92020Jun
A legal perspective of Covid-19 in Mauritius

A legal perspective of Covid-19 in Mauritius

The Covid-19 pandemic has not only caused a serious concern to people’s health but has drastically changed our economic, social and business environments. Mauritius has imposed a total lockdown since 24 March with a view of ensuring the safety of the population and to prevent the spreading of the virus since the first three cases of Covid-19 was confirmed. The Mauritian authorities have been conducting contact tracing with those people who have been in contact with the infected patients.

A Covid-19 (Miscellaneous Provisions) Bill and a Quarantine Bill was introduced on the 13th May 2020 at the national assembly by the Prime Minister to amend a considerable number of enactments to cater for the impact of the novel corona virus. Both Acts have been successfully passed by the majority of voters in parliament.  The Covid-19 Act is comprised of 56 amended Acts and most of these amendments have a bearing on the business environment. Both Acts includes strict sanitary measures that will be enforced in public transport, schools, metro, offices, elevators, taxis and other public places. These sanitary measures will also be applicable at the airport with the arrival of repatriated Mauritians from other countries.

The Covid-19 Act has amended a considerable number of enactments and has inserted new provisions to much cater for the combat of this pandemic. This Article is prepared to help businesspeople to understand the main changes that are of utmost importance in their decision-making process concerning Employment law, Company law and Insolvency law. This Article provides a comparison between the previous laws and new/amended laws to ease the understanding of the reader.

Employment Law

Emphasis has been placed much on employment related measures whereby both public and private sector were being asked and encouraged to work from home and COVID-19 Work Access Permits have been issued to key persons of all organizations who needed access to their place of work. Working from home was a pre agreed condition under the Worker’s Rights Act 2019 (WRA 2019). However, with the newly amended law, an employer may require any worker to work from home provided a notice of at least 48 hours is given to the worker.

All companies in Mauritius could apply for Wage Assistance subsidy to alleviate the employee cost for the month of March ranging from 15 days basic wage bill to MUR 12,500 per employee. Workers from the informal sector, such as self-employed not registered with the revenue authority received 50% of the prevailing minimum wage if they registered with the revenue authority during the COVID19 lockdown. 

With the promulgation of the Covid-19 Act 2020, a new provision was inserted as regards to Unpaid leave instead of termination for certain Enterprises, whereby if the Board finds that the reasons for the reduction of the workforce or the closing down are justified, the Board shall, in lieu of the termination of employment, at the request of the employer and subject to the consent of the worker concerned, order that the worker, or such category of workers as the employer may designate, shall proceed on leave without pay for such period as the employer may specify in his notification subject to the condition that the resumption of employment be on such new terms and conditions, including pension benefits, as the employer may, prior to resumption of work, offer to the worker.

Additionally, Section 72 of the WRA 2019 was introduced to reinforce the protection of workers redundancy. The Covid-19 Act 2020 has brought fundamental changes concerning reduction of workforce where an employer intends to reduce the number of workers in his employment, he shall give the give written notice to the Redundancy Board, together with a statement showing cause for the reduction at least 15 days before the intended reduction. The Redundancy Board shall complete its proceedings within 15 days from the date of notification by the employer and if it finds that the reasons for the reduction of the workforce are justified, the Board shall order that the worker shall be paid 30 days’ wages as indemnity in lieu of notice. However, if the reduction of workers is unjustified the Board shall order the employer to pay to the worker severance allowance at the rate of 3 months’ remuneration per year of service.

Company Law

As a result of this pandemic, Companies not only in Mauritius but around the world have suffered. The Mauritian Companies Act 2001 (CA 2001) has been amended with the coming of the Covid-19 Act 2020 to well suit some of the provisions to the current pandemic situation which are mentioned below:

Annual meetings of shareholders

  • In the previous law, Section 115 of CA 2001 was to the effect that the Board of directors shall call an annual meeting of shareholders to be held not later than 6 months after the balance sheet date. The delay has been extended to not later than 9 months (or not later than such further period as the Registrar may, after the COVID-19 period lapses, determine) after the balance sheet date.
  • Section 115 of CA 2001 prescribed that the Board of directors shall call an annual meeting of shareholders to be held not more than once in each year and not later than 15 months after the previous annual meeting. However, with the amended law, the Registrar may issue such Practice Directions as may be necessary to determine the manner in which a meeting is to be held during the COVID-19 period and such further period, as the Registrar may determine, after the COVID-19 period lapses.

