When the Constitution was enacted in 1968, there was not much business around apart from sugar cane, industries accessory to it and basic trade and commerce for the needs of colonial Mauritius.
WE WERE governed by colonial laws adapted to the country but with no specific approach to the modernisation of business. The new Constitution directly tackled the protection of business by protecting the right to property and the right to do business. All laws enacted against the Constitution would evidently be invalid. The Supreme Court, in its judgments, has generally been supportive of the protection of fundamental rights and freedoms of the individual. The Constitution therefore provided the framework for Parliament to enact laws to promote and protect business and the fruits of business. In the last 50 years, many important laws have been enacted to encourage the development of trade, commerce, agriculture, industry, financial and corporate services and tourism and hospitality. Every year, the Minister of Finance presents to Parliament the Government budget and it is the opportunity to introduce to the nation new projects and new fiscal policies. Most of them will then be incorporated in the yearly Finance Act which will also amend various existing laws. We may also note that many specific laws make provision for the Minister in charge of that specific sector to enact regulations to put into practice the principles enunciated in the main law. We therefore have a mass of regulations concerning business introduced over the years.
Let us also note the Code de Commerce and the Code Civil in force since 1809 and 1808 respectively. They provide part of the framework for commerce and trade. For example, contracts in the field of business will generally be governed by the Civil Code of French inspiration, even if the specific law concerns, for example, banking using an Anglo-Saxon common law framework. Those are the particularities of our hybrid laws in the country. The Supreme Court needs to intervene to judge business disputes and, in 2009, the Commercial Division of the Supreme Court was set up. Arbitration, especially in relation to business, has been encouraged along the years and in 2008 was enacted the International Arbitration Act to transform our jurisdiction into an international arbitration centre.
We may briefly look at the important laws enacted over the years. Sugar factories were over time allowed to restructure and indeed most sugar mills closed down as they were losing money. This encouraged the real diversification of the economy.
Going back to 1970, came into force the Export Processing Zone (EPZ) Act to establish the Export Processing licenses which were to launch the industrialisation of Mauritius. The EPZ Act provided for reduced taxation, a flexible employment law regime and other facilities for factories. Companies are generally the means through which business is done and it is important for the Companies Act to be kept updated, allow flexibility, defend the rights of shareholders and permit companies to move swiftly. A modern law was enacted in 1984 to replace the Companies Act of 1913 and the latest one was introduced along the New Zealand model in 2001. The Stock Exchange was created by the Stock Exchange Act 1988 for the operation of an efficient and regulated securities market. It has since developed into an international stock exchange with the aim of attracting foreign businesses to list on it.
The offshore sector took off in 1992 through new laws and the formation of the Mauritius Offshore Business Activities Authority (MOBAA) to promote and regulate innovative offshore activities. The Offshore Trusts Act was enacted in 1992 and in 1993 came the International Companies Act which allowed the incorporation of International Business Companies (IBC).
The idea was to allow Mauritius to compete with other booming offshore financial centres of the world. This helped our jurisdiction to become a player on the worldwide scene of financial and corporate service providers. It was and still is a good policy that we look for quality rather than quantity in welcoming foreign companies on the island. In 2001, the Financial Services Commission (FSC) took over the MOBAA and the offshore sector was to become the global business sector. The FSC has since been a pro-active regulator for non-banking financial services covering today global business, insurance, pensions and stock exchange. Banks are regulated by the Bank of Mauritius created in 1967 whilst the latest Banking Act of 2004 governs the banking business.
The evolution of the financial and corporate business sector was much helped by low taxation and the ability of players in that field to innovate. The India-Mauritius Double Taxation Agreement (DTA) was one prime mover, allowing foreign companies wishing to invest in India to incorporate here and become proper tax residents of Mauritius so as to afterwards invest in India. Double Taxation Agreements are international bilateral contracts governed by public international law. We inherited some DTAs from Britain at independence, we continued them legally and signed many new ones mainly with African and Asian countries.
Coupled with the new DTAs came along the Investment Promotion and Protection Agreements (IPPA) to protect Mauritian entities incorporated here, investing elsewhere and flying the Mauritian flag overseas. The IPPA is also an international bilateral contract between Mauritius and a foreign state concerning investments from one country to the other. The IPPA is an important element when an international investor decides whether or not to use the Mauritian jurisdiction as a platform for its investments overseas. The growth of the global business sector is intertwined with that of the banking sector, of the accountancy and auditing firms, of the law firms and indeed of Management companies.
The financial and corporate services sector employs today, directly and indirectly, a large workforce and contributes to the economy and tax revenue. On the taxation front, the Mauritius Revenue Authority (MRA) was created in 2004 with the aim of forming an effective and efficient revenue collection body. Value Added Tax (VAT) had been introduced by a new law in 1998.
We may briefly mention our intellectual property laws and our information technology laws which were updated in the last decade, as illustrated with the coming into force of the modern Data Protection Act in 2017. Corporate governance has been promoted by the adoption of a Code of Corporate Governance in 2003 which was updated later in 2016. It comprises strict rules as to the dos and don'ts of companies and their officers in the daily running of their business. On the social front, many companies had for years been contributing to the welfare of citizens and of non-governmental organisations. Corporate Social Responsibility (CSR) is now firmly entrenched by law and 2% of the annual profits have to go towards CSR funding.
In the field of industrial relations and labour laws, post-Independence, came the Industrial Relations Act in 1973 after a period of serious industrial unrest. It remained in force until the enactment of the Employment Relations Act 2008. Also in 2008, the Employment Rights Act replaced the Labour Act 1975. A number of regulations supplement their laws.
We now look at tourism and hospitality which together make an important part of the island's economic activities today. The hotel industry and tourism have been encouraged since Independence and the hospitality industry is today linked to the development of the real estate sector. Various schemes have been instituted over the years with the Board of Investment acting as a facilitator. Laws and regulations were amended to allow foreigners to buy villas, apartments or their workplace locally. The smart city scheme is the latest one in this field and in the meantime the Board of Investment is coming under the aegis of the Economic Development Board since 2017. We finally take note of the Business Facilitation Act 2017 to promote business locally. Much has been possible because of the synergy between various governments, the public sector, the private sector and institutions facilitating dialogue.
I may conclude by stating that no business environment can progress without laws and regulations being constantly updated but the rules of the game should not be changed abruptly. Innovation is key but, most of all, certainty in the laws governing us in the long term is essential to allow businesses to plan for the future.
Originally published in Business Year Book, a special edition of Business Magazine.
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