Corporate Governance 810. Board and director appraisal. Only one company mentioned that the appraisal process for the board and its directors complies with section 2.10 of the code. 811. Board committees. Section 3.5 of the code specifies that “all companies should, at a minimum, have an audit committee and a corporate governance committee”. 812. Audit committee and corporate governance committees. The review of the 20 companies with audit committees revealed that: • • • • • 813. 814. 815. 284 Chapter 5 The chairpersons were independent nonexecutive directors (a recommendation of section 3.9.1 of the code) in only 10 of the 20 companies. In one case, the chairperson was an executive director. The remaining companies gave no information. The chairpersons of boards were also members of audit committees in four of the 20 companies with audit committees. This contravenes section 3.9.1 of the code. Audit committees comprised only nonexecutive directors in 11 cases. This is in line with recommended best practice. Of the 16 companies with corporate governance committees, only three complied with the best practice recommendation that independent non-executive directors chair corporate governance committees. In two cases, nonindependent directors chaired the committees. The remaining companies disclosed no information. Seven of 16 companies comply with the guideline that corporate governance committees should have a majority of nonexecutive directors as members. The World Bank Report on the ROSC has also found some noncompliance among listed firms regarding using the international and national requirements for disclosing and communicating financial and nonfinancial information. The CRM reveals that the private sector can finance political parties in Mauritius, but needs to disclose this. This does not always happen in practice. The FRC may make corporate governance a regulatory requirement for public-interest entities [see section 72(3)] and make it compulsory for auditors to report on whether corporate disclosure is consistent with the requirements of the code [see section 39(3)]. However, these requirements are not yet in force. Chapter 5 Corporate Governance iii. Recommendations 817. The APR Panel recommends, in respect of the responsibilities of boards of directors, that: • • • • • • The key standards of the Code of Corporate Governance be made mandatory, although they are currently voluntary. This is because the CRM observed lack of compliance with the code and consulted with the parties concerned. [NCCG] The FRC, the SEM and the Registrar of Companies pool their efforts to ensure more representation of small shareholders on the boards of private companies. [FRC] The MIoD plays a bigger role in continuously offering training courses to new board members and upgrades the skills of the incumbents. [MIoD] Incumbent members of boards and controlling shareholders show that they are adhering to the spirit, and not just the letter, of the relevant standards of the Code of Corporate Governance. [FRC] Boards of directors include members who are nonresidents of Mauritius to enlarge the pool of potential directors in quantitative and qualitative terms, because the number of qualified directors in Mauritius is limited. [NCCG] The government (i) pursues public sector reform, as currently discussed with the World Bank; (ii) reviews the efficiency and corporate governance structures of parastatals and other SOEs; and (iii) applies the principles of good governance to the appointment of directors of parastatals and other SOEs. [MOFEE] The APR Panel recommends, in respect of reporting guidelines for corporations, that: • The FRC, as the monitoring and enforcing institution for developing and implementing sound financial reporting and accounting standards, improves its capacity for the short term. [FRC] • The government (i) develops a framework to regulate, monitor and sanction the accounting and auditing industry when it violates existing standards and rules; (ii) establishes a public accounting oversight board; (iii) requires all accountants and public accounting firms to register with this board and supply it with information; (iv) makes the board responsible for setting standards for accounting, auditing, quality control, ethics and independence in preparing audit reports for public companies; (v) enables the 285