Corporate Social Responsibility in Mauritius
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Corporate Social Responsibility in Mauritius

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CORPORATE SOCIAL RESPONSIBILITY IN MAURITIUS
Overview
The European Commission defines corporate social responsibility (CSR) as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. This is indeed somewhat contradictory to business terms since the only goal of a business is to make profits. However since CSR encapsulates the interest one and all in terms of economy, ecology and social upliftment, it has become more and more important in the past years. Following this global trend the government of Mauritius has chosen to include a mandatory form of CSR in the legislation of Mauritius.
In a nutshell it can be noted that the objective of this law has been to order the registered companies in Mauritius to pay 2% of their annual book profit towards some well-defined programmes that contribute to the social and environmental development of the country.

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    Corporate Social Responsibility in Mauritius Corporate Social Responsibility in Mauritius Document Transcript

    • CORPORATE SOCIAL RESPONSIBILITY IN MAURITIUS<br />Author: Ramtohul Yoganand <br />LLB (Hons) University of Mauritius<br />Date: 6th September 2011<br />CORPORATE SOCIAL RESPONSIBILITY IN MAURITIUS<br />Overview<br />The European Commission defines corporate social responsibility (CSR) as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. This is indeed somewhat contradictory to business terms since the only goal of a business is to make profits. However since CSR encapsulates the interest one and all in terms of economy, ecology and social upliftment, it has become more and more important in the past years. Following this global trend the government of Mauritius has chosen to include a mandatory form of CSR in the legislation of Mauritius.<br />In a nutshell it can be noted that the objective of this law has been to order the registered companies in Mauritius to pay 2% of their annual book profit towards some well-defined programmes that contribute to the social and environmental development of the country. According to the Mauritian guidelines on CSR, the objectives are as follows:<br />Encourage companies to manage their own programmes, impacting the intersection of economic with social and environmental development <br />Facilitate the contribution of companies to support existing Approved National Programmes implemented by Companies, national agencies or NGOs <br />Promote a functional community on NGOs with complementary workplans that are relevant to the national development programme <br />THE LAW ON MANDATORY MANDATORY CSR<br />The S50K of the INCOME TAX ACT OF MAURITIUS (Act 16 of 1995) provides that all companies must have a CSR fund that will be used to finance specific programmes. It also provides which companies are to be involved in CSR as well as how much and when to contribute to this fund. Companies such as those holding a Category 1 Global Business Licence under the Financial services Act, banks in Mauritius whose income are derived from banking transactions with non-residents or corporations holding a Global Business Licence under the Financial, IRS companies as mentioned in the Investment Promotion (Real Estate Development Scheme) Regulations 2007, as well as any non-resident société, a trust or a trustee of a unit trust scheme are exempted from the mandatory obligation on contributing to the CSR fund. All other companies incorporated and registered at the Registrar of Companies of Mauritius have to contribute 2% of their annual book profits to this fund as provided by the S50L of the INCOME TAX ACT OF MAURITIUS (Act 16 of 1995).<br />According to the S50L of the same Act the 2% that goes to the CSR fund shall be used to either implement an approved programme by a company, an approved programme under the National Empowerment Foundation or to finance an approved NGO. These programmes or the NGOs to be financed are reviewed by the CSR committee which is set up under the same S50L. This is done in order to have a better control and transparency about the investments being made. It also interesting to note that if in respect to a year the amount paid out of the CSR Fund is less than 2% then the difference shall be remitted as an income and will be taxed at end of the financial year. <br />STRUCTURES IN PLACE FOR PROPER GOVERNANCE<br />In order to avoid abuse of the CSR fund, the CSR committee has set up some restrictions on the different activities in which investments can be made. These activities are categorized as non-qualifiable activities. As such contribution for religious activities, for promoting discriminatory activities, to trade unions, to political parties as well as for activities against public and national interest is strictly prohibited. Also, sponsorship for marketing purposes as well as contribution to schemes that will benefit the staff or the families of staffs or shareholders do not fall under the approved programmes to be funded by a CSR fund.<br />Vehicles eligible for use in the implementation of a CSR Programme <br />A company can implement a CSR Programme through its own organization or by use of approved NGOs, Special Purpose Vehicle or via Corporate Partners. Companies with CSR Value of Rs 2 m (i.e. 2% of Profit equals or is greater than Rs 2 million) and, not using SPVs, may seek approval of their Corporate Programme from the CSR Committee using Corporate Programme Proposal Form. The CSR Committee will approve the application subject to receipt of all necessary documentation. Otherwise the company will have to contribute to any approved programme by the CSR committee. The different vehicules that can be used are described below.