do not know if the FSC intends to recognise ACfA as the self-regulatory organisation responsible for supervision of all crowdfunding platforms under the ACfA Label Framework, which is our key objective,” she said, adding that the framework is being funded by FSDAfrica and the DfID.

She said while the Mauritius Africa FinTech Hub aims to position Mauritius as a gateway to Africa for fintech companies, it remains to be seen whether the FSC will indeed support that vision.

The planned crowdfunding framework will complement the country’s regulatory sandbox regime which was introduced last year by the Economic Development Board of Mauritius.

The Mauritius Africa Fintech Hub did not respond to request for comment by time of publication.

Correction (14 August 2019): The Mauritius’s Economic Development Board (EDB) confirmed today that nine regulatory sandbox licenses have so far been granted by the EDB, which oversees the issues of such licenses. Initially we had quoted Fundkiss’s Paul Perrier as saying 13 have been issued. We have corrected this.

Featured image: African Crowdfunding Association director and regulations lead Elizabeth Howard (Twitter)