Corporate Governance 2024 Comparisons

Some of the most used structures in Mauritius are:

• private or public company limited by shares;
• Limited Partnership; and
• Trusts or Foundations.

Companies limited by shares holding a global business licence or an authorisation as an Authorised Company are also common where the majority of shares are held by non-citizens of Mauritius and the company carries on business primarily outside of Mauritius.

There are also more than 1,000 collective investment schemes and closed-end funds (most as companies or limited partnerships) domiciled in Mauritius.

The Variable Capital Company, introduced in 2022, is gaining traction, especially with regards to funds and multiple family offices.

There is a large body of laws, principles, regulations and rules which list the corporate governance requirements in Mauritius. The principal sources are:

• the Companies Act 2001 (the “CA 2001”);
• the National Code of Corporate Governance (the “Code”);
• the Listing Rules of the Stock Exchange of Mauritius (the “Listing Rules”); and
• guidelines and codes of best practice issued by the regulators.

It should be noted that, except for public interest entities or public sector originations, the provisions of the Code are not statutory in nature. Therefore, companies are not legally obligated to adopt and respect the provisions of the Code but are encouraged to do so. It contains broad principles and specific provisions that should be used as a guide.

Companies are required to report on how they have applied the main principles of the Code. Where the provisions of the Code have not been applied, companies will then be required to provide an explanation for non-compliance.

Public interest entities are (a) all companies listed on the Stock Exchange of Mauritius, (b) all banks and non-banking financial institutions, (c) any company which has, during two consecutive preceding years, at least one of the following (i) an annual turnover exceeding MUR500 million or (ii) total assets exceeding MUR500 million and (d) any group company which has, during two consecutive preceding years, at least one of the following (i) an annual turnover exceeding MUR1 billion or (ii) total assets exceeding MUR1 billion.

In Mauritius, company shares can be publicly traded on the stock exchange, which is regulated by the Stock Exchange of Mauritius Ltd (the “SEM”) under the supervision of the Financial Services Commission (the “FSC”), in accordance with the Securities Act 2005. The SEM is therefore responsible for enforcing the rules governing the listing of securities. Companies with publicly traded shares need to abide by corporate governance requirements, inasmuch as:

• The board should have a balanced composition of executive, non-executive, and independent directors.
• The roles and responsibilities of the board and management should be clearly defined, with the board providing strategic direction and oversight while management executes operational activities.
• The establishment of an independent audit committee responsible for overseeing financial reporting, internal controls and risk management.
• Implementation of robust internal control systems and risk management frameworks to identify, assess and mitigate risks effectively.
• Companies are required to disclose relevant information to shareholders and stakeholders in a timely and transparent manner.
• Protection of shareholder rights, including equitable treatment, voting rights and access to information.
• Companies are expected to uphold high ethical standards and integrate CSR initiatives into their business practices, considering the impact on stakeholders and the environment.
• Disclosure of executive remuneration policies and practices, ensuring alignment with company performance and long-term shareholder interests.
• Compliance with applicable laws, regulations and listing requirements, along with mechanisms for accountability and remediation in case of breaches.

These requirements are considered mandatory, rather than voluntary, as the National Code of Corporate Governance applies to companies with publicly traded shares.

In 2021, the Committee launched a “governance scorecard” for public and private organisations to self-evaluate their corporate governance practices. This is in line with the “apply and explain” approach as companies not only have to apply, but also explain such application in their annual reports and websites. The Committee then publishes Assessment Reports analysing data based on the scorecards.

In more recent years, Environmental, Social, and Governance (ESG) integration is becoming a central focus for corporate governance in Mauritius. Companies are increasingly adopting comprehensive ESG strategies that address environmental sustainability, social responsibility and robust governance practices. This trend aligns with global shifts towards greater transparency and accountability in how businesses impact the environment and society.

In 2023, the Committee has worked on the following ongoing projects: (1) Corporate Governance Scorecard for Mauritius, (2) Diversity and Inclusiveness of board of directors and (3) Ethics, Integrity and Corruption.

Companies in Mauritius are increasingly focusing on sustainability reporting and integrating ESG factors into their business strategies. This could involve initiatives to reduce carbon footprint, enhance social impact and improve governance practices related to sustainability.

The Code requires companies to present a fair assessment of their environmental, social and governance position, performance and outlook in the annual report and website, to shareholders and other key stakeholders. The Code recommends companies to report on key issues related to environment, health and safety, social, CSG, political and charitable contributions, and governance.

In recent years, as interest in ESG related investment products has gained prominence, there is a growing need for quality and comparable information on ESG matters. In October 2023, the FSC released a consultation paper on the proposed Environmental, Social and Governance Guidelines for Investment Funds and sought feedback from the public and from stakeholders to enhance the approach adopted by the industry with regards to the disclosure of Investment Funds on their ESG strategies for investors to make informed decisions.

Companies are recommended to be familiar with relevant provisions of laws such as the Environment Protection Act and any other legislation applicable to the relevant industry.

