The Stock Exchange Act 1988 established a small but thriving exchange which is run by the Stock Exchange of Mauritius Ltd (SEM), a private limited company. The Act also established the Stock Exchange Commission (SEC), which controls and supervises stock exchange operations. Two markets are operated: the Official List and the Over-The-Counter Market (for unlisted shares). There are around 40 companies listed on the Official List, and around eighty companies quoted in the Over-The-Counter Market. 10 companies are quoted for their debentures. The Stock Exchange has classified these companies into 7 categories – namely Banks and Insurance, Industry, Investments, Sugar, Commerce, Leisure & Hotels and Transport. There are also 2 dual listed funds quoted both on the London Stock Exchange and the Stock Exchange of Mauritius.
The SEMDEX – the all shares index – reflects capitalisation based on each listed stock which is weighted according to its shares in the total market. In its computation, the current value of SEMDEX is expressed in relation to a base period, which was chosen as of July 5 1989, with an index value of 100.
Trading takes place five days a week and is conducted through an open outcry, order-driven and single-price auction system. Each share (excluding foreign shares) has a maximum +/- 6% price limit per trading session.
Major developments have been realized through the establishment of a new electronic clearing and settlement system and the introduction of daily trading (at the end of 1997). Future planned developments include the introduction of a new electronic trading system and the listing of new financial products on the Stock market. The Stock Exchange of Mauritius was recently promoted from the status of corresponding Exchange to that of affiliated securities markets within the Fedération Internationale des Bourses de Valeurs (FIBV) and is also a founder member of the African Stock Exchange Association (ASEA).
A 1% brokerage commission is charged by stockbroking companies. There is no tax on dividends or capital gains.
The stock market was opened to foreign investors in 1994 following the abolition of exchange controls. Foreign investors do not need approval to trade shares, unless the investment is for the purpose of legal or management control of a Mauritian company. The only restriction is that foreign investors can not have individual holding of more than 15% in a sugar company. There is no control on currency repatriation, and the currencies are fully convertible and market determined. Settlement can be made in foreign currency and foreign currency accounts can be opened in Mauritius. There are no capital gains taxes and no withholding tax on dividends procured from trading in officially listed companies.
A major development of 1998 has been the implementation of a Central Depository System, in which all listed companies are registered. This system allows delivery versus payment (DVP) on a T+5 day rotating basis. The establishment of a clearinghouse, through the Bank of Mauritius, provides for a guarantee fund, which incorporates measures for securities and fund settlement failure. The Stock Exchange in collaboration with international advisers has drafted new listing and reporting rules to ensure greater transparency for investors. These rules are due to be released during the first half of 1998.
Every Stockbroking company holds a license granted by the Minister of Finance on the recommendation of the Stock Exchange Commission, and is a member of the Stock Exchange of Mauritius Ltd. All stockbrokers are required to abide to a Code of Conduct and to adhere to the Rules of the Stock Exchange.
Stockbroking Companies are required to have at least two duly licensed stockbrokers who have satisfied minimum entry requirements and passed the prescribed stockbrokers examination. Stockbroking companies are required to maintain a minimum paid up capital of Rs 500,000 and every stockbroker must furnish a personal guarantee to the amount of Rs 250,000.
Eleven Stockbroking companies are currently operating on the Stock Exchange, with a total of about thirty stockbrokers. To date, three stockbroking companies operate in association with foreign partners. SBCs and Stockbrokers pay an annual license fee of RS 2,000 and 1,000 respectively to the Stock Exchange Commission, and are required to have their licenses renewed annually.
To be listed on the Stock Exchange of Mauritius, a public company requires an ‘adequate’ trading record with published accounts for three years preceding listing. A minimum market capitalization of Rs 20 million and the issue of at least 25 per cent of the share to the public, with a minimum of 200 shareholders, is also required. Companies are obliged to issue at least 15% of their shares initially, increasing this proportion to 20% within three years and 25% by the end of five years.
All listing applications must be sent to the Stock Exchange of Mauritius through a stockbroking company. The applications are then forwarded to an independent Listing Committee. Under the recommendation of the Committee, the Stock Exchange of Mauritius, with the approval of the regulatory body, accepts the applications.
A listed company must:
- Be established either in Mauritius or in another acceptable jurisdiction
- Pay the initial and annual fee as prescribed by the Exchange
- Submit legal, financial, and economic documentation in accordance with the regulations
The market capitalization at the end of November 1997 was US$ 1.76 billion (excluding debentures).