Developing states like Mauritius rely on foreign investing and trade for economic growing. The top standards used by international investors in measuring the investing potency are legal and accounting substructure, fraud hazard and corporate administration ( Heenetigala 2011 ) . Therefore, to construct investor assurance, developing states need to set about reforms of corporate administration, fiscal coverage and related Torahs ( Abhayawansa & A ; Johnson 2007 ) .
3.1 Early Corporate Governance in Mauritius
Corporations have existed in Mauritius from the early yearss of colonization. At the beginning of the Gallic colonial period, Mauritius was in fact administered by a corporation, “ La Compagnie des Indes ” . However, it was merely in 1984 that Mauritius stepped into the modern epoch with the debut of a new Companies ‘ Act in that twelvemonth. In 1989, there was another measure frontward with the puting up of The Stock Exchange of Mauritius. However, it was at the beginning of the new millenary that things truly started to travel in front. Both authorities and the private sector realized that for Mauritius to do headroom in the planetary economic system, it was indispensable to follow Torahs and conventions that were in melody with the alterations taking topographic point in the developed economic systems of the universe ( Governance 2004 ) .
3.2 Corporate Administration ReformsOrder now
As such, investors consider corporate administration to be among the top standards in their investing determinations.
Since the corporate dirt affecting Air Mauritius and Rogers ( 2002 ) which in bend negatively affected the fiscal sector, the attending on proper corporate administration was greatly increased. Furthermore, after the Air Mauritius dirt other corporate frauds were detected such as the Delphis Bank and Mauritius Commercial Bank ( 2003 ) which is closely linked to the National Pension Fund.
Therefore, in 2001 a raft of new steps was introduced and designed to aline where possible the patterns of corporate Mauritius with best pattern world-wide. These steps were in footings of:
Introduction of a new Companies Act.
Introduction of International Accounting Standards ( IAS )
Introduction of new listing regulations for companies listed on the Stock Exchange of Mauritius.
Puting up of a National Committee on Corporate Governance.
The “ National Committee on Corporate Governance ” ( NCCG ) has been established under subdivision 63 of the fiscal Reporting act 2004.
As the national coordinating organic structure responsible for all affairs refering to corporate administration. The aims of the NCCG were to:
( a ) set up rules and patterns of corporate administration ;
( B ) promote the highest criterions of corporate administration ;
( degree Celsius ) promote public consciousness about corporate administration rules and patterns ; and
( vitamin D ) act as the national coordinating organic structure responsible for all affairs refering to corporate administration.
The World Bank was asked to finish a Report on Standards and Codes ( R.O.S.C. ) on corporate administration in Mauritius that was published in August 2002.
3.3 CG patterns
3.3.1 Code of Best Practice on CG
It is in September 2001 that the Minister of Economic Development, Financial Services and Corporate Affairs, The Honourable Sushil Khushiram, appointed a Committee on Corporate Governance for Mauritius. The Committee was given the undertaking of raising the degree of corporate administration in Mauritius so that it would compare favourably with international best pattern. As portion of its footings of mention, the Committee was asked to see the rightness of presenting a Code of Best Practice on Corporate Governance for Mauritius. After a reappraisal of corporate administration patterns in Mauritius, the Committee decided that it was appropriate to fix a Code of Corporate Governance for Mauritius. In October 2003 the Code of Corporate Governance for Mauritius which was on a “ comply or explicate footing ” was launched whereby the followerss were the cardinal demands:
The functions of the Chair and CEO must be separate ( Section 2 chapter 3 num 1 )
The codification addressed the balance of the board in Section 2 ( chapter 1-principle 2 Board Composition ) where each board required at least 2 independent managers and at least 2 executive managers.
The assignment of Board Committee ( subdivision 3 ) stated each board required an Audit Committee, and a Corporate Governance Committee ( whose duties include inter alia wage and nomination affairs ) .
The Code did non stipulate an optimal size for the board but by and large there should be smaller boards than exist at nowadays. Boardss of more than 12, even for the larger companies, could go unmanageable ( subdivision 2 Chapter 1-num 8.2 ) .
3.3.2 Conformity with the codification of CG
Harmonizing to a Survey by the NCCG ( 2009 ) conformity with the Code of Corporate Governance is still non the norm in Mauritius, in that merely 30 % of the companies province that they presently comply with the Code, whilst 29 % do non follow.
Higher conformity with the Code is noted among listed companies ( including Banks and Non-Banking Financial Institutions ) and State Owned Enterprises , instead than among DEM Listed companies and non-listed companies .
An analysis of the Annual Reports of 86 companies for which the Annual Reports could be collected showed that:
An betterment in the proportion of the Companies showing a Corporate Governance Report in their Annual Report was noticed over the last 3 old ages, connoting from 74 % in 2006 to 85 % in 2008.
There was an addition in the proportion of companies puting up Board Committees to turn to Corporate Governance, Audit, Risk, and Nomination Issues.Whereby, the chief commissions established within companies were, by order of importance the Audit Committee , Corporate Governance Committee , the Remuneration Committee and the Board Risk Committee .
Interestingly, the station of Chairman and CEO was seen to be held by different persons in the bulk of the companies .
Average Board size in Mauritanian companies reacting to the study was noted to be 8.9.
In most instances, the companies had a mix of Executive and Non- Executive Directors, with an norm of 2 Executive Directors and 7 Non- Executive Directors.
3.4 CG and Firm Performance in Mauritius
The codification in Mauritius favours a unitary board and The Code of Corporate Governance was revised in April 2004.
The factors that affect steadfast public presentation in Mauritius are the rate of involvement, rising prices, degree of unemployment and others.
conformity with the codification of corporate administration in Mauritius, study October 2009, NCCG
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Abhayawansa, S & A ; Johnson, R 2007, ‘Corporate Governance Reforms in Developing States: Accountability versus Performance ‘ , in R Johnson ( ed. ) , Reading in Auditing Volume 2, John Wiley & A ; Sons Australia, Ltd, Milton, Qld, pp. 84-98.