The Bank of Mauritius published the Guideline on Climate-related and Environmental Financial Risk Management, which came into effect in 2022. As required by the Bank of Mauritius, banks must submit a roadmap for developing their internal climate-related and environmental financial risk management framework, tracking emerging ESG reporting developments, such as the publication of IFRS Sustainability S1 General Requirements for Disclosure of Sustainability-related Financial Information and S2 Climate-related Disclosures, and the increasing alignment of ESG reporting frameworks and standards.

The business and affairs of a company shall be managed by, or under the direction or supervision of, the board which shall have all the powers necessary for managing, directing and supervising the management of the business and affairs of the company.

The Code expects companies to be headed by “an effective board” with well-defined responsibilities and accountabilities. Such board should consist of an appropriate combination of executive, non-executive, independent and non-independent directors with a board size and diversity commensurate with the company’s sophistication. 

As per the Code, there should also be committees and sub-committees set up to assist the board in its tasks, although this is not a requirement under CA2001.

The board bears ultimate accountability and responsibility for the operations and output of the company. Its primary responsibility is to supervise executive management and ensure that the organisation operates as intended.

The chairperson of the board oversees the operations of both the board and its committees. The chief executive officer, who reports directly to the board of directors, is in charge of managing the organisation’s business operations.

The board in turn will be answerable to the shareholders (normally in meetings of shareholders).

The board of directors and the shareholders have more or less the same formal decision-making process, ie, by way of resolutions passed during meetings or by way of written resolutions.

A one-tier or unitary board is the preferred structure adopted by companies and usually includes executives, non-executives and independent directors.

The board and its committees should have the appropriate balance of skills, experience, independence and knowledge of the organisation.

The chairperson:

• chairs board and general meetings;
• sets the board agenda, taking into account the issues and concerns of all board members;
• manages the board to allow enough time for discussion of complex or contentious issues; and
• facilitates the effective contribution and constructive relations of executive and non-executive directors.

Non-executive directors:

• do not engage in the day-to-day management of the organisation but are involved in policymaking and planning exercises;
• monitor executive directors and act in the interest of the company stakeholders; and
• seek independent advice where appropriate.

Executive directors:

• handle day-to-day operations;
• are responsible for the hiring of staff;
• help maintain a relationship with the board; and
• implement strategies and fund-raising goals.

The independent director acts as a guide, coach, and mentor to the company. This includes improving corporate credibility and governance standards by working as a watchdog and helping in managing risk.

The company secretary:

• ensures that the organisation complies with its constitution and all relevant statutory and regulatory requirements, code of ethics and rules established by the board;
• develops and circulates agendas and any supporting papers in good time; and
• ensures that the meetings and resolutions of the board are properly held and passed in accordance with the company’s articles of association.

Under CA 2001

All companies shall have at least one director who ordinarily resides in Mauritius. For companies holding a Global Business Licence, at least two directors must be ordinarily resident in Mauritius.

The board of directors of public companies shall at all times include at least two independent directors.

Public companies shall have at least one woman on the board of directors, whilst public listed companies shall have a minimum of 25% of women on their board.

Under the Code

The composition of the boards of directors is required to be as follows:

• Chairperson;
• Executive Directors;
• Non-executive Directors;
• Independent Directors; and
• Company Secretary.

They should also have directors from both genders as members of the board of directors, ie, at least one male and one female director.

With regards to the board of public companies, there should be a minimum of two independent directors with at least one being a woman.

All boards of directors are encouraged to have a non-discrimination policy that covers its senior governance positions, including disability, gender, sexual orientation, gender realignment, race, religion and belief, and age.

In fact, the Code recommends that the board should contain independently minded directors. It should include an appropriate combination of executive directors, independent directors and non-independent non-executive directors to prevent one individual or a small group of individuals from dominating the board’s decision taking. The board should be of a size and level of diversity commensurate with the sophistication and scale of the organisation. Appropriate board committees may be set up to assist the board in the effective performance of its duties.

Directors should be elected on a regular basis at the annual meeting of shareholders.

Each director should be elected by a separate resolution.

For the election of new directors, the biographical details of each director should be included in the notice published in the annual report to enable shareholders to take informed decisions.

A director of a public company may be removed from office by an ordinary resolution (namely a resolution that is approved by a simple majority of the votes of those shareholders entitled to vote and voting on the matter which is the subject to the resolution) passed at a meeting called for the purpose that includes removal of a director.

Subject to the constitution of a company, a director of a private company may be removed from office by a special resolution (namely a resolution approved by a majority of 75% or such higher majority as required by the constitution, of the votes of those shareholders entitled to vote and voting on the question) passed at a meeting called for the purpose that includes the removal of the director.

The constitution of the company may provide for a different mechanism for appointment and removal of a director.

All actions to be undertaken by way of ordinary or special resolution may also be undertaken by way of resolution in writing signed by not less than 75%, or such other percentage as the constitution requires for passing a special resolution, of the shareholders who would be entitled to vote on that resolution at a meeting of shareholders who together hold not less than 75% (or such other percentage required by the constitution) of the votes entitled to be cast on that resolution. 

