VEIL OF INCORPORATION

Under Mauritius law, a company duly incorporated is a separate legal entity distinct from its shareholders, its employees and its individual directors[1].

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]

The Mauritian Law[3] provides for the duty of directors to act in good faith and in best interests of company.

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].

 EXCEPTIONAL CIRCUMSTANCES WHERE DIRECTOR’S LIABILITY IS ENGAGED

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 façade concealing the true facts and the faute is committed outside the director’s normal functions[5].

Directors may also need to take the interests of creditors, rather than just shareholders, into account, in situations closer to insolvency the company.

As per Mauritius Law[6] 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.

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].

[1] Mauritius Broadcasting Corporation v Ashrafi Financial World Company Limited & 2 ors [2011 SCJ 155]

[2] Rory Kenneth Dunoon Kirk v. The Bay (Holding) Limited & Ors [2013 SCJ 108]

[3] Section 143 of the Companies Act 2001 (the “Act”)

[4] Borneo Investment Group Inc, Egon Mauss v. Borneo Investment Group Inc [2012 SCJ 448]

[5] 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]

[6] Section 162 of the Companies Act 2001

[7] Same ref. above [2011 SCJ 1555]