Corporate Governance 642. The CSAR presents the main contents of the Code of Corporate Governance for Mauritius. The CSAR lists its governing bodies, covers a number of desktop surveys on compliance with the Code of Corporate Governance in the private sector and gives the views and comments of the chairperson of the NCCG on remuneration and appraisals of boards and directors. 643. The CSAR lists the institutions created by the Financial Reporting Act (FRA) of 2005. These are the Mauritius Institute of Directors (MIoD) and the Mauritius Institute of Professional Accountants (MIPA). Chapter 5 Corporate Governance 649. The CSAR examined the critical areas around corporate governance in Mauritius. It mentions that the key issue is the burden that small and medium enterprises (SMEs) experience in complying with the International Financial Reporting Standards (IFRS) and the International Standards on Auditing (ISA). The CSAR quotes the opinion of an industry stakeholder that the firm-size threshold for mandatory compliance with the IFRS and ISA is lower than for many other jurisdictions. 650. In terms of the FRA of 2004, MIPA, the NCCG and the MIoD are required to file copies of their annual reports with the FRC within three months of the close of the act’s financial year. The FRC then has to file its annual report within four months of the close of its financial year. None of these reports had been made public by the date of the CSAR final report. 651. The CSAR also offers some suggestions on how to improve corporate governance in the country. These include especially implementing all the recommendations of the World Bank Report on the ROSCs. The government should ensure that all the recommendations of this report are implemented. These are that: Compliance with corporate governance codes 646. The CSAR notes that a major challenge in Mauritius is implementing and enforcing laws. It observes that, for issues like protecting creditors and recovering credit, the courts do not respond to the needs of the industry. • • • The CSAR observes that, while there is the Code of Corporate Governance for Mauritius, complying with it is not mandatory and companies can choose not to. The Companies Act of 2001 requires all except small companies in the private sector to comply with international standards on auditing. ii. Findings of the CRM 652. The CRM observed that Mauritius has acceded to, ratified and adopted the most significant international standards and codes listed in the African Peer Review Mechanism (APRM) framework. However, Mauritius faces a major challenge in implementing and enforcing laws because of the lack of capacity at lower levels to support toplevel decisions. 653. The CRM observed that Mauritius has not yet implemented the recommendations of the World Bank Report on the ROSCs. The CRM also noted that the FRC has been lax in enforcing compliance with the Code of Corporate Governance. The CRM also learnt that the Financial Services Commission (FSC) has developed a new Risk- 644. The CSAR describes the status of corporate governance in the public sector briefly. The establishment of audit committees at ministerial level and the guidelines for state-owned enterprises (SOEs) improved corporate governance. 645. The CSAR presents other initiatives aimed at improving corporate governance in the country. These include adhering to the Organisation for Economic Co-operation and Development (OECD) initiative as well as creating the Financial Action Task Force and the IMF Offshore Financial Centre Stability Programme. 647. 648. Desktop research of the annual reports of 25 companies also revealed a high level of noncompliance with the code: • • 240 Chapter 5 Only 10 of the 25 complied with the code’s recommendation to have a properly balanced board of directors. Only one company mentioned an appraisal process for its board of directors. The FRC should aim at full compliance with the Code of Corporate Governance. The NCCG should periodically review and reassess compliance with the Code of Corporate Governance. The FRC and the Stock Exchange Commission (SEC) should explore ways of encouraging shareholder activism. 241