The Code states that boards should normally have at least two independent directors. An independent director’s presence on the board should be commensurate with the sophistication, scale and sector of the organisation. The board should determine whether a director is independent in character and judgement and whether there are relationships or circumstances likely to affect, or appear to affect, the director’s judgement on an annual basis. It is suggested that, when considering independence, the board should take into account the following issues:

• Has the director been an employee of the organisation or group within the past three years?
• Has the director had within the past three years, a material business relationship with the organisation either directly or as a partner, shareholder, director or senior employee of a body that has such a relationship with the organisation?
• Has the director received additional remuneration from the organisation apart from a director’s fee or as a member of the organisation’s pension scheme?
• Is the director a nominated director representing a substantial shareholder?
• Has the director close family ties with any of the organisation’s advisers, directors or senior employees?
• Has the director cross directorships or significant links with other directors through involvement in other companies or bodies?
• Has the director served on the Board for more than nine continuous years from the date of his first election?

The Code provides that affirmative answers to any of the above questions would lead to a director being defined as non-independent. A board can have its own definition of independence, but if the board allows any material divergence from any of the above criteria, it should be fully explained in the corporate governance section of the annual report and on the website. The Code further provides that an explanation should be provided if a board has less than two independent directors.

The CA 2001 was amended to define an independent director  as a director who is a non-executive director and who:

• is not an employee;
• does not have material business relationship with the company either directly or as a partner, shareholder, director or senior employee of an organisation that has such relationship with the company;
• does not receive remuneration from the company except remuneration or any other benefit given to him as a director (in accordance with section 159 of CA 2001);
• is not a nominated director representing a substantial shareholder;
• does not have close family ties with any of the advisers, directors or senior employees of the company;
• does not have cross directorships or significant link with other directors through involvement in other companies or other organisations;
• and has not served on the board for more than nine continuous years from the date of his first election.

Conflict of Interest under CA2001

A director of a company shall (pursuant to Section 148 of CA 2001) forthwith after becoming aware of the fact that he is interested in a transaction or proposed transaction with the company, cause to be entered in the interests register and where the company has more than one director, disclose to the board of the company:

• where the monetary value of the director’s interest is able to be quantified, the nature and monetary value of that interest; or
• where the monetary value of the director’s interest cannot be quantified, the nature and extent of that interest.

Such disclosure is not required when:

• the transaction or proposed transaction is between the director and the company; and
• the transaction or proposed transaction is or is to be entered into in the ordinary course of the company’s business and on usual terms and conditions.

CA 2001 further provides that a director of a company shall be interested in a transaction to which the company is a party where the director:

• is a party to, or shall or may derive a material financial benefit from the transaction;
• has a material financial interest in or with another party to the transaction;
• is a director, officer, or trustee of another party to, or person who shall or may derive a material financial benefit from, the transaction, or being a party or person that is:
1. the company’s holding company being a holding company of which the company is a wholly-owned subsidiary;
2. a wholly-owned subsidiary of the company; or
3. a wholly-owned subsidiary of a holding company of which the company is also a wholly-owned subsidiary;
4. is the parent, child or spouse of another party to, or person who shall or may derive a material financial benefit from, the transaction; or
5. is otherwise directly or indirectly materially interested in the transaction.

In respect of a debt or obligation for which the director of a company has personally assumed responsibility under a guarantee, indemnity, or by the deposit of a security, that director shall not be deemed to be interested in the transaction to which the company is a party. However, the transaction should only comprise of the giving by the company of security to a third party. Furthermore, CA 2001 specifies that this should be done at the request of that third party which has no connection with the director.

Conflict of Interest Under the Code

Conflicts of interest, inherent in related party transactions, should be addressed. The potential abuse of related party transactions is an important issue in all market sectors but particularly in those where corporate ownership is concentrated. Banning these transactions is not a solution as there is nothing wrong per se with entering into transactions with related parties provided the conflict of interest inherent in these transactions are adequately addressed including through proper monitoring, approval and disclosure.

A director should make his best effort to avoid conflicts of interest or situations where others might reasonably perceive such a conflict. Transactions between the company and its managers, directors or large and/or dominant shareholders are sources of such conflicts. The personal interests of a director, or persons closely associated with the director, must not take precedence over those of the company and its shareholders. Any director appointed to the board at the instigation of a party with a substantial interest in the company, such as a major shareholder, substantial creditor or significant supplier or adviser, should recognise that their duty and responsibility as a director is always to act in the best interests of the company and not the party who nominated them.

The company secretary should be responsible for maintaining an interests’ register. It is the responsibility of each director to ensure that any interests be recorded in this register. Full and timely disclosure of any conflict, or potential conflict, must be made to the board.

All boards should develop a “Conflicts of interest and Related party transactions Policy” that outlines the procedures for addressing issues arising in these areas. Furthermore, the Code recommends that questions relating to related party transactions and conflict of interest should be referred to the audit committee. These issues may also involve discussions with the auditors. Shareholders may also be given a role in approving certain transactions with interested shareholders being excluded.

