Dirish Noonaram: Risks in Corporate Finance Advisory

The investment advisory (Corporate finance) is an important practice in the positioning of Mauritius as an international financial centre (IFC). Professional advisers in corporate finance support mergers and acquisitions (M&A), capital raising, restructuring, valuations, and strategic transactions for local and cross-border clients. Dirish Noonaram, a professional with a track record in investment advisory spanning two decades is of the view that the evolving regulatory environment, heightened enforcement activity, and increasing complexity of transactions have significantly expanded the risk profile for advisers operating in Mauritius. The more so, the evolving legal framework often makes it even more risky for professional advisers. 

Mauritius has developed into a regional financial hub for Africa and Asia, leveraging its tax treaties, bilingual resources, rule of law and currency advantages with respect to other countries. 

Risks for Corporate Finance Advisers and other professionals 

1. Regulatory and Licensing  

Corporate finance advisers in Mauritius require licensing under the Financial Services Act, Securities Act, and FSC Rules depending on the nature of activities. Such licenses are complex and require firms to abide to strict rules and regulations. Those make it costly to sustain licenses and often subject to inspections in the  

2. Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) Risk 

Mauritius is subject to FATF and ESAAMLG scrutiny. Corporate finance advisers are considered Reporting Persons in certain contexts and must comply with the Financial Intelligence and Anti-Money Laundering Act (FIAMLA) and related guidelines. Advisers and their firm are required to comply with CDD and enhanced due diligence (EDD) for high-risk clients, identify beneficial ownership structures, undertake transaction monitoring and suspicious transaction reporting (STR). 

3. Misrepresentation and Disclosure Risk 

Corporate finance advisers are exposed to liability for misleading information in offering documents, prospectuses, or information memoranda. However, investment advisers usually request their clients to appoint legal advisers to have an oversight of all transactional processes. 

4. Professional Negligence and Litigation Risk 

Corporate finance advice often involves complex financial judgments. Errors in valuation, structuring, or tax planning may lead to risks. 

In a small financial centre like Mauritius, reputational risk is amplified for professional advisers. Any association with failed transactions or regulatory investigations  can have disproportionate consequences. 

At VERDE, which is a licensed corporate finance advisory firm by the Financial Services Commission, we adopted a practice-wide ethics charter since more than 10 years. 

In addition to the requirements of the regulatory bodies, we have a comprehensive risk management framework, including dedicated compliance officers, independent monitoring, and periodic audits. All engagement Letters have limitations of liability and disclaimers. The firm also invests in continuous training on regulations, best practices, AML and ethics programs.