<br />Non Government Organisation (NGO) <br />There is some specific conditions that must be respected for an NGO to be eligible to be funded by a CSR fund. As such the NGO should have a legal locus standi and it should run on a non-profit making basis. It should also have an established track record of activities of atleast two years in socio economic development (including gender and human rights), health promotion, education, leisure and sports, environment, catastrophic interventions & support. They should operate on either a national, regional or local basis and should be on a NON-SECTARIAN basis. As such, there must exist no discrimination whatsoever in terms of race, sex, creed, nationality, gender and so on. Concerning the administrative costs of NGOs, they should not exceed 15% of the total expenditure of the budget of a project. <br />An NGO seeking approval for ‘Approved NGO Status’ must submit an application to the CSR Committee using Application Form for Accreditation of NGO. Once approved, the NGO will have to report to the CSR committee every six month about its programmes.<br />Special Purpose Vehicle (SPV) <br />A Company with a CSR Programme of above Rs 2 million annually can also use a Special Vehicle for the implementation of its programme.A Special Purpose Vehicle should have a legal status and be run on non-profit making basis. Similar to the NGOs, the administrative costs of Special Vehicle should not exceed 15% of the total expenditure of the budget of a project.  They should also keep well audited reports of their activities and should not be involved in any non-qualifiable activities. <br />SPVs must seek approval, using Application Form for Accreditation of Special Purpose Vehicle from the CSR Committee and must report in the same way as NGOs. However, contrary to a company using a NGO, a company using a Special Vehicle for CSR Programme will be allowed to carry forward a maximum of 20% the total CSR programme value for up to one year. <br />Corporate Partners <br />These are organizations which have been delivering CSR activities on behalf of a company for the last 2 years. As with NGOs and SPVs, corporate partners must operate on non-profit making basis and their administrative costs should not exceed 15% of the total expenditure of the budget of a project. Also, in order to be eligible, they should implement an approved corporate programme.<br />It is also interesting to note that a company with a CSR Budget of less than Rs. 2 million, using a Corporate Partner to implement its CSR Programme will be allowed to spend only an amount not exceeding 25% of the 2% value of the CSR budget. <br />Approved National Programme <br />Private, Non-Profit and Public organizations should apply to the CSR Committee for approval of an ‘Approved National Programme’ status, using Application to Accredit a CSR Programme as an Approved National Programme.Reporting on implementation must be submitted six monthly to the CSR Committee using the NGO, SPV and National Programme Reporting on Actual CSR Programme Implementation.<br />USE OF CSR FUND BY COMPANIES<br />Companies contribute mainly in education and sponsorship of students. However in practice these money may sometimes used for to fund programmes from which the companies themselves may benefit. In Mauritius, the CSR Committee reviews all these programmes and provides for specific guidelines in order to prevent these from happening. <br />The CSR fund contribution of some big companies of Mauritius:<br />ROGERS Group contributes towards education and training of adults concerning AIDS and allocates 1% of its CSR fund to this programme. The other 1% goes for funding other NGOs that engage in social and ecological development.<br />Air Mauritius supports charitable institutions in the form of rebated tickets, fund raising prizes, and community based promotional activities. It also donates to charitable institutions but not to political or any religious group. This company has also entered in an agreement with Mauritian Wildlife Foundation (MWF) in support of the conservation projects of the endemic flora and fauna of Mauritius and allocates part of its CSR fund to it. <br />Mauritius Commercial Bank:<br />This company contributes mainly in education and poverty alleviation. According to its annual report, the contributions to the CSR fund in 2010 were as follows:<br />Rs<br />Education 15,818000<br />Poverty Alleviation 5,225000<br />Environment 1,192000<br />Sports 436000<br />Others 849000<br />Ireland Blythe Ltd has been involved in poverty alleviation mainly and allocated part of its CSR fund to EAP (Eradication of Absolute Poverty) clusters. Also, the IBL Foundation CSR Committee has developed numerous micro projects called “Projet Sourire” focusing on education, health and sports for underprivileged children. A total of 8,035 000 Mauritian rupees had been allocated to these programmes as of year ended june 2010.<br />Bibliography<br />
      • Guidelines on Corporate Social Responsibility - Available at: http://www.nef.mu/csr/guidelines.php
      • A Beginner's Guide to CSR – Available at:
      • http://www.welovemauritius.org/node/29