Duties of directors on insolvency

In the previous law, Section 162 of CA 2001 provided that the duties of directors on insolvency where a director of a company who believes that the company is unable to pay its debts as they fall due shall forthwith call a meeting of the Board to consider whether the Board should appoint a liquidator or an administrator. However, this section shall not apply during the COVID-19 period and such further period, as the Registrar may determine, after the COVID-19 period lapses.

Obligations to prepare financial statements

Section 210 of CA 2001 states that the financial statements of a company should be prepared and signed by the directors within 6 months after the balance sheet date of the company. However, the period of 6 months has been extended to 9 months during the Covid-19 crisis.

Registration of financial statements

Every company, other than a small private company, shall ensure that, within 28 days after the financial statements of the company and any group financial statements are required to be signed, copies of those statements together with a copy of the auditor’s report on those statements are filed with the Registrar for registration. However, the 28 days have been replaced by 3 months as stipulated  in the Covid-19 Act 2020.

Insolvency Law

Some provisions of the Insolvency Act 2009 (IA 2009) have been amended to give companies a second chance to restructure themselves during this pandemic. We have witnessed many companies in Mauritius going towards the verge of Voluntary Administration and liquidation in which Air Mauritius Limited could be seen as one example. A considerable provision has been amended in the IA 2009 as can be seen below:

Adjudication

Section 4 (3) of IA 2009 prescribes that the Court shall not make a bankruptcy order on the petition of a secured creditor unless the creditor has established that the amount of the debt exceeds the value of the security claimed by the creditor by at least Rs 50,000. However, the amount of Rs 50,000 have been replaced by Rs 100,000.

Creditor’s petition

Section 5 of IA 2009 enshrines that, a person may petition the Court for a bankruptcy order where the debtor owes the creditor Rs 50,000 or more

or, where 2 or more creditors join in the application, the debtor owes a total of 50,000 rupees or more to those creditors between them. However, the amount Rs 50,000 has been replaced by Rs 100,000.

Modes of winding up

Section 100 of IA 2009 enumerates sections concerning the modes of wining up. However, the following two sections have been inserted: where a resolution is passed during the COVID-19 period, or during a period not exceeding 3 months after the COVID-19 period lapses, that resolution shall be deemed not to have been passed and shall be void. However, this shall not apply to a company holding a Global Business Licence under the Financial Services Act 2008.

Circumstances for voluntary winding up

The following 2 sections have been added in Section 137 where a special resolution is passed during the COVID-19 period, or during a period not exceeding 3 months after the COVID-19 period lapses, that resolution shall be deemed not to have been passed and shall be void. However, this shall not apply to a company holding a Global Business Licence under the Financial Services Act.

Statutory demand

A statutory demand shall be in respect of a debt that is due and is not less than Rs 100,000 or such other amount as may be prescribed according to section 180 of IA 2009. However, the the amount Rs 100,000 has been replaced by Rs 250,000.

Court may set aside statutory demand

The application shall be made, and served on the creditor, within 14 days of the date of service of the demand as per the previous law. However, the 14 days have been replaced by 28 days as per the Covid-19 Act 2020.

Appointment of receiver

Any receiver appointed during the COVID-19 period shall be of no effect and shall be void. Same amendment has been made to Section 185 (1)and (3) of the IA 2009.

The Covid-19 Act has been promulgated as a matter of urgency by the government of Mauritius to address some of the significant concerns during this crisis. A considerable number of enactments have been amended and some newly temporary provisions have been inserted to ease the business activities in Mauritius.

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