MAURITIUS Law and Practice Contributed by: Professor Michael Katz, Laksha Juddoo Prayag, Anne-Sophie Lenette and Ayesha Rambajun, ENS
Nevertheless, directors are required to take into account or may act in the interests of other parties in several circumstances. • Wholly owned subsidiaries – a director may, if expressly permitted by the constitution, act in a manner believed to be in the best interests of the holding company, even if not in the best interests of the subsidiary. • Non-wholly owned subsidiaries – a director may similarly act in the interests of the holding compa - ny, but only if expressly permitted by the constitu - tion and with the prior agreement of the sharehold - ers other than the holding company. • Joint ventures – a director may, if expressly per - mitted by the constitution, act in the interests of a shareholder or shareholders, even if not in the best interests of the company. • Shareholders generally – directors must at all times act in a manner which is not oppressive, unfairly discriminatory or unfairly prejudicial to sharehold - ers. Importantly, whilst the general duties under Sec - tion 143 are owed to the company, Section 174 (3) expressly provides that certain specific duties are owed directly to shareholders. These are as follows. • Section 94 – the duty of the secretary to supervise the share register and to take reasonable steps to ensure that the share register is properly kept and that share transfers are promptly entered. • Section 148 – the duty of a director to disclose to the board (and to the interests register) any inter - est the director has in a transaction or proposed transaction with the company. • Section 156 – the duty of a director of a public company to disclose to the board share deal - ings and relevant interests in shares issued by the company. As these duties are owed to shareholders, a share- holder or former shareholder may bring a personal action against the director (or, for Section 94, the sec - retary) for breach. Creditors on insolvency – under Section 162, where a director believes the company is unable to pay its
debts as they fall due, the director must forthwith call a board meeting to consider whether to appoint a liq - uidator or administrator. Failure to do so can give rise to personal liability for losses suffered by creditor. 3.8 Breach of Directors’ Duties Enforcement by the Company The duties under Section 143 are owed to the com - pany, which is the primary entity entitled to bring an action against a director for breach. Under Section 160 (3), where an officer breaches a duty, the officer and any knowing participant shall compensate the company for loss; the officer shall account for any profit; and any contract entered into in breach may be rescinded by the company. Derivative Actions by Shareholders or Directors Under Section 170, the Court may grant leave to a shareholder or director to bring derivative proceedings in the company’s name against a director. Leave may be granted where the company does not intend to bring, continue or defend proceedings, or where it is in the company’s interests that conduct of proceedings not be left to directors or shareholders as a whole. The Court considers the likelihood of success, costs relative to relief, and any action already taken. Personal Actions by Shareholders Section 174 permits a shareholder or former share - holder to bring a personal action against a director (or secretary) for breach of duties owed to shareholders under Sections 94 (share register supervision), 148 (disclosure of interests) and 156 (director share deal - ing disclosure). However, such action may not recover loss in the form of reduced share value by reason only of a loss suffered, or gain forgone, by the company. Declarations and Injunctions by Members or Debenture Holders Any shareholder or debenture holder may apply to the Court for a declaration that an act or proposed act by a director constitutes a breach of duty, or for an injunction restraining such breach. Prejudiced Shareholders Under Section 178, any shareholder, former share - holder or entitled person who considers the compa - ny’s affairs have been conducted in an oppressive,
473 CHAMBERS.COM
Powered by FlippingBook