MAURITIUS Law and Practice Contributed by: Professor Michael Katz, Laksha Juddoo Prayag, Anne-Sophie Lenette and Ayesha Rambajun, ENS
Limitation of liability of directors/officers Indemnification
unfairly discriminatory or unfairly prejudicial manner may apply to the Court for remedies including orders to acquire shares, pay compensation, regulate future conduct, alter the constitution, appoint a receiver, or put the company into liquidation. Criminal Consequences A director who fails to comply with Section 143 (1) to (5) commits a criminal offence, liable on conviction to a fine not exceeding MUR100,000 and imprisonment not exceeding 12 months. 3.9 Other Claims/Enforcement Against Directors/Officers The CA provides several additional bases for claims. • Duty on insolvency – where a director fails to call a board meeting or does not resolve to appoint a liq - uidator or administrator when the company cannot pay its debts, and the company is subsequently liquidated, the court may hold the director person - ally liable for all or part of creditors’ losses. • Personal liability for unlawful distributions – a direc - tor who signed the solvency certificate or failed to ensure proper procedures may be personally liable to repay distributions not recoverable from share - holders. • Criminal offences – directors and officers may face criminal prosecution for misconduct including fraudulent use or destruction of company property, falsification of records with intent to defraud, fraud - ulent conduct of business, and failure to maintain proper accounting records, with penalties up to MUR1 million rupees and five years’ imprisonment. • Disqualification and prohibition – the court may disqualify a person from acting as director for up to five years (Section 338). Persons convicted of offences involving promotion, formation or man - agement of a company, or crimes involving dis - honesty, are automatically prohibited for five years unless court leave is obtained (Section 337). • Liability under Section 339 – a person acting as director in breach of Sections 337 or 338 is per - sonally liable to the liquidator for unpaid debts and to creditors for debts incurred during the prohibited period.
As a general rule, a company shall not indemnify or insure a director or employee for liability or defence costs arising from acts in their capacity as such; any indemnity in breach is void. However, subject to the constitution: • a company may indemnify a director for costs incurred in proceedings relating to liability for acts done as a director, where judgment is given in the director’s favour, or the director is acquitted, or the proceedings are discontinued, or relief is granted under Section 350; and • a company may indemnify a director in respect of liability to any person other than the company or a related company, and costs in defending or settling related claims, but this does not extend to criminal liability or liability for breach of the duty of good faith under Section 143 (1)(c). Insurance Subject to its constitution and with board approval, a company may insure a director for non-criminal liabil - ity, defence or settlement costs, and costs in defend - ing criminal proceedings resulting in acquittal or nolle prosequi. Particulars must be entered in the interests register, recorded in board minutes, and disclosed in the annual report. Court relief Where in proceedings for negligence, default or breach of duty it appears the person acted honestly and reasonably and ought fairly to be excused, the court may relieve that person either wholly or partly from liability on such terms as the court thinks fit. A person who apprehends that a claim may be made against them may also apply proactively to the court for such relief. Statutory defences In criminal proceedings for offences relating to duties imposed on the board or company, a director may defend on the ground that the board or company took all reasonable and proper steps to ensure compliance, or that the director personally did so, or that the direc - tor could not reasonably have been expected to do so.
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