Securities (Licensing) Rules 2007

The text below is an internet version of the Rules made by the FSC under
section 155 of the Securities Act 2005 and is for information purposes
only. Whilst reasonable care has been taken to ensure its accuracy, the authoritative version is the one published in the Government Gazette of Mauritius (GN No. 216 of 2007) as subsequently amended. SECURITIES (LICENSING) RULES 2007 (Consolidated version with amendments as at 8 th September 2020) SECURITIES ACT [GN 216 of 2007 – 28 September 2007] [Section 155] Arrangement of Rules
PART I – GENERAL PROVISIONS

1. Citation
   These rules may be cited as the Securities (Licensing) Rules 2007.
2. Interpretation
   In these rules –
   “licensee” means a person licensed or required to be licensed under the Act as – (a) a securities exchange; (b) a clearing and settlement facility; (c) a trading securities system; (d) an investment dealer; (e) an investment adviser; and (f) a representative of an investment dealer or adviser where specifically mentioned; “market-maker” means a person who is admitted by a securities exchange licensed by the Commission as a market-maker in respect of futures contracts specified by the licensed exchange for the purpose of – (a) entering into transactions for the purchase or sale of futures contracts for his own account; and (b) regularly publishing bona fide competitive bid and offer quotations in respect of futures contracts; [Inserted by GN No. 246 of 2019] “officer responsible” means the officer responsible for the securities activities of the licensee and, in the case of a licensee

not constituted as a company, a person having the same responsibility. [Amended GN 172 of 2012]
PART II – LICENSING OF SECURITIES EXCHANGES,
CLEARING AND SETTLEMENT FACILITIES AND TRADING SECURITIES SYSTEMS
3. Application for licence
(1) An applicant for a licence as a securities exchange, clearing and settlement facility or trading securities system shall be constituted as a public company under the Companies Act. (2) An application under this Part shall be made as set out in the FSC rules and shall include – (a) the constitution of the company; (b) the proposed operating rules and procedures which satisfy the requirements under sections 12, 13 and 14 of the Act, as applicable; (c) the duly audited financial statements for the 3 years preceding the application or, in the case of a new company, a financial forecast for 3 years; (d) the personal questionnaire form set out in the FSC rules for every officer, proposed director, shareholder and beneficial owner of the applicant; (e) the fees specified in the FSC rules; and (f) any other information or documents as may be requested by the Commission.
PART III – LICENSING OF INVESTMENT DEALERS,
INVESTMENT ADVISERS AND THEIR
REPRESENTATIVES
4. Categories of investment dealer licence
(1) Every person who, by way of business, intends to carry out any of the activities of investment dealer under section 29 of the Act shall apply for a licence as an investment dealer in one of the following categories – (a) full service dealer – authorised to – (i) act as an intermediary in the execution of securities transactions for clients; (ii) trade in securities as principal with the intention of reselling these securities to the public; (iii) underwrite or distribute securities on behalf of an issuer or a holder of securities; (iv) give investment advice which is ancillary to the normal course of his business activities; and (v) manage portfolios of clients;

(b) broker – authorised to execute orders for clients, manage portfolios of clients and give advice on securities transactions to clients; (c) discount broker – authorised to execute orders for clients without giving advice; (d) Investment Dealer (Derivatives) – authorized to – (i) act as an intermediary in the execution of orders for clients in derivatives contracts only; and (ii) act as market maker. (e) - (f) Investment Dealer (Government of Mauritius Securities and Bank of Mauritius Securities Segment); (g) - [Amended by GN No. 246 of 2019] (2) The Commission shall not grant a licence under paragraph (1) unless it is satisfied that the applicant meets all the requirements of these rules, and in particular, the minimum stated unimpaired capital requirement. (3) A financial institution shall not apply for an investment dealer licence for categories (a), (b), (c) and (d) specified in paragraph (1) unless it has constituted a subsidiary which may meet all the requirements of these rules. [Amended by GN No. 246 of 2019] (3A) - [Repealed by GN No. 246 of 2019] (4) An applicant for an investment dealer licence for category (f) specified in paragraph (1) shall satisfy the criteria laid down by the Bank of Mauritius in relation to primary dealers. [Amended by GN 133 of 2009; GN 219 of 2011; GN 172 of 2012]
5. Categories of investment adviser licence
(1) Subject to paragraph (2), every person who, by way of business, intends to carry out any of the activities of an investment adviser under section 30 of the Act, shall apply for a licence in one of the following categories – (a) unrestricted – authorised to manage, under a mandate, portfolios of securities and give advice on securities transactions other than corporate finance advisory, through printed materials or any other means; (b) restricted – authorised to give advice on securities transactions other than corporate finance advisory, through printed materials or any other means. (c) corporate finance advisory – authorised to provide corporate finance advisory services with respect to securities transactions through printed materials or any other means.

