First published in October 2003, the National Code of Corporate Governance for Mauritius ("the Code") was revised in 2016 to align it with new laws and guidelines in Mauritius, as well as to recognise, learn and apply governance lessons from the global financial crisis, and identify and apply international best practices for Mauritius to remain a jurisdiction of choice with the highest standards of corporate governance in Africa.
The Code adopt a principles-based, rather than a rules-based, approach that provides organisations with the flexibility to adopt systems and procedures that suit their circumstances. The Code, as far as possible, avoids taking a mandatory or prescriptive approach (since a tick-the-box approach to governance is not recommended). The Code rather employs an "apply-and-explain" methodology, which is a departure from the "comply-or-explain" approach, in that public interest and other entities are now required to apply all the principles contained in the Code and explain in their annual reports how these principles have been applied. The Code applies to all companies (insofar as the principles are applicable to them). For more information on the entities to which the Code applies, please click here.
Rather than being a rigid set of rules, the Code comprises eight principles forming the core of the Code and every board of directors should decide how to apply each principle. Below is an overview of the eight corporate governance principles of the Code. For a full copy of the Code, please click here.
Principle 1 – Governance structure
All organisations should be headed by an effective board. Responsibilities and accountability within the organisation should be clearly identified.
Principle 2 – The structure of the board and its committees
The board should contain independently minded directors. It should include an appropriate combination of executive directors, independent directors and non-independent non-executive directors to prevent an individual or a small group of individuals from dominating the board's decision taking. The board should be of a size and level of diversity commensurate with the sophistication and scale of the organisation. Appropriate board committees may be formed to assist the board in the effective performance of its duties.
Principle 3 – Director appointment procedures
There should be a formal, rigorous and transparent process for the appointment, election, induction and re-election of directors. The search for board candidates should be conducted, and appointments made, on merit, against objective criteria (to include skills, knowledge, experience and independence, and with due regard for the benefits of diversity on the board, including gender). The board should ensure that a formal, rigorous and transparent procedure is in place for planning the succession of all key officeholders.
Principle 4 – Director duties, remuneration and performance
Directors should be aware of their legal duties. Directors should observe and foster high ethical standards and a strong ethical culture in their organisations. Each director must be able to allocate sufficient time to discharge his or her duties effectively. Conflicts of interest should be disclosed and managed. The board is responsible for the governance of the organisation's information strategy, information technology and information security. The board, committees and individual directors should be supplied with information in a timely manner and in an appropriate form and quality in order to perform to required standards. The board, committees and individual directors should have their performance evaluated and should be held accountable to appropriate stakeholders. The board should be transparent, fair and consistent in determining the remuneration policy for directors and senior executives.
Principle 5 – Risk governance and internal control
The board should be responsible for risk governance and should ensure that the organisation develops and executes a comprehensive and robust system of risk management. The board should ensure the maintenance of a sound internal control system.
Principle 6 – Reporting with integrity
The board should present a fair, balanced and understandable assessment of the organisation's financial, environmental, social and governance position, as well as its performance and outlook, in its annual report and on its website.
Principle 7 – Audit
Organisations should consider having an effective and independent internal audit function that has the respect, confidence and cooperation of both the board and management. The board should establish formal and transparent arrangements to appoint and maintain an appropriate relationship with the organisation's internal and external auditors.
Principle 8 – Relations with shareholders and other key stakeholders
The board should be responsible for ensuring that an appropriate dialogue takes place among the organisation, its shareholders and other key stakeholders. The board should respect the interests of its shareholders and other key stakeholders within the context of its fundamental purpose.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.