In instances of an actual or potential conflict of interest, the director concerned should not be present at that part of the meeting in which the conflict or potential conflict is discussed and should not participate in the debate, vote or indicate how he or she would have voted on the matter in the board or the committee meeting. The fact that conflicts of interest have been effectively managed should be noted in the annual report.

Fiduciary Duties

The director, as agent of the company, must exercise these duties in good faith for the benefit of the company as a whole. In so doing, he must use his powers for the purposes for which they are intended, and fulfil the duties of his office with integrity.

A director must:

• act in good faith in what the director considers to be in the best interests of the company and not for any collateral purpose;
• exercise powers for a proper purpose – this means for a purpose which advances the interests of the company itself as a separate entity, distinct from its shareholders;

• avoid conflicts of interest with the company, that is, a director should not put himself in a position in which his duties to the company and his personal interests may conflict. Unless the conflict is fully disclosed to the board, any contract entered into by the company and a third party in which a director has an interest may be voidable at the instance of the company, and any profit made by the director in question is recoverable by the company; and
• not make secret profits – a director may not make a personal profit from any opportunities arising out of his directorship, even if he is acting honestly and for the good of the company. Any profit made in such circumstances must be paid to the company.

Statutory Duties

A non-exhaustive list of the duties of directors can be found under CA 2001. A director must:

• exercise their powers in accordance with CA 2001 and the company’s constitution;
• obtain authorisation at meeting of shareholders before doing any act or entering into any transaction for which the authorisation or consent of the shareholders is required;

• exercise their powers honestly in good faith, in the best interests of the company and for the respective purposes for which the powers are explicitly or impliedly conferred, except where otherwise provided under CA 2001;
• exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances;
• not agree to the company incurring any obligation unless the director believes, at that time, on reasonable grounds that the company will be able to perform the obligation when it is required to do so;
• account to the company for any monetary gain, or the value of any other gain or advantage, obtained by him in connection with the exercise of his powers, or by reason of his position as a director of the company, except remuneration, pension provisions and compensation for loss of office in respect of his directorship of any company in accordance with CA 2001;

• not make use of or disclose any confidential information received by him on behalf of the company as director, otherwise than as permitted and in accordance with CA 2001;
• not compete with the company or become a director or officer of a competing company, unless it is approved by the company in accordance with CA 2001;
• disclose to the board any transaction to which the company is a party involving self-interest, unless the transactions are in the ordinary course of the company’s business and on usual terms and conditions;
• not use any assets of the company for any illegal purpose or purpose in breach of its duties, and not do, or knowingly allow to be done, anything by which the company’s assets may be damaged or lost, otherwise than in the ordinary course of carrying on its business;

• transfer immediately to the company all cash or assets acquired on its behalf, whether before or after its incorporation, or as the result of employing its cash or assets, and until such transfer is effected to hold such cash or assets on behalf of the company and to use it only for the purposes of the company;
• attend meetings of the directors of the company with reasonable regularity, unless prevented from so doing by illness or other reasonable excuse; and
• keep proper accounting records and make such records available for inspection in accordance with CA 2001.

These duties, amongst others, are submitted to the overriding requirement that every officer which includes a director or secretary must exercise their powers and discharge the duties of his office honestly, in good faith and in the best interest of the company.

Other legal obligations are contained in other legislation in respect of specific entities (eg, Banking Act 2004, Financial Services Act 2007, etc).

Under the Code

The Code provides that directors should be aware of their legal duties and that directors should observe and foster high ethical standards and a strong ethical culture in their company.

Directors are required to exercise that degree of care, skill and diligence which a reasonably prudent and competent director, in his or her position, would exercise.

Furthermore, the Code stats that all companies that do not already have a code of ethics should consider developing one. The company’s website should contain the code of ethics. It is suggested that a code of ethics should typically include the following elements:

• A section on conflicts of interest, including a full description of how directors and employees should behave when dealing with matters in which he or she has a personal interest. It should include a statement that the audit committee has been given explicit responsibility for reviewing and approving any conflicts-of-interest and related-party transactions and for working with the auditor on detecting and reporting on related-party transactions.
• A statement on proper use of the company’s property.
• A policy on fair dealing with customers, clients, employees, suppliers, competitors and other stakeholders.
• A policy on procurement, giving and receiving gifts and facilitation payments.
• A statement on compliance with laws and regulations including tax management activities.
• A process for reporting unethical behaviour and decision-making.
• A director endorsement statement to abide by the Code.

In the formulation of its code of ethics, it is recommended for a company to consider the specific circumstances and risk areas within the particular industry in which it operates. In addition, where necessary, reference should be made to relevant laws, rules and regulations that apply to the company’s activities and services. A board should regularly monitor and evaluate compliance with its established ethical principles and standards. The Code encourages all boards to put whistle-blowing procedures in place and to describe these in their code of ethics.