(2) No application shall be made by a person for an Investment Adviser (Corporate Finance Advisory) licence unless it is a corporation. [Amended by GN 193 of 2016]
6. Activities authorised
(1) A licensed investment dealer or investment adviser may solicit any person to enter into securities transactions. (2) The licence shall indicate the activities that the investment dealer or investment adviser is authorised to exercise. (3) Where the Commission is of the opinion that an investment dealer does not have the necessary material or financial resources to carry out some of its activities, the Commission may limit the number of activities the investment dealer may exercise. (4) A licensed investment dealer or investment adviser shall obtain prior approval of the Commission for any modification of its licence.
7. Representative of investment dealer
(1) No individual shall carry out any of the securities activities of an investment dealer unless he is licensed as a representative of the investment dealer under one of the types specified in the First Schedule, as applicable. (2) The Commission shall not grant a licence under paragraph (1) unless it is satisfied that the applicant holds such qualifications as specified in the First Schedule, or an equivalent qualification as it may approve, and meets all the requirements of these rules. (3) An investment dealer shall, at all times, employ at least one representative, who shall be entitled to carry out the functions of the investment dealer, holding a licence under the following type, as applicable – (a) for an Investment Dealer (Full Service Dealer) – a degree in a relevant field and at least 8 years of relevant experience in investment business; (b) for an Investment Dealer (Broker) – a degree in a relevant field and at least 4 years of relevant experience in investment business; (c) for an Investment Dealer (Discount Broker) – a diploma course in a relevant field and at least 2 years of relevant experience in investment business; (d) for an Investment Dealer (Derivatives) – a diploma course in a relevant field and at least 5 years of relevant experience in investment business. [Amended by GN No. 246 of 2019]

(4) –
8. Representative of investment adviser
(1) No individual shall carry out any of the securities activities of an investment adviser unless he is licensed as a representative of the investment adviser. (2) The Commission shall not grant a licence under paragraph (1) unless it is satisfied that the applicant holds such qualifications as are specified in the First Schedule or an equivalent qualification as it may approve, and meets all the requirements of these rules. (3) An investment adviser, as the case may be, shall, at all times, employ or be represented by at least one representative, as specified in the First Schedule, who is entitled to carry out the functions of the investment adviser. (4) –
9. Application for investment dealer licence or investment adviser
licence
(1) An application for an investment dealer licence or an investment adviser licence shall indicate the category of licence sought and contain the information and documents set out in the Second Schedule. (2) No investment dealer or investment adviser shall carry out any type of securities activities, either directly or through a subsidiary, other than that for which it is licensed, unless authorised to do so by the Commission.
10. Application for licence as representative of investment dealer or
investment adviser
(1) An application for a licence as a representative of an investment dealer or of an investment adviser, as the case may be, shall be filed with the Commission by the investment dealer or the investment adviser in accordance with the FSC rules, and shall contain the information and documents set out in the Third Schedule. (2) The representative shall only be licensed to act on behalf of one investment dealer or one investment adviser, as the case may be, and undertake only securities activities for which the investment dealer or investment adviser is licensed. (3) A licensed representative may, with the approval of the Commission, and subject to such terms and conditions as the Commission may determine, have its licence transferred to another investment dealer or investment adviser.

