MAURITIUS Law and Practice Contributed by: Professor Michael Katz, Laksha Juddoo Prayag, Anne-Sophie Lenette and Ayesha Rambajun, ENS
Disclosure of interests in shares (public companies)
Standard of Care In addition to good faith duties, every officer must exercise the care, diligence and skill that a reason - ably prudent person would exercise in comparable circumstances. A director of a public company who also serves as an executive must exercise the care, diligence and skill of a reasonably prudent and com - petent executive in that position. Business Judgement Rule A director or officer making a business judgement meets the standard of care where the judgement is made in good faith for a proper purpose, the officer has no material personal interest, informs the com - pany to the extent reasonably believed appropriate, and reasonably believes the judgement is in the com - pany’s best interests. That belief is reasonable unless no reasonable person in that position would hold it. Reliance on Information and Advice A director may rely on reports, statements, financial data and professional or expert advice from employ - ees believed reliable and competent, professional advisers or experts on matters within their compe - tence, or other directors or committees on which the director did not serve. Reliance is only available where the director acts in good faith, makes proper inquiry where indicated, and has no knowledge that reliance is unwarranted. Duty on Insolvency A director who believes the company cannot pay its debts as they fall due must forthwith call a board meeting to consider appointing a liquidator or admin - istrator. If the director fails to do so and the com - pany is subsequently liquidated, the Court may hold the director liable for all or part of creditors’ losses from continued trading. Directors who do not vote to appoint a liquidator or administrator at such a meet - ing may similarly be held liable where there were no reasonable grounds for believing the company could pay its debts. 3.7 Responsibility/Accountability of Directors Under Section 143 (5)(a) of the CA, directors’ duties are expressly owed to the company, and not to the shareholders, debenture holders or creditors of the company.
Directors of public companies must promptly disclose to the board any interest in the company’s shares, including acquisitions or dispositions, with details of consideration and date. These must be entered in the interests register. Insider dealing A director possessing material non-public information may only deal in the company’s (or a related compa - ny’s) shares at fair value, determined on the basis of all information known or publicly available. Contravention results in liability for the difference between fair value and consideration. For listed companies, there is an absolute prohibition on dealing while in possession of unpublished price-sensitive information and restric - tions during close periods. 3.6 Legal Duties of Directors/Officers Good Faith and Best Interests Under Section 143 of the CA, directors owe broad duties to the company. A director must exercise pow - ers honestly, in good faith, in the company’s best interests, and for the purposes for which such pow - ers are conferred. Directors must act within the limits of the CA and the constitution, and obtain shareholder authorisation where required. A director must not agree to obligations unless reason - ably believing the company can perform them when due. Directors must account for any gain obtained through their powers or position. They must not use company assets illegally or in breach of duties, nor do or allow anything that damages assets except in ordinary business. Cash or assets acquired on the company’s behalf must be transferred forthwith and held for its purposes until transfer. Directors must attend board meetings with reasonable regularity (unless prevented by illness or reasonable excuse), keep proper accounting records and make them available for inspection, and act in a manner not oppressive, unfairly discriminatory or unfairly prejudi - cial to shareholders.
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