Corporate governance and challenges ahead

The Financial Reporting Act 2004, which includes the National Committee on Corporate Governance, is a first step in the right direction. There is no doubt that the Code on Corporate Governance is not adequate in the Mauritian context whereby deep-rooted feelings among family-controlled enterprises supersede basic economic sense. However, it is now for the committee to improve on it for the continued economic growth of our country.

Having assessed the appointment of independent directors, we have strong reservations on how independent the independent directors are. Most of them appear to be a cosmetic exercise as the decisions are taken in a very closed circle. There are many competent independent persons who can bring significant contributions and benefits to the organization but either they are not given the opportunity, or the company is not prepared to remunerate them fairly. The Report on Corporate Governance refers to the appointment of two independent directors while, in US and Australia, independent directors already must make up the majority of the board and, in UK, at least half of the board must be independent.

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