This article gives an overview of the main changes brought to the Companies Act 2001 (the ‘Act') and its impact on the corporate sector.
- Small private companies
Change in turnover
- Prior to the amendment, a company would be deemed as a small private company where its turnover in respect of its last preceding accounting period was less than 50 million rupees. This turnover amount has now been increased up to 100 million rupees. This means that more small private companies will now benefit from certain privileges.
Privileges of small private companies
- For instance, small private companies are exempted from preparing financial statements in accordance with the International Financial Reporting Standards. Furthermore, they are also not required (a) to prepare and present their accounts in accordance with the International Accounting Standards and (b) to appoint an auditor.
- Another privilege that small private companies benefit from is that unless there is a change in its shareholding or in the composition of the board of directors or any other matter in relation to same, a small private company does not have to file an annual return with the Registrar of Companies (‘RoC') while on the other hand it is mandatory for any other company to register an annual return with the RoC once in every year. Eventually, these changes are likely to result in the creation of more small private companies.
- Lifting of COVID-19 period extensions/exemptions/provisions
Companies should take special note of the lifting of the extensions/exemptions/provisions in relation to the COVID-19 period in the Act.
- Initially, the Board of directors of a company were required to call an annual meeting of shareholders after the balance sheet date of the company not later than 9 months after the COVID-19 period lapses. The law has been amended to limit the period to not later than 6 months after the balance sheet date of the company, within which the annual meeting of shareholders should take place. This amendment will come into operation as from 3rd October 2022.
Duty of directors – insolvency
- When the director of a company believes that the company is unable to pay its debts as they fall due, the law imposes a duty on the director to call a meeting of the Board to consider appointing a liquidator or an administrator. However, during the COVID-19 pandemic, the director was exempted from such duty. The duty of directors on insolvency has now been reinstated with the lifting of the COVID-19 period.
- Filing of particulars of charges
Previously, when filing of particulars were done, a certified copy of the instrument of charge was required by the RoC. However, the law has become more flexible in allowing a copy instead of a certified copy of the instrument of charge to be filed with the RoC.
- Company re-domiciliation in Mauritius
With the recent changes, a more defined procedure has been established in order to avoid any confusion as to which law would be applicable to the company seeking new registration. As such, a conditional certificate of registration will initially be issued by the RoC to a company seeking re-domiciliation in Mauritius until that company is de-registered from its original place of registration. Thereafter, the company will be issued a certificate of registration as from its date of deregistration from its original place of registration. Prior to the amendments, there was a grey area as to what happens when a company obtains a certificate of registration under Mauritius law while still being registered under the law of another country.
- Removal of companies from the register in Mauritius when re-domiciling in a foreign jurisdiction
In the context of re-domiciliation, we now have in place an established procedure for the removal of a company from the register in Mauritius. Therefore, when a company is seeking to transfer its registration from Mauritius to a foreign jurisdiction, the RoC will first require it to obtain a certificate of registration under the law of the foreign jurisdiction. Thereafter, upon receipt of the certificate of registration under the new jurisdiction, the RoC shall remove the company from the register in Mauritius. This process will ensure that the re-domiciled company has been well registered and operative under the new jurisdiction.
The law has also been amended to segregate the two components comprising an existing ground for removal of a company from the register into two distinct grounds which are as follows: the company has ceased to carry on business or there is no reason for the company to exist.
The above amendments come to fill in existing gaps, for instance with respect to re-domiciliation of companies along with catering for the changing landscape of corporate law and the impact of Covid-19 on doing business.
Originally Published 19 August 2022
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.