Section 18: Limitations on management and remuneration

18. Limitations on management and remuneration (1) No financial institution incorporated in Mauritius shall be managed by any person other than the persons on its board of directors or by any person other than persons appointed by the board of directors. (2) Any branch of a foreign financial institution shall be managed by persons appointed by the parent financial institution, which appointment shall be subject to the approval of the central bank. (3) Subject to subsection (4), no financial institution incorporated in Mauritius shall have a board of directors consisting of fewer than— (a) 5 natural persons; and (b) 40 per cent independent directors. (Subsec. (3) came into operation on 15 September 2008.) (4) The central bank may— (a) having regard to the size, complexity and ownership of a bank or non-bank deposit taking institution, require the bank or non-bank deposit taking institution to have more than 40 per cent independent directors and the appointment of any such additional director or directors shall be subject to the prior approval of the central bank; (b) having regard to the scope of the activities undertaken by a financial institution, require that its board of directors be composed of such higher number of persons or, where the financial institution is a subsidiary or an associate of a foreign banking B3 – 18 (3) [Issue 9] Banking Act group of companies, 40 per cent non-executive directors instead of 40 per cent independent directors, as the central bank may direct; and (c) in the case of a cash dealer, require that its board of directors be composed of such lower number of persons as the central bank may direct. (Subsec. (4) came into operation on 15 September 2008.) (5) No financial institution shall employ any person whose remuneration is linked to the income of the financial institution or to the level of activities on customers’ accounts. (6) Without limiting the generality of subsections (1) and (2), the directors of a financial institution shall— (a) establish such committees of the Board as the Board may determine to discharge its responsibilities effectively; continued on page B3 – 19 [Issue 9] B3 – 18 (4) Revised Laws of Mauritius (b) establish such procedures as may be necessary to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information; (c) take into account the requirements of the banking laws and establish such procedures as may be necessary to provide disclosure of information to customers and other parties having a direct interest in the financial institution; and (d) approve major policies of the financial institution, including, as applicable, investment, lending and risk management policies and standards and procedures in respect of such policies. (7) Every director or senior officer of a financial institution shall, in exercising any of his powers and discharging any of his duties— (a) act honestly and in good faith and in the best interest of the financial institution; and (b) exercise care, diligence and skill that a reasonable and prudent person would exercise in comparable circumstances. (8) Every director or senior officer of a financial institution shall comply with the banking laws, guidelines and instructions issued by the central bank and with the constitution and by-laws of the financial institution. (9) Every former director or senior officer of a financial institution shall remain acco ood faith and in the best interest of the financial institution; and (b) exercise care, diligence and skill that a reasonable and prudent person would exercise in comparable circumstances. (8) Every director or senior officer of a financial institution shall comply with the banking laws, guidelines and instructions issued by the central bank and with the constitution and by-laws of the financial institution. (9) Every former director or senior officer of a financial institution shall remain accountable for his obligation to have met the standards of conduct in accordance with subsection (7) and the compliance requirements of subsection (8) during his term of office. (10) No provision in any contract or in the constitution of a company or any resolution of a company shall relieve any director or senior officer from the duty to act in accordance with the banking laws or from liability for breach thereof. [S. 18 amended by s. 2 (h) of Act 18 of 2008 w.e.f. 19 July 2008; s. 3 (c) of Act 10 of 2010 w.e.f. 24 December 2010.]