Last Monday, the Financial Security Commission of the Republic of Mauritius published guidelines for the regulation applying to companies that wish to launch their STO, i.e. Security Token Offering.
According to the report, the regulation includes the legal requirements applicable to STO projects that can only proceed following the preliminary approval by the FSC.
In this respect, the document reads as follows:
“When STOs are conducted in or from within Mauritius, the offering of such Securities Tokens shall be subject to the Securities Act 2005 and any Regulations or FSC Rules issued thereunder including the requirement for a prospectus, as may be applicable”.
In addition, the FSC classifies security tokens as the digital representation of securities, as defined by the Securities Act of 2005, i.e. including economic or ownership rights in relation to the company that issues them during the STO period, in which it raises funds.
Excluded from prior legal approval are, however, all offers of securities dedicated to particular categories such as investors and funds defined as “sophisticated” or “expert”, or for professional investment schemes.
The document also clarifies the obligation for anyone wishing to carry out transactions involving security tokens to hold a licence as well as the obligation to perform adequate due diligence with regard to STOs, including a disclosure obligation.
Finally, the document defines the nature of security tokens as “high risk” and suggests the following with regard to investments:
“The FSC urges all prospective investors to fully ascertain the related risks prior to committing any funds for investment in Securities Tokens. In addition, the FSC hereby informs investors that any investment in Securities Tokens is at their own risks and that they are not protected by any statutory compensation arrangement in Mauritius”.