Corporate Governance 770. Chapter 5 There are virtually no shareholder associations in Mauritius. However, the CRM was told that they do exist. The CRM was able to locate, and interact with, only one active association. This was the Air Mauritius Limited Small Shareholders Association. It seemed to be the only active shareholder grouping. This could explain why there is a lack of shareholder activism in the country. It will therefore be difficult even to contemplate talking about a code of conduct for these associations to ensure their ethical conduct at this stage. Chapter 5 Citizens Charter to protect consumer rights. It does this by enforcing existing consumer protection legislation and by educating consumers about their rights. However, the CRM was told that there are still pirated products in Mauritian markets. 774. The CSAR also reports that there are two leading consumer associations in Mauritius. They educate and inform consumers about their rights, and protect consumers and their rights. These two consumer associations are: the Institut pour la Protection des Consommateurs and the Association des Consommateurs de l’Ile Maurice. These local consumer organisations also engage in sensitisation campaigns, training courses and workshops for their members. ii. Findings of the CRM Rights of stakeholders 771. 772. Corporate stakeholders are all parties directly affected by the activities, or who are interested in the wellbeing, of a firm or corporation. They include employees, customers, suppliers, creditors, financiers, the communities in which these firms or corporations operate or are located, governments, competitors and society in general. The CSAR says nothing about stakeholders’ rights. This could be because the Code of Corporate Governance does not provide for stakeholder rights. The chairperson of the NCCG observed that this was an omission. However, the Report on Corporate Governance for Mauritius by the Ministry of Industry, Science and Research defines stakeholders in the country. Sadly, it is rather silent about their rights. Stakeholders are now more important than ever and their rights are being increased internationally after the Enron, Worldcom and Tyco debacles. The absence of provisions for stakeholder rights in Mauritius is worrisome because of family-ownership structures and control of companies, as well as the effect of industries like textiles, sugar, tourism and ICT on the environment and on communities on the island. Stakeholder rights are particularly important in the light of the serious fraud that took place in February 2003, where the MCB lost USD30 million. If the bank were to have collapsed, the effect on stakeholders, particularly small depositors, could have been devastating. Consumer protection 773. 272 The CSAR states that consumers are adequately protected in Mauritius. Some of the laws developed to protect their rights include 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. The CRM was informed that all of these acts are being reviewed. The government has established a Ministry of Consumer Protection and Corporate Governance Rights of shareholders 775. The current corporate governance framework in Mauritius provides for the protection of shareholder rights under the Companies Act of 2001. The act protects the basic rights of shareholders. However, the CRM was informed by stakeholders that, under Mauritian law, a company can block the transfer of shares by giving notice of its refusal within 28 days. There is also a rule in Mauritius that permits shareholder meetings to proceed even if shareholders were accidentally not notified about them. This rule definitely needs review. The CRM was also informed that boards, and not shareholders, decide to distribute dividends. Stakeholders told the CRM that private shareholder agreements are not made public, even though the Companies Act requires it. Finally, high effective tax rates were imposed on stock options. Mauritius has recently lowered its tax rate across the board to 15 per cent. Hopefully, this will support the efforts of companies willing to issue stock options as a way of aligning manager and shareholder interests. It must be mentioned that the CRM was told that stock options were not popular with companies or employees in Mauritius. 776. Minority shareholders. The Companies Act of 2001 protects minority shareholders in Mauritius. However, stakeholders informed the CRM that minority shareholders are unable to influence the decisions that the boards of private sector companies make. They are, therefore, not able to defend their rights. The CRM was also told that some minority shareholders do not know their rights and that some even do not attend meetings. This apathy could be because of the hopelessness some of 273