Corporate Governance Chapter 5 private shareholders in a number of these companies. One company, where the government has effective control, is Air Mauritius. It is listed on the SEM. The government has indicated that it wants SOEs to practise good governance and follow the code. However, it will need to rethink the relationships between the boards of each of these SOEs and its ministries to do so. 699. The CRM supports the findings of the Doing Business Survey where they are consistent with what the CRM learnt in the meetings it held with the various stakeholders. However, this CRM report highlights the differences between its findings and those of the Doing Business Survey. Corporate governance prospects in Mauritius 700. 701. 254 Mauritius faces certain challenges despite its efforts to improve corporate governance. The first is that of implementation and enforcement. The country has fallen short of enforcing its legal framework because of a lack of institutional capacity to ensure compliance. The second challenge to promoting good governance in Mauritius relates to the ownership structures of businesses in the country. Family-owned companies dominate most of them. The SEM lists many of these family-owned companies because of an incentive and tax benefits scheme that the government introduced. These families and/or partnerships still own these companies despite these listings. Because most of these families hold vast interests, they have failed to yield satisfactory earnings. They therefore fail to release shareholder value. Mauritius’s global business companies (GBCs) present another challenge. Most of them are not listed in Mauritius. These GBCs account for 4 per cent of the country’s GDP. They benefit from the country’s favourable tax and regulatory systems, but they lack transparency. This makes it difficult to determine whether the countries where these GBCs are listed are able to assess their compliance with OECD principles. Furthermore, the kinds of business that most of these GBCs engage in do not lend themselves to compliance with OECD principles. iii. Recommendations 702. The APR Panel recommends that the government of Mauritius: • Undertakes a major study on public enterprise and public sector reform and implements its recommendations to restructure Chapter 5 • • • • Corporate Governance the management of these enterprises to ensure that they function efficiently. [MOFEE and the National Economic and Social Council (NESC)] Encourages family-owned enterprises to promote transparent and competitive recruitment practices that benefit other qualified persons. [JEC] Sets up a committee to oversee the implementation of the recommendations of the World Bank Report on the ROSC. [MOFEE] Aims at full compliance with the Code of Corporate Governance. [MOFEE and the FRC] Develops an effective regulatory framework, and clarifies the reporting framework, for SOEs. [MOFEE and the FRC] Objective 2: Ensure that corporations act as good corporate citizens with regard to human rights, social responsibility and environmental sustainability i. Summary of the CSAR Workers’ rights 703. The CSAR states that the government has reviewed most of the old laws that regulate workers’ rights (the Labour Act of 1975, the Industrial Relations Act33 (IRA) of 1973 and the Year-end Gratuity Act of 2001) to respond to current challenges in the marketplace better. The new Employment Rights Act and the Employment Relations Act codify the most important revisions. The Mauritius Employers’ Federation (MEF) sees these acts as positive. However, the trade unions argue that the new laws relax the constraints on employers and expect that the two acts will lead to a significant regression in workers’ rights. 704. The CSAR also observes that the government has dismantled the existing tri-partite structure for wage negotiations and replaced the Tripartite Committee by a National Wage Council (NPC). The trade unions have voiced their concern about this change. At present, the consumer price index (CPI is the basis for wage increases. However, the government wants the new council to determine wage increases based on the capacity to pay and on productivity. 705. The CSAR refers to the Equal Opportunities Act. This establishes the Equal Opportunities Commission and the Equal Opportunities Tribunal. The main objective of this act is to promote equal opportunity 33 - Both acts were enacted in August 2008 and proclaimed on 2 February 2009. 255