(4) The investment dealer or the investment adviser who wishes to appoint the licensed representative shall submit an application to the Commission under paragraph (3). 10A. Obligations of investment dealers (1) Any sale or purchase by or on behalf of an investor of securities in Mauritian companies or other Mauritian entities listed on a securities exchange licensed by the Commission shall be carried out through an investment dealer on the securities exchange. (2) No investment dealer shall execute any investment transaction if, to his knowledge, having made all reasonable enquiries, it would result in a breach of any restriction provided under any relevant Act. (3) Investment dealers shall take all reasonable steps to determine whether a proposed investment transaction is to be made by or on behalf of a foreign investor. (4) For avoidance of doubt, this rule shall not apply to the holder of a Trading Securities Systems licence issued under section 11 of the Securities Act. [Inserted by GN 70 of 2013] Amended by [GN No. 118 of 2020]
11. Licensing conditions for investment dealers
(1) The Commission shall not grant a full service investment dealer licence, unless it is satisfied that the applicant has established procedures designed to prevent conflicts of interest and the use of inside information by an effective segregation of its different activities. (2) The procedures mentioned in paragraph (1) shall ensure that the investment decisions concerning the portfolio of clients shall not be communicated or be available to any unauthorised third party.
12. Licensing conditions for investment advisers
In order to obtain an unrestricted licence, an investment adviser shall provide sufficient justification to the Commission as to the competence of the persons who will be responsible for investment advice and the management of portfolios.
13. Licensing conditions for representatives
(1) An applicant for a licence as a representative of an investment dealer or of an investment adviser shall satisfy the Commission that he holds such appropriate training or qualification as may be necessary and as the Commission may, from time to time, specify. (2) Notwithstanding paragraph (1), the Commission shall consider such other training, membership to recognised professional bodies or qualifications as it may consider acceptable.

(3) The investment dealer or investment adviser shall demonstrate to the Commission that any person acting as its representative is properly qualified.
14. Minimum stated unimpaired capital requirements
(1) Subject to paragraph (2), an applicant for a licence shall maintain a minimum stated unimpaired capital as specified in the Fourth Schedule. (2) The minimum stated unimpaired capital shall be fully paid and no amount shall be due or payable. (3) Where an investment adviser licence is granted to an individual, he shall demonstrate to the Commission that he has sufficient means to ensure the continuity of his business and the provision of adequate services to his clients. (4) The licensee shall inform the Commission immediately where its minimum stated unimpaired capital falls below the minimum required by these rules.
15. Duration and modification of a licence
The licence of an investment dealer, an investment adviser or its representative shall be valid as long as the person meets the conditions set out in the Act, any relevant regulations or rules made thereunder, and any other conditions as may be set out by the Commission and pays the fees as specified in the FSC rules.
16. Organisation and supervision
(1) An applicant for a licence of investment dealer or investment adviser shall satisfy the Commission that internal structures such as its organisation, its technical and financial means and its staffing are appropriate and sufficient for the efficient operation of its business. (2) Where the applicant for a licence is a subsidiary of another company, the Commission may require that some or all the employees or officers of the applicant shall be able to perform independently from the parent company. (3) Where a licensee operates or intends to operate branches, it shall designate an officer responsible for every branch and inform the Commission accordingly. (4) Every applicant shall establish systems and procedures to ensure that non-public information is strictly controlled and not circulated to unauthorised third parties. (5) Every applicant shall put into place systems and procedures designed to prevent money laundering and the financing of terrorism.

(6) Where the applicant is part of a group of companies, the systems and procedures put in place shall prevent the circulation of non-public information to other members of the group.
17. Membership of self-regulatory organisations
The Commission may require that an applicant for a licence as an investment dealer or an investment adviser becomes a member of a securities exchange or a self-regulatory organisation as a condition of obtaining and maintaining its licence.
18. Exemptions
Rules 4(3) and 7 shall not apply to Investment Dealer (Government of Mauritius Securities and Bank of Mauritius Securities Segment). [Amended by GN 246 of 2019]
PART IV – MISCELLANEOUS
19. Offences
Without prejudice to any sanction that may be imposed under the relevant Acts and such regulations or rules made, any person who contravenes or fails to comply with these rules shall commit an offence and shall, on conviction, be liable to a fine not exceeding 500,000 rupees. [Amended by GN 133 of 2009]
20. –
[Amended by GN 133 of 2009]

FIRST SCHEDULE
[Rules 7 and 8]
REPRESENTATIVES OF INVESTMENT DEALER AND INVESTMENT ADVISER Representative of Type Relevant qualifications* Investment Dealer (Full Service 1 Degree in a relevant field and at Dealer) least 8 years of relevant experience in investment business 2 Degree in a relevant field and at least 5 years relevant experience in investment business 3 Diploma in a relevant field and at least 3 years relevant experience in investment business Investment Dealer (Broker) 1 Degree in a relevant field and at least 4 years of relevant experience in investment business 2 Diploma in a relevant field and at least 3 years relevant experience in investment business Investment Dealer (Discount 1 Diploma course in a relevant field Broker) and at least 2 years of relevant experience in investment business Investment Dealer (Derivatives) 1 Diploma course in a relevant field and at least 5 years of relevant experience in investment business Investment Adviser (Unrestricted) Degree in a relevant field and at least 4 years of relevant experience in investment business Investment Adviser (Restricted) Degree in a relevant, field and at least 3 years of relevant experience in investment business Investment Adviser (Corporate Finance Degree in a relevant field and at Advisory) least 5 years of relevant experience in investment business *Relevant Qualification refers to a Degree or Diploma from a University, or any other qualification as may be considered appropriate by the Commission. Relevant field refers to Accounting, Finance or Economics or any other field as may be considered appropriate by the Commission. [Amended by GN 193 of 2016; GN 246 of 2019; GN 212 of 2020]

