Section 159: Remuneration and other benefits

159. Remuneration and other benefits (1) Subject to subsections (5) to (10) and the constitution of a company— (a) the company shall by ordinary resolution approve the remuneration of the directors and any benefit payable to the directors, including any compensation for loss of employment of a director or former director; (b) the Board may determine the terms of any service contract with a managing director or other executive director; (c) the directors may be paid all travelling, hotel and other expenses properly incurred by them in attending any meetings of the Board or in connection with the business of the company. (2) Subject to subsections (5) to (10), the constitution may provide that the Board, instead of the meeting of shareholders of a company, may, where the Board considers that it is fair to the company, approve— (a) the payment of remuneration or the provision of other benefits by the company to a director; (b) the payment by the company to a director or former director of compensation for loss of office. (3) Where the Board approves any payment under subsection (2), the Board shall forthwith enter, or cause to be entered, in the interests register, if the company has one, and in the minutes of directors’ meetings particulars of any such payment. (4) Where a payment is made under subsection (2), any shareholders who— (a) consider that the payment was not fair to the company; and (b) hold between them not less than 10 per cent of the company’s voting share capital, may, within one month of the date on which the existence of the payment or other benefit was first made known to shareholders, whether through the annual report, production of the interests register to a shareholders meeting or otherwise, require the directors to call a meeting of shareholders to approve the payment by way of ordinary resolution and to the extent to which the payment is not approved by ordinary resolution, it shall constitute a debt payable by the director to the company. [Issue 1] C35 – 102 Revised Laws of Mauritius (5) Subject to subsection (6) a company shall not— (a) make a loan to a director of the company or any relative or related entity of the director; or (b) enter into any guarantee or provide any security in connection with a loan made by any person to any person referred to in paragraph (a). (6) Subsection (5) shall not prevent a company from— (a) making a loan to a related company, with the approval of the Board; (b) entering into a guarantee or providing security in connection with a loan made by any person to a related company; (c) providing a director with funds to meet expenditure incurred or to be incurred by him for the purpose of the company or for the purpose of enabling him to perform his duties as an officer of the company; (d) making a loan in the ordinary course of the business of lending money, where that business is carried on by the company; (e) making a loan to a director who is engaged in the salaried employment of the company or its holding company, in accordance with a scheme for the making of loans to employees of the company which is approved by the meeting of shareholders of the company in so far as its application to directors is concerned; or (f) making a loan pursuant to section 81 in respect of a director who holds salaried employment under the company or in a holding company or subsidiary of the company. (7) Where a loan is made in breach of subsection (5) the loan shall be voidable at the option of the comp or its holding company, in accordance with a scheme for the making of loans to employees of the company which is approved by the meeting of shareholders of the company in so far as its application to directors is concerned; or (f) making a loan pursuant to section 81 in respect of a director who holds salaried employment under the company or in a holding company or subsidiary of the company. (7) Where a loan is made in breach of subsection (5) the loan shall be voidable at the option of the company and the loan shall be immediately repayable upon being avoided by the company, notwithstanding the terms of any agreement relating to the loan. (8) Where a transaction other than a loan to a director is entered into by a company in breach of subsection (5)— (a) the director shall be liable to indemnify the company for any loss or damage resulting from the transaction; and (b) the transaction shall be voidable at the option of the company unless— (i) the company has been indemnified under paragraph (a) for any loss or damage suffered by it; or (ii) any rights acquired by a person other than the director in good faith and for value, without actual notice of the circumstances giving rise to the breach of this section, would be affected by its avoidance. C35 – 103 [Issue 1] Companies Act (9) Notwithstanding the provisions of this section, the shareholders of a company may, by unanimous resolution or by unanimous shareholder agreement, approve any payment, provision, benefit, assistance or other distribution referred to in this section provided that there are reasonable grounds to believe that, after the distribution, the company is likely to satisfy its solvency test. (10) For the purposes of this section, “a related entity of a director” means a company or corporation in which the director and any relative or relatives of the director between them hold, by themselves or through nominees, voting interests that equal or exceed 50 per cent or the Board or managing body of which is otherwise controlled by such persons within the meaning of section 5.