The Fit and Proper assessment is the gatekeeping exercise through which the FSC, the Bank of Mauritius and other competent authorities decide whether a person may hold a licensed function — as a shareholder, director, officer, MLRO or Compliance Officer of a regulated entity.

The test is a continuing requirement: a person must be fit and proper at the time of application, and must remain so throughout the term of the licence. A material change in circumstances may trigger a reassessment.

I. The four limbs of the test

Mauritian regulators assess fitness and propriety by reference to four limbs. The list is non-exhaustive, and the weight given to each limb will depend on the function applied for.

  1. Honesty, integrity and reputation — including any history of dishonesty, fraud, breach of trust, disciplinary action by a professional body, or refusal of authorisation by another competent authority.
  2. Competence and capability — including qualifications, experience and, where relevant, evidence of continuing professional development. For certain functions, the regulator will expect direct experience of the activity or of a comparable jurisdiction.
  3. Financial standing — including solvency, history of bankruptcy or insolvency, judgment debts, and the ability to discharge the financial obligations attaching to the function.
  4. Time commitment and independence — including other directorships, conflicts of interest, and the capacity to devote sufficient time to the role.

II. Evidence the regulator will seek

An applicant should be prepared to produce:

  • a curriculum vitae and organisational chart evidencing the scope of responsibility;
  • certified copies of educational and professional certificates;
  • a certificate of character or equivalent from each jurisdiction of residence in the past five to ten years;
  • bankers', auditors' and, where relevant, regulators' references;
  • a completed personal questionnaire with full disclosure of any investigations, disciplinary proceedings or refusals;
  • a statement of affairs or financial summary supporting the financial-standing limb; and
  • evidence of other mandates and the time commitment attaching to each.

III. Disclosure — the duty to the regulator

Full and frank disclosure is essential. Regulators routinely cross-check statements against public registers, sanctions lists, adverse-media databases and peer-regulator responses. A failure to disclose — even of a matter that would not, in itself, have defeated the application — is often treated as more serious than the underlying matter.

IV. When an application is declined

Where the regulator is minded to refuse, a warning notice is ordinarily issued, setting out the grounds and inviting representations. The applicant has a right to be heard before the decision is made, and a right of review or appeal following the decision. Engaging counsel at the warning-notice stage is, in our experience, materially more effective than responding only once a final decision has been issued.

V. Ongoing obligations

Approved persons must notify the regulator without delay of:

  • any criminal investigation, charge or conviction;
  • any civil judgment or insolvency event;
  • any disciplinary or regulatory action in another jurisdiction; and
  • any change in the scope of the function or the entities in which it is exercised.
Fit and proper is not a formality. It is the mechanism by which regulators keep the sector credible. An application that is well-prepared, internally consistent and candid about the difficult questions is, almost always, the one that is approved.

Published by Lutchmenarraidoo Chambers · 16 March 2023

Have a matter relating to the topics above? Contact the chambers for a confidential consultation.