Executive Summary 5. CORPORATE GOVERNANCE 1.71 Mauritius has ratified and adopted a significant number of standards and codes. They include the Minimum Age Convention, the Worst Forms of Child Labour Convention, the Declaration on Control of Illicit Drug Trafficking and Abuse in Africa, and the Treaty Establishing the African Economic Community. However, a major challenge facing Mauritius is implementing and enforcing these standards and codes, as well as their related laws, because of a lack of capacity at the lower levels to support top-level decisions. The country has not implemented the recommendations of the World Bank Reports on the Observance of Standards and Codes (ROSCs). Another challenge, which devolves to the Financial Reporting Council (FRC), is to ensure that the codes of corporate governance in the country are effectively enforced. Their enforcement is rather lax at present. 1.72 1.73 20 Mauritius relies on trade to grow its economy. It has therefore introduced excellent measures to promote economic and business activities. Its policies are business-friendly and the World Bank’s 2008 Doing Business Survey rates Mauritius as the best sub-Saharan African country on the ease of doing business. Mauritius has consequently succeeded in attracting significant FDI. The country’s Business Facilitation Act of 2006 is the legal framework that provides clear guidelines for starting and operating businesses in Mauritius. The Board of Investment (BOI) is the agency responsible for promoting and facilitating investment in the country. Despite the country’s probusiness environment, family-owned companies dominate the Mauritian market. This poses significant challenges to corporate governance. There are many instances, for example, where senior managers are also major shareholders or are related to them. Corporate social responsibility (CSR) is important in today’s business environment. The Mauritian authorities are becoming increasingly aware of the importance of CSR and the effect it could have on their efforts to make Mauritius the primary business destination in Africa. The government is therefore revising its laws to make them current, to improve CSR practices, and to highlight environmental and labour concerns in the country. However, the CRM observed that there is no legal framework to regulate CSR. There is adequate provision for protecting the environment in Mauritius. The Environment Protection Act (EPA) of 2008 provides adequately for environmental protection in the country. However, it cannot be emphasised enough that the trade Executive Summary unions in the country see the new revision of legal codes as employerfriendly and therefore hostile to the employee. They also mention the Public Gathering Act, a code that the government reportedly uses to prevent trade unions from going on strike. 1.74 The Mauritian government deserves praise for its efforts to promote codes of good business ethics to regulate the corporate sector. The government passed the Code of Ethics for Public Officers in 2000. It sets the standards required of public sector officials when they carry out their duties. The code also presents the principles and guidelines that aim to instil a high standard of good behaviour in the public sector. The country also has a Code of Corporate Governance that applies to large private companies. According to this code, Mauritian companies should consider and address issues about ethical practices that are relevant to their particular environments and circumstances. The CRM discovered that Mauritius has the necessary written codes, but that enforcing them in practice is a challenge. The APR Panel recommended that the Mauritian authorities consider enforcing and implementing the country’s codes as the priority for improving the business climate in a competitive global business environment where countries are competing for FDI. 1.75 The Companies Act of 2001 protects shareholder rights in Mauritius. The act states that each company must give its shareholders, on request, a statement that specifies the class of shares that they hold in the company. The act also lists shareholder obligations and liabilities, and provides for the rights of minority shareholders. 1.76 The Consumer Protection Act of 1991, the Fair Trading Act of 1979, the Price Control Act of 1998 and the Hire Purchase and Credit Sales Act of 1964 protect consumers in Mauritius. The government is currently revising all these instruments. Despite the protection the acts give to shareholders and stakeholders in the country, companies can still block the transfer of shares by giving notice of refusal within 28 days. The CRM also learnt that shareholder meetings can proceed even if there is an accidental failure to notify a shareholder. Finally, whereas the Companies Act of 2001 protects small shareholders, the CRM learnt that small shareholders cannot actually influence the decisions that the boards of private sector companies make. This makes it difficult for shareholders to defend their rights. The Mauritian authorities should consider new measures to protect shareholder rights, particularly those of small shareholders. The Mauritian corporate governance framework should treat minority 21