The National Code of Corporate Governance 2016
The launching of the National Code of Corporate Governance 2016 (the "Code") on 13 February 2017 reinforces Mauritius? commitment to uphold its standards and ranking in respect of corporate governance across the African continent. The Code will be effective from 01 July 2017 and will apply to the reporting year ending 30 June 2018.
According to the Financial Reporting Act 2004 and the Financial Reporting (Amendment of Schedule) Regulations 2016 (together referred to as the "Act"), the Code applies to Public Interest Entities ("PIE") which comprise of:
- all companies listed on the Stock Exchange of Mauritius;
- all banks and non-banking financial institutions;
- any company which has during two consecutive preceding years, at least one of the following:
a. an annual turnover exceeding five hundred million rupees; or
b. total assets exceeding five hundred million rupees.
- any group company which has during two consecutive preceding years, at least one of the following:
a. an annual turnover exceeding one billion rupees; or
b. total assets exceeding one billion rupees; and
- public sector organisations listed as PIE under the First Schedule of the Act.
The salient aspects of the Code are as follows:
- the Code provides for eight principles (the "Principles") and guidelines which can be uniformly applied and adapted by each and very PIE concerned.
- the Code is a substantial simplification of the 2003 code and therefore, increasing its "user friendliness" which can also be illustrated by the existence of guidance in respect of the application of the Principles to specific type of organisations.
- the "apply or explain" method has been replaced by the "apply and explain" approach. As opposed to the check box approach used by the previous code, this methodology allows for more flexibility and enables corporations to adapt each of the Principles to their business model and internal structuration.
- a holder of category 1 global business licence ("GBC1") is no longer exempted from complying with the Code if it satisfies the requirements of a PIE. However the Act remains to be aligned to reflect the changes made with regards to the exemption so as to be consistent with the Code.
The Code has been designed to guide board of directors? compliance with governance practices within their PIEs. Compliance with concepts of accountability, fairness, transparency and reporting amongst others, helps to minimise risks within companies. It also gives an indication of the companies? reputation and reassures stakeholders. It is undeniable that the Code, if complied with properly, will have a positive impact on the global economic landscape in the near future and will considerably improve governance in the public sector.