SEPTEMBER 2008 - VOL 3

WELCOME

OFFSHORE

Annual Returns for Mauritian Domestic Companies – What does it entail?

Directors Responsibilities: A position
not to be taken lightly

INFRASTRUCTURE

Corporate Tax Return and Advance Payment System – A more Sophisticated System

AVIATION NEWS

Aircraft Leasing and Finance in Mauritius - A clever structuring alternative

OTHER NEWS

New staff

Readers’ Travel Awards 2008

LINKS

www.air-tec.co.za

www.inter-oceanmgt.com

www.mauritiusrelocationservices.com

www.irsmanagementservices.com

Suite 320, 3rd Floor
Barkly Wharf
Le Caudan Waterfront
Port Louis
Republic of Mauritius

Tel +230 210 9334
Fax +230 210 8524

brendon.jones@inter-oceanmgt.com
www.inter-oceanholdings.com

SUBSCRIBE / UNSUBSCRIBE

Directors Responsibilities: A position not to be taken lightly

One of the prerequisites of Global Business Companies, both Global Business Category 1 (GBC 1) and Global Business Category 2 (GBC2), in Mauritius remains the appointment of a Director.  The person called to take up the office of the Director should be of sufficient caliber to exercise independence of mind and judgment for the benefit of the Company. The fact that ALL Directors remain accountable for their own actions, their delegated ones and more importantly the decisions undertaken by individual Director(s) on their own (without having the consent of all the board Directors) are usually not that much highlighted hence this article.

In Mauritius, at least two resident Mauritian’s are required to be appointed as Directors on a GBC 1 company, in order to attain tax residency status, thereby allowing access to Mauritius’ double taxation agreements, while a GBC 2 company can either appoint a resident or foreign Director. Inter Ocean Management Limited’s corporate policy, is to always try and understand the basis of business under our administration, therefore our policy is to co-manage them with our clients. 

As defined in the Companies Act 2001 (the governing piece of legislation for all companies in Mauritius), the Directors, in accordance with the said Act and the Company’s constitution, have specific roles and responsibilities.  Some of the more pertinent roles and responsibilities include:

• To always act in (bona fide) good faith and in the best interests of the Company

• Promoting the success of the company along with their overall management

• Duty to avoid conflicts of interest

• Attending meetings of the Directors of the company with reasonable regularity, unless prevented from so doing by illness or other reasonable excuse

• Duty to declare an interest in a proposed transaction

In addition to the Director(s), the additional authorized signatories for Global Business Companies are generally:

• Beneficial Owner(s);

• Company Secretary (Corporate and/or Individual);

• Bank signatories (not necessarily Directors);

• Any other person(s) to whom the Board of Directors and/or the controlling Shareholder(s) has/have granted power

There is often a perception to think that once powers have been delegated, the original delegator is no longer answerable, however delegation should not be seen as abdication. All signatories are accountable for their actions in the event of fraudulent activities vis-à-vis, while in principal, the Directors are accountable to the regulatory body.  The latter obviously implies a bigger risk factor.

The Director, by virtue of his appointment and powers granted to him legally binds the Company every time he executes a document. For instance, lets say a Director has entered into an Agreement/Contract with another party(ies) in which the former has a vested interest and which he has purposely not declared.  As a result of this disclosure failure and breach of duty, the said Director, among others, may be fined.  The fine, in such cases, given that he/she did not act negligibly, will be borne solely by him/her and not by the Directors’ Insurance.

Responsible for the overall management of a Company, the Board of Directors have to consent to every single decision that the Company takes by signing off resolutions for instance.  Now let’s assume that a Director enters into an agreement for and on behalf of his company with another entity by executing the above. Undoubtedly in the above case, ALL Directors are accountable for same.

The penalties in the event of Directors’ wrong-doings are not light.  Apart from being removed as Director, the court may subsequently disqualify the latter for a certain time period. In addition to the individual, the management company of the underlying company may have its license revoked in a jurisdiction like Mauritius.

In the event we provide Director(s) to a Company, the Client undertakes to indemnify and hold harmless any such Director from any and all cost, liability and expense incurred by the Client and against all actions, proceedings, claims, or demands of whatsoever nature, which may result directly and indirectly from services performed for and on behalf of the Company, except in the instance of fraud or willful misconduct of the Director concerned