The Costs of Fund’s formation in Mauritius and Singapore

Formation of a fund and investor admission:

The first part of expenses relates to the formation of a fund manager and a fund. They include initial due diligence, client acceptance procedures, applications for name reservation, incorporation, licensing, and liaison/notifications to relevant parties (~USD 6,000 in Mauritius).

Formation of a fund manager and a fund requires drafting of constitutive documents, such as Limited Partnership Agreement and Articles of Association, as well as certain corporate resolutions. Furthermore, funds need specific internal documents, including Private Placement Memorandum (PPM), Subscription Agreements, and other. The total cost of drafting these documents starts from USD 12,000.

Furthermore, most jurisdictions provide for a registration fee that should be payable by a fund manager. Depending on the jurisdiction this fee may vary.

In Mauritius, this fee for a fund license consists of a one-off USD 500 payment and annual payment of USD 1,000. For a fund manager license, there is a USD 1,000 processing fee and $2,500 annual fee. Furthermore, an amount of USD 1,000 should be paid to acquire a Tax Resident Certificate and there is a need to pay Return of Capital fee in the amount of USD 350 (annually).

In Singapore, there is a one-off payment in the amount of USD 750 (S$ 1,000) and annual corporate fee in the amount of USD 3,000 (S$ 4,000) for the registration of a fund manager.

In order for a fund to operate, there will be a need to open a bank account (USD 1,500).

In total, obligatory disbursements of formation of a fund manager and a fund cost from USD 20.000-25.000 + USD 3,000-5,000 annually.

VCC:

In case clients want to register a sub-fund within a Variable Capital Company (VCC) structure, cost will include the following fees.

For Mauritius VCC, rental of a VCC License, from our partner firm will cost USD 4,000 annually.

Additionally, there will be a need to pay the registration fee for a VCC – USD 1,000 and USD 3,000 (annually). Fees for additional sub-funds are USD 500 (one-time) and from USD 1,000 (annually), depending on the number of sub-funds.

In case a VCC sub-fund will be incorporated in Singapore, the application fee for the incorporation of VCC is about USD 6,000 (S$ 8,000) and the registration fee for a sub-fund is USD 400. Furthermore, there is an Annual Return fee in the amount of USD 1,600.

Investors:

Admission of Investors requires their KYC and tax due diligence (from USD 250-300 per investor).

Staff and Compliance:

The operation of a fund requires the employment of certain officers and directors. Some jurisdictions require that some of the directors should reside in the fund’s jurisdiction which leads to additional costs.

The law of different jurisdictions usually prescribes that a fund manager should appoint at least two directors (or a higher amount) who are residents of the country where a fund manager operates. In Singapore and Mauritius, the cost of such an appointment starts from USD 3,000 per in case of a corporate directorship annually making it a minimum of USD 6.000 annually. The individual directorships tend to be more expensive, in the range of $10,000-20,000 annually depending upon actual responsibility and workload.

Furthermore, Company Secretary (USD 2,500 annually), Data Protection Officer (USD 2,000), Compliance Officer (starts from USD 4,000), Money Laundering Reporting Officer (MLRO), and Deputy Money Laundering Reporting Officer (DMLRO) should be appointed. Also, there will be a need to prepare certain policies and/or manuals, such as Risk Assessment and Compliance Manual (from USD 2,000).

Operation of a fund also requires certain accounting and tax compliance procedures, including preparation of annual financial statements and assistance to auditors that costs from USD 7,500 and tax computation and filing with relevant authorities (from USD 1,500).

Furthermore, some jurisdictions require fund managers and/or directors to acquire professional insurance. The cost depends on the type of fund and other considerations and starts from USD 3,000-5,000.

Service Providers:

The operation of a Fund requires the appointment of service providers.

Most jurisdictions require the appointment of an authorized Auditor to audit funds’ accounts. The cost of an Auditor can be anywhere from about USD 7,500 to USD 30,000 annually depending upon strategy complexity and volume of transactions. Particular jurisdictions may also prescribe that a fund (depending on its type) should appoint a depositary who will be responsible for the safekeeping of assets of the AIF, performing the cash flow monitoring and other functions.

Another service provider is a Fund Administrator that is responsible for the fund accounting, NAV calculation and transfer agency functions (investor servicing and reporting) of a fund. The costs typically start from USD 18,000 but could run as high as USD 100,000 or more (annually) depending upon strategy complexity and volume of transactions.

In case, clients do not want to set-up their own fund manager, in Singapore and Mauritius they can engage a third-party fund management service. The cost will generally be 20-30 basis points (bp) on AUM size for Mauritius funds (usually with a fixed minimum) and 30-40 bp on AUM size for Singapore funds (usually with a somewhat higher fixed minimum).

Additional Fee:

For Mauritius Funds, 5-10% disbursement on total fees will be added to the final fees.

For Singapore Funds, 5-10% disbursement and 7% Singapore GST on total fees will be added to the final fees.

In total, incorporation of a fund in Mauritius starts from USD 25,000 (including legal fees), plus USD 80,000 annually (including fund manager, directorship, company secretary and administrator services).