Constitution Or Shareholders' Agreement – Which One Prevails?

In the daily practice of a corporate lawyer in Mauritius, a common item which crops up when seeking to ascertain the management rights and duties and obligations of the various stakeholders of a company is whether one should give prevalence to the company's constitution or to its shareholders' agreement.

A quick analysis of the law shows that a company may but does not need to have a constitution. Where it does not, it will be the provisions of the Companies Act (the Act) which will govern the rights and powers of its Board and shareholders. Where it does, the provisions of such constitution will govern such rights and powers provided there are no inconsistencies with the mandatory provisions of the Act. The constitution has the effect of a contract between the company and each shareholder, and between the shareholders themselves.