Insolvency

CA 2001 (Section 162) provides that a director who believes that the company is unable to pay its debts as they fall due must immediately call a board meeting to consider whether the board should appoint a liquidator or an administrator. Failure to do so may, upon application of the liquidator or a creditor before the court, render the director personally liable for the whole or any part of any loss suffered by the creditors of the company, due to the company continuing to trade.

The law does provide for specific circumstances where a director owes his duties to the shareholders and, in the event of a breach of such specific duties, a shareholder. All formal shareholders may bring an action against a director for breach of such duty owed to him as a shareholder (provided that an action may not be brought to recover any loss in the form of a reduction in the value of shares in the company or a failure of the shares to increase in value by reason only of a loss suffered, or a gain forgone, by the company) such duties owed to the director by the shareholders pursuant to S176 of CA2001 are as follows:

• The board shall ensure that the company secretary shall take reasonable steps to ensure that the share register is properly kept and that share transfers are promptly entered on it (S941(1) of CA2001).
• The duty of the director to, forthwith after becoming aware of the fact that he is interested in a transaction or proposed transaction with the company, cause to be entered in the interests register where it has one director, and, where the company has more than one director, disclose to the board of the company, such interest (S148 CA2001).
• Disclosure of directors in respect of share dealings where the director of a public company has a relevant interest in any shares issued by the company or acquires or disposes of a relevant interest in shares issued by the company (S156 CA2001).

Given that the duties (fiduciary, statutory and under the Code) of a director are owed to the company, it is the company which can enforce a breach of these duties.

Any director who fails to comply with specific statutory duties shall commit an offence and shall, on conviction, be liable to a fine not exceeding MUR100,000 and to imprisonment for a term not exceeding 12 months (Section 143 of CA 2001).

If a director commits a breach of any of his duties, CA 2001 provides the following:

• The director and every person who knowingly participated in the breach are liable to compensate the company for any loss it suffers as a result of the breach.
• The director is liable to account to the company for any profit made as a result of the breach.
• Any contract or other transaction entered into between the director and the company, in breach of his duties, may be rescinded by the company.

A director who either:

• fraudulently takes or applies company property for his own use or benefit, or for a use or purpose other than the use or purpose of the company; or
• fraudulently conceals or destroys any company property,

shall commit an offence under CA 2001 and, on conviction, is liable to a fine up to MUR1 million and to imprisonment up to five years.

CA 2001 (Section 170) further provides for derivative actions in as much as the Commercial Court may, on the application of a shareholder or director of a company, grant leave to that shareholder or director to:

• bring proceedings in the name and on behalf of the company or its subsidiary against a director; or
• intervene in proceedings to which the company or any related company is a party for the purpose of continuing, defending, or discontinuing the proceedings on behalf of the company or its subsidiary, as the case may be, against a director.

CA 2001 (Section 178) also provides that prejudiced shareholders can make an application for a court order requiring the company or any other person (including but not limited to a director) to pay compensation to a person (although such section of CA 2001 does not apply to global business companies).

A company shall not indemnify, or directly or indirectly effect insurance for, a director or employee of the company or a related company in respect of:

• liability for any act or omission in his capacity as a director or employee; or
• costs incurred by that director or employee in defending or settling any claim or proceedings relating to any such liability (Section 161 of CA 2001).

Under CA 2001, directors may be held personally liable for any losses incurred by the company as a result of their breach of duty. This includes liability for damages and compensation to the company.

Also, directors who have breached their duties may also be disqualified from acting as directors of any company for a specified period.

In addition, contracts or transactions that were entered into in breach of duty may be rescinded or annulled, especially if they were not fair and reasonable to the company.

Certain breaches, particularly those involving fraud, dishonesty, or serious misconduct, may lead to criminal sanctions including fines and imprisonment.

CA 2001 further provides that a company may indemnify a director or employee of the company or a related company for any costs incurred by him or the company in respect of any proceedings:

• that relate to liability for any act or omission in his capacity as a director or employee; and
• in which judgment is given in his favour, or in which he is acquitted, or which is discontinued or in which he is granted relief under Section 350 of CA 2001 or where proceedings are threatened and such threatened action is abandoned or not pursued.

CA 2001 further states that subject to its constitution, a company may indemnify a director or employee of the company or a related company in respect of:

• liability to any person, other than the company or a related company, for any act or omission in his capacity as a director or employee; or
• costs incurred by that director or employee in defending or settling any claim or proceedings relating to any such liability.

However, this section does not apply to criminal liability or liability in respect of a breach, in the case of a director, of the duty specified in Section 143(1)(c) of CA 2001.

The Code emphasises compliance with concepts of accountability, fairness, transparency and reporting. The Financial Services Act also states that the FSC can direct licensees to comply with the code’s principles and practices.

CA 2001 provides that the company shall by ordinary resolution approve the remuneration of the directors and any benefit payable to the directors, including any compensation for loss of employment of a director or former director.

The board may determine the terms of any service contract with a managing director or other executive director.

The directors may be paid all travelling, hotel and other expenses properly incurred by them in attending any meetings of the board or in connection with the business of the company.

