Corporate Governance Chapter 5 Chapter 5 Based Supervisory Framework to enforce good governance. The CRM learnt that this framework is compulsory for organisations. The challenge will be to enforce it. 654. Mauritius has also benchmarked itself against the OECD Principles of Corporate Governance. These include the protection of shareholders’ rights; the equitable treatment of shareholders; the role of stakeholders in corporate governance; disclosure and transparency; and the responsibility of the board. iii. Recommendations 655. The APR Panel recommends that the Mauritian authorities: • • • • • 5.3 Strengthen the enforcement of existing standards and codes on corporate governance. [Ministry of Foreign Affairs, Regional Integration and International Trade (MoFARIIT), Ministry of Finance and Economic Empowerment (MOFEE) and the FSC] Implement all the recommendations of the World Bank Report on the ROSCs. [MOFEE, the FRC and the FSC] Ensure full compliance with the Code of Corporate Governance. [MOFEE, the FRC and the FSC] Explore the proper means to encourage shareholder activism. [Stock Exchange of Mauritius (SEM) and the FRC] Enforce the FSC’s new Risk-Based Supervisory Framework effectively. [FSC] 242 company law and the legislation for resolving commercial disputes, the country has also improved the regulations for businesses in the country by enacting laws that cover banking and finance, taxation, shipping, insolvency, property, litigation, insurance, textiles and the sugar industry. 658. According to the CSAR, Mauritius can attribute its economic success mainly to the strategies developed by successive governments to create and sustain economic diversification. This began with the implementation of an import-substitution strategy in the 1960s. The export-oriented strategy, which centred on the creation of the EPZ, has driven much of the subsequent growth of the local economy. This diversification strategy has also developed new financial growth sectors that focus on global business, insurance, securities, free port activities as well as the information and communication technology (ICT) sector. The business environment in Mauritius is characterised by openness and a probusiness, outward-looking policy. More recently, attention has been directed to marketing the country as an upmarket residential area by developing integrated resort schemes. These offer residency rights linked to home ownership. 659. Today, Mauritius is among the most competitive and successful economies in Africa and actively seeks and attracts FDI. In the World Bank’s 2008 Doing Business Survey, Mauritius ranked 27 out of 178 countries. The bank rates Mauritius as the best sub-Saharan African state according to its ease of doing business. Despite such achievements, unemployment remains relatively high against a backdrop of high vacancy figures. These imply that skills are not matched to economic needs and that there is a serious shortage of skilled labour. 660. Mauritius is actively engaged in attracting foreign investment by removing some of the difficulties of doing business. The major reforms initiated in the 2006/2007 budget focused on the investment environment and included streamlining and simplifying investment rules, regulations and administrative procedures. 661. Mauritius has gradually improved the legal framework that regulates corporations in the country so that, today, there are laws to monitor companies operating in the country. The most important company law is the Companies Act of 2001. It applies to all companies, whether local or with a global business licence (GBL). The Companies Act requires companies to comply fully with the IFRS, the International Accounting Standards (IAS) and ISA. Assessment of performance on APRM objectives Objective 1: Provide an enabling environment and effective regulatory framework for economic activities 656. This objective focuses on the existing legal and administrative measures that facilitate economic and business activities. The primary analysis under this objective aims to assess the authorities’ effectiveness in regulating, monitoring and supervising financial institutions and other self-regulatory bodies like the stock exchange. i. Summary of the CSAR 657. The CSAR discusses the legal and regulatory framework that controls economic activities in Mauritius. It points to the dual set of laws in the country (based on the French and British legal systems). Apart from the main regulatory codes for corporate practice, like Corporate Governance 243