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Mauritius: Administrators appointed to wind up limited life companies to now abide by the provisions of the Insolvency Act

14 June 2024
– 3 Minute Read
| Tax

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Overview

  • There has been a notable development in this year's Budget insofar as the winding up of limited life companies is concerned.
  • It is being proposed that the Companies Act 2001 (CA 01) be amended so that administrators appointed for the winding up of limited life companies be required to comply with the provisions of the Insolvency Act 2009 (IA 09).
  • The proposed change raises important questions as to whether the appointment of an administrator, in itself, would be subject to the IA 09, which requires a duly qualified and registered Insolvency Practitioner to be appointed.
  • It is also unclear whether ongoing administrations of end-of-life companies would be captured by the upcoming amendments through, for instance, the need to appoint a duly registered Insolvency Practitioner.
  • This development is one that operators and investors alike would be well advised to keep a close watch on.

The Minister of Finance, Economic Planning and Development presented the last Budget of the mandate of the current Government of Mauritius on 7 June 2024. While this year’s Budget is, on the whole, a continuation of previous Budgets, there has been a notable development insofar as the winding up of limited life companies is concerned.

It is being proposed that the Companies Act 2001 (CA 01) be amended so that administrators appointed for the winding up of limited life companies be required to comply with the provisions of the Insolvency Act 2009 (IA 09). The proposed change addresses a long-standing gap in the CA 01, which does not impose an obligation on administrators to be subjected to any insolvency regime in particular, unlike what duly registered Insolvency Practitioners are required to do under the IA 09.

The forthcoming amendment will ensure that administrators adhere to a standardised and legally consistent process, as outlined in the IA 09. The process includes detailed provisions such as, inter alia, the obligations of administrators to make necessary filings with the Director of Insolvency Service and issue public notices pertaining to the winding up of companies.

By aligning the winding up procedures of limited life companies in the CA 01 with the winding up process under the IA 09, a higher level of certainty and predictability as to the obligations of the administrator will be brought about statutorily, which can only be beneficial in the protection of the interests of creditors, shareholders and other stakeholders.  

However, the proposed change raises important questions as to whether the appointment of an administrator, in itself, would be subject to the IA 09, which requires a duly qualified and registered Insolvency Practitioner to be appointed. This is not the case, currently, under the CA 01, which allows any person, including an officer of the company, to act as administrator and, as such, there is no requirement for an Insolvency Practitioner to be appointed.

Additionally it is unclear whether ongoing administrations of end-of-life companies would be captured by the upcoming amendments through, for instance, the need to appoint a duly registered Insolvency Practitioner.

These amendments will only come into effect upon the passing of the Finance Act towards the end of July 2024. It is only upon the circulation of the Finance Bill, which will be debated in Parliament during July, that clarity may be obtained. It is therefore a matter that we will keep clients updated on, and one that operators and investors alike would be well advised to keep a close watch on.