The constitution of a company may also provide that the board, instead of the meeting of shareholders of a company, may, where the board considers that it is fair to the company, approve:

• the payment of remuneration or the provision of other benefits by the company to a director;
• the payment by the company to a director or former director of compensation for loss of office.

Where a payment is made as detailed above, any shareholders who:

• consider that the payment was not to the company; and
• hold between them not less than 10% of the company’s voting share capital,

may, within one month of the date on which the existence of the payment or other benefit was, first made known to shareholders, whether through the annual report, production of the interests register to a shareholders’ meeting or otherwise, require the directors to call a meetings of shareholders to approve the payment by way of ordinary resolution and to the extent to which the payment is not approved by ordinary resolution, it shall constitute a debt payable by the director to the company

Remuneration may also be restricted by way of the Company’s constitution.

There is no requirement to make any public disclosure for a private company regarding remuneration. For a public company, disclosure on pay will be in the financial statement of the company.

The Code in fact recommends that all organisations should include a statement of their remuneration policy in their annual report, so that shareholders and stakeholders can understand the board’s policy and motivation in determining remuneration for directors (both executive and non-executive) and senior executives in accordance with specified benchmarks. The remuneration policy should set remuneration levels that are fair and reasonable in a competitive market for the skills, knowledge and experience required by the organisation. In addition, all boards should consider disclosing details of the remuneration paid to each individual director in their annual report.

In accordance with CA 2001, a shareholder is defined as (a) a person whose name is entered in the share register as the holder for the time being of one or more shares in the company, (b) until the person’s name is entered in the share register, a person named as a shareholder in an application for the registration of a company at the time of incorporation of the company; (c) until the person's name is entered in the share register, a person who is entitled to have his name entered in the share register, under a registered amalgamation proposal, as a shareholder in an amalgamated company.

The relationship between the shareholders and the company is governed primarily by the provisions of CA 2001. The relationship is also regulated by the constitution of the company where it has adopted one and the shareholders agreement when the shareholders and company have entered into one.

The constitution of the company governs the rights and powers of its board and shareholders.

Alternatively, a shareholders’ agreement sets out the rights of the shareholders, such as the rights attached to different classes of shares, investment decisions etc.

The Code emphasises a fair and transparent relationship between companies and their shareholders. It stresses that:

• all shareholders should be treated fairly, regardless of their size or influence;
• companies must provide accurate and timely information to shareholders about financial performance, governance practices, and business developments;
• shareholders should have opportunities to engage with management, express views, and vote on important matters;
• minority shareholders’ rights must be respected and their interests considered in decision-making;
• AGMs provide forums for shareholder updates, questions and voting on resolutions;
• proxy voting facilitates broader shareholder participation, especially for those unable to attend AGMs; and
• companies should address conflicts transparently and take measures to mitigate them.

In essence, the Code aims to promote collaboration and transparency, recognising the significance of shareholder rights and participation in corporate governance.

The Code also touches upon the issue of group companies (with an holding entity and subsidiaries) – this is of relevance when considering the relationship between the shareholders of a holding company and the subsidiaries.

The board of a subsidiary should adhere to the corporate values and governance principles espoused by its parent company. In so doing, the board should take into account the nature of the business of the subsidiary and the applicable legal requirements. The board of a subsidiary should retain and set its own corporate governance responsibilities and should evaluate any group-level decisions or practices to ensure that they do not put the subsidiary in breach of applicable legal or regulatory provisions or prudential rules. The board of the subsidiary should also ensure that such decisions or practices are not detrimental to the sound and prudent management of the subsidiary, the financial health of the subsidiary or the legal interests of the subsidiary’s stakeholders (including the shareholders of the holding entity). Consequently, the board and its directors of both the parent and the subsidiary companies should be responsible for ensuring that an appropriate dialogue take place among their organisations, their shareholders and other key stakeholders.

The Chairperson of any meeting of shareholders shall give the shareholders reasonable opportunity to discuss and comment on the management of the company.

At a meeting of shareholders, a resolution may be passed with recommendations to the board on matters affecting the management of the company. However, these recommendations are not binding.

CA 2001 caters that the powers reserved to the shareholders of a company by this Act or by the constitution of the company shall be exercised only:

• at a meeting of shareholders;
• by a resolution in lieu of a meeting;
• by a unanimous resolution; or
• by a unanimous shareholder agreement.

Subject to the provisions of CA 2001 and the constitution of a company, a power reserved to shareholders may be exercised by an ordinary resolution; ie approved by a simple majority of the votes of those shareholders entitled to vote and voting on the matter which is the subject of the resolution.

Notwithstanding the constitution of a company,  CA 2001 provides that, where the shareholders exercise a power to:

• adopt a constitution or, if it has one, to alter or revoke the company's constitution;
• reduce the stated capital of the company;
• approve a major transaction;
• approve an amalgamation of the company; and
• put the company into liquidation, the power shall be exercised by special resolution.

