Corporate Governance Chapter 5 Corporate Governance iii. Recommendations Objective 5: Provide for the accountability of corporations, directors and officers 789. The APR Panel recommends, in respect of rights of shareholders, that: i. • The government (i) improves basic shareholder rights by imposing a quorum requirement; (ii) introduces cumulative voting; (iii) allows shareholders to approve the distribution of dividends; (iv) requires a 76 per cent majority to authorise shares not yet authorised for the sale of 50 per cent or more of companies; (v) removes the provision that permits annual general meetings to proceed if shareholders are accidentally not notified about them; (vi) considers prohibiting certain types of abusive selfdealing; and (vii) clarifies listing rules that deal with shareholder approvals for related-party transactions. [SEM, the MOFEE and Parliament] The APR Panel recommends, in respect of the rights of minority shareholders, that: 278 Chapter 5 •  • • • (i) minority shareholders and foreign shareholders be treated equally in terms of the Mauritian corporate governance framework; (ii) all shareholders in a class have the same voting rights; (iii) the sections of the Companies Act that permit classes of stock, that do not conform to the one-share, one-vote principle, to be issued, be amended; and (iv) efforts be made to educate minority shareholders about their rights. [SEM, MIoD and JEC] Mauritius authorities (i) study the Sarbanes-Oxley Act of 2002 in order to improve public company governance and reporting requirements; and (ii) develop a code to protect stakeholder rights. [Parliament, SEM, FSC and MOFEE] Mauritius authorities (i) establish a centralised credit bureau for individuals; (ii) develop codes to deal with creditor rights and personal insolvencies; and (iii) establish debtor counselling service to help those who find themselves deeply in debt. [Parliament, MOFEE, FSC and Ministry of Consumer Protection and Citizens Charter] Mauritius authorities (i) establish the Mauritian Intellectual Property Rights Commission; and (ii) draft a bill to deal with pirated and counterfeit goods. [Parliament, Ministry of Business, Enterprise and Cooperatives, Ministry of Consumer Protection and Citizens Charter and JEC] Summary of the CSAR Responsibilities of boards of directors 790. The CSAR describes the responsibilities of boards of directors and offers an overview of accounting and auditing standards in Mauritius. It also deals with the monitoring mechanisms established to ensure compliance by business leaders, boards of directors and auditors. However, according to the CSAR, 88 per cent of respondents to a survey on the private sector, 57 per cent of respondents from the trade unions and 51 per cent of respondents from academia express their doubts about the professional competence of the directors appointed to Mauritian parastatals. They ascribe this to the fact that most of them are political appointees and that their appointments are based solely on their political affiliations. This compromises their objectivity and performance. 791. The CSAR notes that there is widespread recognition that the appointments of directors in SOEs are based on political considerations, as is the case with parastatals. This leads to questionable decisions and claims of political bias in business decisions. The survey respondents also believe that directors often do not have the necessary technical expertise or qualifications for the positions they hold. 792. The CSAR points out that there are problems in private sector organisations as well. First, directorships in the private sector are concentrated within a narrow group of people. Some directors sit on numerous boards of listed companies. This concentration of board members in a few hands has a great effect on the independence of the decision-making processes. This compromises the good governance of the companies concerned. 793. The CSAR also mentions the concerns expressed by members of the public about the independence of auditors in the country. The reasons behind this perception are, first, that some auditors (and auditing firms) in the country are associated with the companies of some of their clients. Secondly, financial scandals, like those of the MCB and Air Mauritius, have fuelled that perception. 279