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).
