Special Purpose Vehicle (SPV)

Definition

A Special Purpose Vehicle (SPV), or ad hoc vehicle, is a legal entity created to carry a specific and limited purpose — holding an asset, financing a project, ring-fencing a risk — rather than to carry on a general operating activity. This legal separation protects the other entities of a group from the debts and liabilities specific to the SPV, and vice versa.

Framework in Mauritius

Mauritius does not provide for a specific legal status called an "SPV" — the ad hoc vehicle takes the form of one of the existing company structures, chosen according to the purpose pursued. Where the SPV is intended to be tax resident in Mauritius and to benefit from the country's double taxation agreement network, it is most often incorporated as a Global Business Company (GBC), subject to meeting the required substance conditions. Where the activity is purely extraterritorial and does not require Mauritian tax residence, an Authorised Company may be used instead. In both cases, the company must hold a licence from the Financial Services Commission (FSC), the regulator of non-bank financial services in Mauritius, and be administered by a management company licensed by the FSC, acting as registered agent.

In practice

The Mauritian SPV is used in particular to ring-fence an asset or project — property, a shareholding, structured financing — from the risks borne by the parent company, to contain a specific financial or operational risk, or to structure a cross-border holding transaction. The choice between a GBC and an Authorised Company depends on tax residence needs, access to tax treaties and the level of economic substance the client is able to maintain in Mauritius (genuine presence, qualified staff, proportionate expenditure). This structuring is examined case by case with an adviser, according to the situation and objectives specific to each project, without any tax outcome being capable of guarantee in advance.

Related terms

The SPV is closely linked to the Global Business Company (GBC) and the Authorised Company (AC), the two forms the vehicle may take in Mauritius, as well as to the Management Company, which administers it, and to the Holding company, another holding structure with which the SPV is sometimes combined.

Related terms