At any meeting at which a special resolution is passed, a declaration of the Chairperson that the resolution is so passed, shall, unless a poll is demanded, be conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour or against the resolution.

CA 2001 (Section 107) provides that, notwithstanding anything in CA 2001, or the constitution of a company, the Chairperson of any meeting of shareholders shall give the shareholders a reasonable opportunity to discuss and comment on the management of the company. In addition, a meeting of shareholders may pass a resolution under this same section which makes recommendations to the board on matters affecting the management of the company. Unless carried out as a special resolution, or unless the constitution so provides, any recommendation under this section shall not be binding on the board.

The board of directors shall, pursuant to CA 2001, call an annual meeting of shareholders to be held:

• not more than once in each year;
• not later than six months after the balance sheet date of the company or such other period as the Registrar may determine; and
• not later than 15 months after the previous annual meeting.

It further sets out that the meeting of shareholders may be held:

• by a number of shareholders who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or
• by means of audio, or audio and visual, communication by which all shareholders participating and constituting a quorum, can simultaneously hear each other throughout the meeting.

In addition, CA 2001 provides that a resolution in writing, signed by shareholders, shall be valid as if it has been passed at a meeting of those shareholders, where the resolution is signed by shareholders who:

• are entitled to vote on that resolution at a meeting of shareholders; and
• hold not less than 75% of the votes entitled to be cast on that resolution, or such percentage above 75% as is required under the constitution.

CA 2001 further provides that the Commercial Court may call a meeting of shareholders in specific circumstances, namely where the Commercial Court is satisfied that (a) it is impracticable to call or conduct a meeting of shareholders in the manner prescribed by CA 2001 or the constitution of the company; or (b) it is in the interests of a company that a meeting of shareholders be held. In such circumstances, the Commercial Court may order a meeting of shareholders to be held or conducted in such manner as the Commercial Court directs. An application to the Commercial Court may be made by a director, a shareholder or a creditor of the company. The Commercial Court may make an order on such terms as it thinks fit with regard to the costs of conducting the meeting and security for the costs. The Court may in addition give such directions as it thinks fit, including the direction that the heir of any deceased member may exercise all or any of the powers that the deceased member could have exercised if he were present at the meeting.

Lastly, the Fifth Schedule shall govern the proceedings at meetings of shareholders of a company except to the extent that the constitution of the company makes provision for the matters that are expressed in that schedule to be subject to the constitution of the company.

Shareholders have certain recourses available against the company or its directors under CA 2001, namely:

• derivative actions, whereby the Commercial Court may, on the application of a shareholder or director of a company, grant leave to that shareholder or director to bring proceedings in the name and on behalf of the company or its subsidiary; or intervene in proceedings to which the company or any related company is a party for the purpose of continuing, defending or discontinuing the proceedings on behalf of the company or its subsidiary, as the case may be;
• any shareholder of a company may bring an action against the company for breach of a duty owed by the company to him as a shareholder;
• the Commercial Court may, on the application of a shareholder of a company, if it is satisfied that it is just and equitable to do so, make an order requiring the company or its board or a director of the company to take any action that is required to be taken by the constitution of the company or CA 2001 and, on making the order, the Commercial Court may grant such other consequential relief as it thinks fit;
• where a shareholder of a company brings proceedings against the company or a director, and other shareholders have the same or substantially the same interest in relation to the subject-matter of the proceedings, the Commercial Court may appoint that shareholder to represent all or some of the shareholders having the same or substantially the same interest, and may, for that purpose, make such order as it thinks fit including, without prejudice to the generality of this section, an order:
1. as to the control and conduct of the proceedings;
2. as to the costs of the proceedings;
3. directing the distribution of any amount ordered to be paid by a defendant in the proceedings among the shareholders represented;

• any shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to that person in that capacity or in any other capacity, may apply to the Commercial Court for an order. It should be noted that such recourse is not available to shareholders of a company holding a global business licence.

It should be noted that the directors and officers of entities holding licence(s) from regulatory bodies (eg, the FSC or the Bank of Mauritius) would normally have additional duties due to the said licence(s) but such duty is normally owed to the company as opposed to the shareholders. Notwithstanding the foregoing, any shareholder can make a written complaint to the relevant authority, which will have the discretion to look into such matter, as relevant.

In accordance with rule 33 of the Securities (Takeover) Rules 2010 (which apply where the offeree is a reporting issuer), there is a requirement on a person either individually or together with a person acting in concert (i) holding more than 30% of the rights attached to voting shares of a company and acquires or contracts to acquire additional voting shares of the company, (ii) acquiring effective control of a company or (iii) following a dealing in securities of a company, that person, acquiring the right to exercise, or control the exercise of, more than 50% of the rights attached to the voting shares of the company, to make an offer in accordance with the Securities (Takeover) Rules 2010 on all voting shares of the offeree not already held by the offeror. The foregoing offer shall be accompanied by a public announcement and the FSC and relevant securities exchange to be notified of the public announcement.

