{"id":48854,"date":"2025-05-29T13:15:00","date_gmt":"2025-05-29T13:15:00","guid":{"rendered":"https:\/\/my.legal500.com\/developments\/?post_type=legal_developments&p=48854"},"modified":"2025-05-29T13:15:00","modified_gmt":"2025-05-29T13:15:00","slug":"when-a-director-of-mauritian-company-is-personnally-liable-towards-third-party","status":"publish","type":"legal_developments","link":"https:\/\/my.legal500.com\/developments\/thought-leadership\/when-a-director-of-mauritian-company-is-personnally-liable-towards-third-party\/","title":{"rendered":"WHEN A DIRECTOR OF MAURITIAN COMPANY IS PERSONNALLY LIABLE TOWARDS THIRD PARTY?"},"content":{"rendered":"

VEIL OF INCORPORATION<\/strong><\/p>\n

Under Mauritius law, a company duly incorporated is a separate legal entity distinct from its shareholders, its employees and its individual directors[1]<\/sup><\/a>.<\/p>\n

Then, a director cannot be confounded with the company he manages and the company creates a veil between third parties and its directors and officers.[2]<\/a><\/p>\n

<\/p>\n

The Mauritian Law[3]<\/a> provides for the duty of directors to act in good faith and in best interests of company.<\/p>\n

However, the duties of directors shall be owed to the company and not to the shareholders, debenture holders or creditors of the company. Nevertheless, a shareholder may sue a director to enforce obligations owed to the company in a derivative action [4]<\/a>.<\/p>\n

\u00a0<\/strong>EXCEPTIONAL CIRCUMSTANCES WHERE DIRECTOR\u2019S LIABILITY IS ENGAGED<\/strong><\/p>\n

However, there are exceptional circumstances where the corporate veil of a company can be pierced and the personal liability of a director engaged, e.g. where the company is a mere fa\u00e7ade concealing the true facts and the faute is committed outside the director\u2019s normal functions[5]<\/a>.<\/p>\n

Directors may also need to take the interests of creditors, rather than just shareholders, into account, in situations closer to insolvency the company.<\/p>\n

As per Mauritius Law[6]<\/a> 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, or to carry on the business of the company. Where, a director fails to comply with the above requirement, at the time of that failure the company was unable to pay its debts as they fell due; and the company is subsequently placed in liquidation, the Court may, on the application of the liquidator or of a creditor of the company, make an order that the director shall be liable for the whole or any part of any loss suffered by creditors of the company as a result of the company continuing to trade.<\/p>\n

If a director did not take every step to minimize losses when insolvent liquidation was predictable and has actually occurred, he\/she engages his\/her personal liability towards creditors of the company[7]<\/a>.<\/p>\n

\n

[1]<\/a> Mauritius Broadcasting Corporation v Ashrafi Financial World Company Limited & 2 ors [2011 SCJ 155]<\/p>\n

[2]<\/a> Rory Kenneth Dunoon Kirk v. The Bay (Holding) Limited & Ors [2013 SCJ 108]<\/p>\n

[3]<\/a> Section 143 of the Companies Act 2001 (the \u201cAct\u201d)<\/p>\n

[4]<\/a> Borneo Investment Group Inc, Egon Mauss v. Borneo Investment Group Inc [2012 SCJ 448]<\/p>\n

[5]<\/a> Mauritius Commercial Bank Ltd vs Robert Lesage & Ors [2010 SCJ 222], Maudar & Ors vs Moirt & Ors [2011 SCJ 387], Rory Kenneth Dunoon Kirk v. The Bay (Holding) Limited & Ors [2013 SCJ 108]<\/p>\n

[6]<\/a> Section 162 of the Companies Act 2001<\/p>\n

[7]<\/a> Same ref. above [2011 SCJ 1555]<\/p>\n","protected":false},"featured_media":0,"template":"","class_list":["post-48854","legal_developments","type-legal_developments","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments\/48854","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/legal_developments"}],"about":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/types\/legal_developments"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/developments\/wp-json\/wp\/v2\/media?parent=48854"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}