MAURITIUS Law and Practice Contributed by: Professor Michael Katz, Laksha Juddoo Prayag, Anne-Sophie Lenette and Ayesha Rambajun, ENS
Business judgement rule A director making a business judgment meets the required standard of care where the judgment was made in good faith for a proper purpose, the director had no material personal interest, the company was appropriately informed, and the director reasonably believed the judgment was in the company’s best interests. That belief is deemed reasonable unless no reasonable person in that position would have held it. 3.10 Payments to Directors/Officers Approval Requirements Under Section 159 of the CA, directors’ remuneration and benefits, including loss of office compensation, must be approved by ordinary shareholder resolution, subject to the constitution. The board may separately determine service contract terms for managing or executive directors, and directors are entitled to reim - bursement of expenses properly incurred for company business. The constitution may alternatively empower the board to approve remuneration, benefits and loss of office compensation where it considers the payment fair, provided particulars are entered in the interests reg - ister and board minutes. Shareholders holding at least 10% of voting share capital may, within one month of learning of the payment, require a meeting to approve it by ordinary resolution; unapproved amounts become a debt payable by the director. Prohibition on Loans to Directors Section 159 (5) prohibits a company from making loans to a director (or relative or related entity) or pro - viding guarantees or security for such loans. Limited exceptions include loans to related companies with board approval, advances for company expenditure, loans in the ordinary course of a lending business, and approved employee loan schemes. Loans in breach are voidable and immediately repayable; for non-loan breaches, the director must indemnify the company for any loss. Notwithstanding these restrictions, shareholders may by unanimous resolution or agreement approve any such payment, benefit or assistance, provided there are reasonable grounds to believe the company will satisfy the solvency test. For Global Business Licence
holders, directors may by resolution fix their own remuneration, subject to the constitution or unani - mous shareholder agreement. Disclosure Requirements Section 221 of the CA requires annual report disclo - sure of total remuneration and benefits of executive directors (including bonuses and commissions) and non-executive directors separately, as well as indi - vidual director remuneration. For holding companies, total remuneration from both the holding company and subsidiaries must be stated. The report must also disclose service contract terms and notice periods, predetermined termination compensation exceeding one year’s salary, and benefits in kind. Interests register entries during the accounting period must be stated in the annual report. Board-approved remuneration under Section 159 (2) must be recorded in both the interests register and board minutes. Any indemnity or insurance for a director or employee must be disclosed in the interests register, board minutes and annual report. Private companies may be exempted from certain disclosure requirements where all shareholders agree, provided the exemption is noted in the annual report and does not apply to FRA 04 First Schedule entities.
4. Shareholders 4.1 Companies and Shareholders Relationship Between a Company and its Shareholders
Under the CA, a company is a separate legal entity from its shareholders. A “shareholder” is a person whose name is entered in the share register as the holder of one or more shares in the company. Hold - ing a share confers voting rights (one vote per share on a poll), equal participation in dividends, and equal participation in surplus asset distributions. These rights may, however, be restricted, limited, altered or added to by the constitution or the terms of issue of the shares. A shareholder is not liable for the obligations of the company only by being a shareholder. A sharehold -
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