SECOND SCHEDULE
[Rule 9]
APPLICATION FOR LICENCE AS INVESTMENT DEALER OR INVESTMENT ADVISER (1) The person applying for a licence as an investment dealer or investment adviser shall file the following information and documents with the Commission – (a) a certified copy of the resolution of the board of directors authorising 2 members of the board to sign the application and appointing an officer responsible and a manager responsible for any branch office; (b) a copy of the constitution or similar constitutive document; (c) a complete description of the proposed activities – type of customers, products and services to be offered (brokerage, CIS securities, underwriting, portfolio management, etc.); (d) the amount, type and distribution of the shares of the applicant, including the list of shareholders and the number of shares owned directly or indirectly; (e) if the applicant wishes to offer portfolio management services, a copy of a model of the contract to be signed between the investment dealer or investment adviser (unrestricted) and the client; (f) a copy of the contract relating to internet trading, if any; (g) a copy of the internal procedures manual; (h) details of membership, applications for membership or shareholding in a securities exchange, a clearing and settlement facility, a securities trading system or a self￾regulatory organisation or of applications for membership; (i) a detailed description of systems and procedures to prevent conflicts of interest, money laundering and financing of terrorism; (j) a personal questionnaire form as set out in the FSC rules for every officer or proposed officer, shareholder and beneficial owner of the applicant. (2) In the case of an application for a licence as an investment adviser, where the applicant is not constituted as a company, only paragraphs (1)(c), (e), (f), (g), (i) and (j) shall apply.

(3) Subject to paragraph (4), in case where the person applying for the licence is not yet legally constituted, the information or the documents that would apply to a legally constituted person may be filed in draft form. (4) In the case referred to in paragraph (3), the Commission shall only grant approval in principle for a licence and the licence shall only be issued when the Commission has received final documents and information from the applicant and is satisfied that the final information and documents are consistent with the drafts filed.

THIRD SCHEDULE
[Rule 10]
APPLICATION FOR LICENCE AS A REPRESENTATIVE (1) The person applying for a licence as representative shall file the Personal Questionnaire Form, as set out in the FSC rules, with the Commission. (2) Where the Personal Questionnaire Form has been filed together with the application for the licence of the investment dealer or the investment adviser, for a period not exceeding 6 months, the applicant may not need to file a new Personal Questionnaire Form, unless there is a material change in the information filed. (3) Where the Personal Questionnaire Form has already been filed as specified in paragraph (2), the applicant shall include in his application a signed letter to the Commission indicating that the Personal Questionnaire Form has already been filed and the date on which it was filed. (4) The applicant shall include any document that is necessary to complete the information included in the Personal Questionnaire Form. (5) The Personal Questionnaire Form shall be signed by the applicant and the investment dealer or investment adviser responsible to file it on behalf of the representative.

FOURTH SCHEDULE
[Rule 14]
MINIMUM STATED UNIMPAIRED CAPITAL REQUIREMENTS Category MUR (Rs) or an equivalent amount Investment Dealer (Full Service Dealer, including 10,000,000 underwriting) Investment Dealer (Full Service Dealer, excluding 1,000,000 underwriting) Investment Dealer (Broker) 700,000 Investment Dealer (Discount Broker) 600,000 Investment Adviser (Unrestricted) 600,000 Investment Adviser (Restricted) 500,000 Investment Adviser (Corporate Finance Advisory) 1,000,000 Investment Dealer (Government of Mauritius 200,000,000 Securities and Bank of Mauritius Securities Segment) Investment Dealer (Derivatives) 1,000,000 [Amended by GN 133 of 2009; GN 219 of 2011; GN 172 of 201; GN 193 of 2016; GN 246 of 2019]