Companies are required to provide the FSC with Audited Financial Statements (AFS) in conformity with the International Financial Reporting Standards, prepared by an auditor licensed by the Financial Reporting Council, or by an internationally recognised accounting standards (as may be agreed by the FSC).

The holder of a Global Business License shall submit the AFS within six months of its financial year-end, compared to  three months for those holding a different type of financial services activity licence.

For other licensees, the financial summary must be submitted within six months of the financial year-end.

With regards to the Registrar of the Companies, except for small private companies, every company must sign within 28 days after the financial statement of the Company and group financial statements, copies of the said statements along with a copy of the auditor’s report on those statements are filed with the Registrar of Companies.

The financial summary must be submitted by other license holders within six months of the end of the fiscal year.

In line with the “apply and explain” method, companies have to show in their annual reports and websites that they are compliant with Corporate Governance principles and the Code in general.

Every company registered in Mauritius must file an annual return which provides updated information about the company’s shareholders, directors, registered office address and share capital.

Companies are typically required to file their financial statements annually.

Any changes to the company’s details, such as changes in directors, shareholders, registered office address or company name, must be filed with the Registrar of Companies.

Certain actions may require the filing of special resolutions with the Registrar of Companies.

These filings are available for inspection by the public at the Registrar of Companies for domestic companies; whilst filing of Global Business Companies are kept private.

It is essential for companies in Mauritius to fulfil their filing requirements to ensure compliance with regulatory obligations, maintain good standing, and avoid potential penalties or legal consequences.

Every company is required to designate an auditor during its annual meeting pursuant to CA 2001 (Section 195). However, this is not an obligation for small private company ie, a private company (a) the turnover of which in respect of its last preceding accounting period is less than MUR100 million or such other amount as may be prescribed, (b) which does not hold a global business licence and (c) is not an entity specified in the First Schedule to the Financial Reporting Act. 

There are two ways of appointing auditors:

• through the appointment by the directors – the directors have the authority to appoint the first auditors prior to the inaugural annual meeting; or
• through an appointment by the shareholders – shareholders also have the option to appoint them at a general meeting convened specifically for this purpose.

Under the Code

The Code provides that auditors should observe the highest standards of business and professional ethics, and, in particular, their independence should not be impaired in any way. The proper functioning of the external auditors depends on their independence. Therefore, the audit fees should be set in a manner that enables an effective external audit on behalf of shareholders. Targeting audit fees as a means of cost savings to the organisation should be discouraged.

In effect, Principle 7 of the Code provides that organisations should consider having an effective and independent internal audit function that has the respect, confidence and co-operation of both the board and the management. The board should establish formal and transparent arrangements to appoint and maintain an appropriate relationship with the organisation’s internal and external auditors.

The Code states that auditors should observe the highest standards of business and professional ethics, and, in particular, their independence should not be impaired in any way. The proper functioning of the external auditors depends on their independence. Therefore, the audit fees should be set in a manner that enables an effective external audit on behalf of shareholders. Targeting audit fees as a means of cost savings to the company should be discouraged.

Auditors may compete with each other for the performance of non-audit functions, but this competition should not have the unacceptable consequence of impairing their effectiveness in the performance of their audit functions. The audit committee should determine whether joint audits are required and, if so, must provide an explanation in the annual report. In considering the use of the external auditors for non-audit services, the impact on the auditors’ independence should be assessed by the audit committee. A description of non-audit services rendered by the external auditor should be provided in the annual report of the company, stating particulars of the nature of the services and amounts paid for each of the services described. Where appropriate, a supplementary explanation or justification for these services may be necessary.

The auditors should identify the parts of the annual report that have been audited and note any inconsistencies. The board may request the auditors to assess the company’s application of the Code. If applicable and subject to relevant laws or other regulatory requirements, the auditor should be reappointed every year at the annual meeting and the board should consider putting the external audit contract out to tender at least every seven years. It should also be noted that the Financial Reporting Act 2004 provides that an audit firm shall not audit a listed company’s accounts for a continuous period of more than seven years. The board should also ensure that the audit partner is rotated at least every five years. A review of the audit process, the effectiveness and performance of the audit team and the output, quality and cost effectiveness of the audit is a valid alternative to the tender approach.

In addition, the Code provides that the board should be responsible for risk governance and should ensure that the organisation develops and executes a comprehensive and robust system of risk management.

The Code highlights the significant involvement of directors in the management of risk and internal controls to safeguard the interests of shareholders and stakeholders, enhance transparency, and promote long-term sustainability. For example:

• the board is responsible for overseeing the company’s risk management and internal control systems;
• companies are expected to have a robust risk management framework in place;
• companies are required to disclose information about their risk management practices and internal control systems to shareholders and stakeholders;
• companies are encouraged to establish an internal audit function;
• the board may be supported by an audit committee in supervising risk management and internal controls; and
• risk management should be integrated into the company’s strategic planning process.

The Board should oversee internal controls, review their effectiveness yearly, and report the results in the annual report. This includes financial, operational and compliance controls. They must ensure the system works well and be informed of any deficiencies, management's actions to address them and the evaluation methods used.