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National Code of Corporate Governance - New circular released by the Mauritius FSC

Insight 1 December 2021

National Code of Corporate Governance - New circular released by the Mauritius FSC

The Mauritius FSC issued a new circular letter on 28 October 2021 on the National Code of Corporate Governance.

On 28 October 2021, the FSC issued a new circular letter CL28102021 on National Code of Corporate Governance (“New Circular”) which revokes and supersedes the circular letter CL280218 issued on 28 February 2018.

Background

On 28 February 2018, the FSC issued a Circular Letter on National Code of Corporate Governance (“CL280218”) under Section 7(1) of the Financial Services Act to inform licensees of their obligations with respect to the second edition of the National Code of Corporate Governance (‘’Code’’), issued by the National Committee on Corporate Governance and published in the Government Gazette on 3 December 2016. The FSC clarified that the circular was to be used as a guidance without prejudice to compliance obligations with the Code under the Financial Reporting Act 2004, Companies Act 2001 and any other relevant acts as identified in the Financial Services Act 2007.

Recent Developments

While the purpose of the new circular letter, the supervisory role of the FSC, the core principles of the Code, the implications of the provisions in relation to the reporting and disclosures, directors’ report and auditor’s report, provisions to compliance with corporate governance of a foreign jurisdiction remain unchanged under the New Circular compared to CL280218, the noteworthy change is the applicability of the Code itself.

The previous circular letter provided that the Code shall apply to all licensees of the FSC providing financial services, including Management Companies and compliance with the Code shall be mandatory for holders of Category 1 Global Business Licensees (GBC1s) which provide financial services or conduct financial business activities.

Under the New Circular, the FSC has clarified that, in relation to licensees providing financial services, the Code shall be applicable to:

Management Companies falling under the definition of Public Interest Entity 1 as defined under the Financial Reporting Act 2004 having similar features as the category of licensee identified under paragraph 4 of the First Schedule of the Financial Reporting Act.

  • The following licensees identified under paragraphs 3 and 4 of the First Schedule of the Financial Reporting Act 2004:
  • Insurance companies, other than companies conducting external insurance business, licensed under the Insurance Act 2005
  • Collective investment schemes and closed-end funds registered as reporting issuers under the Securities Act 2005
  • CIS managers and custodians licensed under the Securities Act 2005
  • Persons licensed under section 14 of the Financial Services Act 2007 to carry out leasing, credit finance, factoring and distributions of financial products to the extent that the services supplied are by retail
  • Any other licensee (excluding holders of Global Business Licence) which has, during 2 consecutive preceding years, at least one of the following:
  • An annual turnover exceeding 500 million rupees.
  • Total assets exceeding 500 million rupees.
  • Any group company which has, during 2 consecutive preceding years, at least one of the following:
    • An annual turnover exceeding one billion rupees.
    • Total assets exceeding one billion rupees.

Henceforth, the Code shall not be applicable to all licences/ Global Business licensees of the FSC providing financial services but it shall be applicable only to the class of licensees set out in Section F above and to licensees having the statutory obligation to comply with the Code.

  • Expert Funds, Professional Collective Investment Scheme (CIS) or Specialised CIS which are not Reporting Issuers;
  • Family Offices;
  • Private Pension Schemes;
  • An individual person who is the holder of a licence;
  • Insurance agents;
  • Holders of Global Headquarter Administration licence;
  • Holders of Global Treasury Activities Licence; and
  • Any other licence as the FSC deems appropriate.

Though the Code is not mandatory for above class of licensees, the licensees are encouraged to set up appropriate corporate governance measures.

Way forward

It is not mandatory for holders of Global Business Licences providing financial services, save for (i) the class of licensees mention in Section F above and (ii) licensees having the statutory obligation to comply with the Code, to:

  • comply with the Code and to apply the 8 principles of Corporate Governance
  • disclose compliance with the Code on an ‘apply and explain’ basis in the manner laid out in the code
  • have their Annual Reports/ Audited Financial Statements are accompanied by a Directors’ Statement of Compliance with the Code in the form and manner provided in the Code
  • have the auditors assess any explanation in cases of non-compliance and shall make a report in the form and manner provided in the Code

However, the exempted class of licensees (Section H) are encouraged to set up appropriate corporate governance measures.

Access the new circular letter as issued by the Mauritius FSC here

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