Government Readies New Companies Act In Mauritius

by Lorys Charalambous, Tax-news.com, Cyprus

06 September 2001

According to an official at the Companies Division of the Mauritius Ministry of Economic Development, Financial Services and Corporate Affairs, the new Companies Bill 2001 will come into effect in October.

The new Act replaces most of the Companies Act of 1984, other than sections dealing with insolvency and public companies, which will remain in force until new legislation is brought forward in separate bills. The 1984 Act was the first major revision of companies' legislation in Mauritius and provided a virtually complete restatement of the law relating to companies. The 1984 Act used as its basic model the Singapore Companies Act 1967 (as revised in 1970 and 1975). The Singapore Act had used as its basic model the Australian Uniform Companies Act of 1961 which was in turn substantially based on the UK Companies Act 1948.

Since 1984 significant changes in company legislation have been made in the United Kingdom, Australia, New Zealand and South Africa. The Government had made piecemeal reforms to companies' legislation, especially in respect of the offshore sector, but decided the time had come for a root-and-branch restatement of the law to adapt it to modern business realities.

The Government's starting point for the new law was New Zealand company law, which is widely regarded among English-speaking jurists as representing the best available compromise between the various modern trends in corporate legislation, now that English law has been so influenced by EU law as to be no longer satisfactory as a model for common law jurisdictions.

The Government says that the core company law contained in the new Act provides the basic framework for the incorporation, internal management and receivership of all companies, what could colloquially be called provisions for the birth, life and ill health of all companies, with provisions for the death of the company being contained in the Insolvency Bill which has yet to be published. The incorporation and management of exempt offshore companies continues to be governed by the separate International Business Companies Act 1994 which deals with the special needs of that group of companies. This leaves the Companies Act as a vehicle for providing the core company law provisions for domestic companies, including companies described in the Mauritius Offshore Business Activities Act 1992 as "offshore companies".

Some key features of the new legislation are as follows:

• The Act introduces a simple form of incorporation enabling a company to be incorporated on the filing of a single application together with the necessary consents from the proposed directors and secretary and a notice of reservation of the proposed company name. It will not be necessary to submit a constitution at the time of incorporation. If a company wants to depart from the standard requirements set out in the Actl, then, either on incorporation or subsequently, it needs to file a separate constitution setting out the departures from the standard form. The new legislation also recognises the reality of 'nominee' shareholders by allowing companies to operate with just one shareholder.
• The Act does away with the need for a separate objects clause, and provides that a company has the rights, powers and privileges of a natural person; this incidentally removes the remains of the one-time ultra vires doctrine. This would not preclude a company from stating specific objects in its constitution if it wished to limit the capacity of a company in this way.
• The Act replaces the Memorandum and Articles of Association by a single constitution, which is no longer required to be notarised.
• Private companies will continue to be prohibited from offering shares or debentures to the public, will be able to dispense with the holding of company meetings by passing resolutions by means of entry in the company minute book, and exempt private companies will not be required to appoint a qualified auditor or a qualified secretary and will be entitled to file only a summary statement of accounts with the Registrar.
• The proposed legislation will retain the distinction between exempt and non-exempt private companies in the same form as in the existing legislation.
  
• The Act introduces no par value shares and permits a company to issue shares which are not designated with any monetary value.
• The Act incorporates the new procedure of self-purchase and holding of treasury shares introduced by the Finance Act 1999.
• The new legislation makes provision for a company to provide in its constitution for the company to have power to indemnify or insure its directors, secretary or employees in accordance with the limitations provided by the Act.
• The Act contains a requirement that public companies and non-exempt private companies are required to prepare and present their accounts in accordance with international accounting standards and that exempt private companies are required to present their accounts in accordance with accounting practices and principles that are reasonable in the circumstances and having regard to any requirements set out in regulations made under the Act.
• The old Companies Act required all companies to appoint an auditor but relieved exempt private companies from the requirement to appoint a qualified auditor. The new Act allows an exempt private company not to appoint an auditor (whether qualified or unqualified).
• Offshore Companies are brought under the Companies Act and redesignated as "external companies". New provisions allow for the continuation in Mauritius of companies which are incorporated elsewhere and also provides for the incorporation of limited life companies.

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