An INSIGHT INTO THE COVID-19 act

Mannish Ajodah, Barrister.

The Covid-19 (Miscellaneous Provisions) Act (Act No 1 of 2020) was passed by the National Assembly on the 15 May 2020 and assented by the President of the Republic and gazetted on the 16 May 2020. It amends no less than 56 other existing acts. Many of these amendments are relevant to business decision makers. A brief insight on some of these amendments of interest is set out below.

See disclaimer at bottom of article.

CONTENT

1.             Meaning of “Covid-19 Period”

2.            Companies & Compliance

3.            Bankruptcy

4.            Insolvency

5.            Foundations, Limited Liability Partnerships, Limited Partnerships

6.            Taxation & Revenue

7.            Landlord and Tenant & Other Leases

8.            Workers’ Rights & Employment Relations

9.            Foreign Nationals

10.         Customs and Freeport

11.         Licences

1.            MEANING OF “COVID-19 PERIOD”

The meaning of “COVID-19 period” is pivotal to the law. It means the period starting on 23 March 2020 and ending on 1 June 2020 (or ending on such later date as may be prescribed by regulations).

2.            COMPANIES & COMPLIANCE

Practice Directions, Guidelines or other Instructions

The Registrar of Companies is empowered during the COVID-19 period (and such further period, as the Registrar may determine, after the COVID-19 period lapses) to issue such Practice Directions, Guidelines or such other Instructions as may be necessary for the proper administration of the Companies Act 2001.

Such Practice Directions, Guidelines or other Instructions issued shall be published in the Gazette and shall remain in force unless amended or revoked.

Delay to call Annual Meeting of shareholders

Pre Covid-19 Act position

Normally, the Board of directors had the obligation to call an annual meeting of shareholders up to 6 months after the balance sheet date of the company.

Post Covid-19 Act position

The delay has been extended to not later than 9 months (or not later than such further period as the Registrar may, after the COVID-19 period lapses, determine) after the balance sheet date.

Number of Annual Meeting of shareholders per year

Pre Covid-19 Act position

Annuals meeting of shareholders to be held (i) not more than once in each year and (ii) not later than 15 months after the previous annual meeting.

Post Covid-19 Act position

These prohibitions have been rendered inapplicable during the COVID-19 Period (and for such further period, as the Registrar may determine, after the COVID-19 period lapses).

Practice Directions - manner meeting to be held

Note: The Registrar is empowered to issue such Practice Directions as may be necessary to determine the manner in which an annual meeting of shareholders is to be held during the COVID-19 period (and such further period, as the Registrar may determine, after the COVID-19 period lapses).

Duty of directors on Insolvency

Pre Covid-19 Act position

Under section 162 of the Companies Act 2001, a director of a company who believes that the company is unable to pay its debts as they fall due has the duty to forthwith call a meeting of the Board to consider whether the Board should appoint a liquidator or an administrator. The Board which has been convened has the duty to consider whether to appoint a liquidator or an administrator, or to carry on the business of the company. Directors risk personal liability under section 162.

Post Covid-19 Act position

Section 162 has been rendered inapplicable during the COVID-19 period (and for such further period, as the Registrar may determine, after the COVID-19 period lapses).

Delay to prepare FS

Pre Covid-19 Act position

The Board of every company had the duty to ensure that statutory Financial Statements are (i) completed at its balance sheet date and (ii) dated and signed on behalf of the Board within 6 months after the balance sheet date of the company,

Post Covid-19 Act position

The delay has been extended to 9 months (or such further period, as the Registrar may determine, after the COVID-19 period lapses).

Delay to file and register FS

Pre Covid-19 Act position

A company (other than a company holding a Global Business Licence or a Small Private Company), has the duty ensure that copies of Financial Statements together with a copy of the auditor's report on those statements are filed with the Registrar for registration within 28 days after those financial statements of the company and any group financial statements are required to be signed.

Post Covid-19 Act position

The delay has been extended to 3 months (or such further period, as the Registrar may determine, after the COVID-19 period lapses).

3.            BANKRUPTCY

The statutory minimum has been increased from 50,000 rupees to 100,000 rupees.

4.           INSOLVENCY

Winding up resolutions Void

Pre Covid-19 Act position      

The winding up of a company may be effected inter alia (i) by way of a voluntary winding up commenced by a resolution passed by the company or (ii) by way of a resolution of creditors passed at the watershed meeting.

Post Covid-19 Act position

A resolution passed during the COVID-19 period, or during a period not exceeding 3 months after the COVID-19 period lapses, shall be deemed not to have been passed and shall be void.

[This voiding provision is not applicable to companies holding a Global Business Licence under the Financial Services Act].

Special resolutions to wind up Void

Pre Covid-19 Act position      

A company may be wound up voluntarily where the company passes a special resolution that it shall be wound up [subject to obtaining the leave of the Court where the application for winding up has been presented on the ground that a company is unable to pay its debts].

Post Covid-19 Act position

A resolution passed during the COVID-19 period, or during a period not exceeding 3 months after the COVID-19 period lapses, shall be deemed not to have been passed and shall be void.

[This voiding provision is not applicable to companies holding a Global Business Licence under the Financial Services Act].

Creditors’ Meetings

Pre Covid-19 Act position

S.142 of the Insolvency Act inter alia provides (i) for the duty of the directors to summon a meeting of creditors where there is a creditors’ voluntary winding up and (ii) for the mechanisms for such creditors’ meeting.

Post Covid-19 Act position

S.142 is made inapplicable during the COVID-19 period or during a period not exceeding 3 months after the COVID-19 period lapses.

Statutory Demand Minimum

The statutory minimum has been increased from 100,000 rupees to 250,000 rupees.

Delay to satisfy creditors

Pre Covid-19 Act position

A Statutory Demand had to require the debtor company (i) to pay the debt or (ii) enter into a compromise or (iii) otherwise compound with the creditor or (iv) give a charge over its property to secure payment of the debt, to the reasonable satisfaction of the creditor, within one month of the date of service, or such longer period as the Court may order.

Post Covid-19 Act position

The delay of one month has now been extended to two months.

Appointment of Receiver

Pre Covid-19 Act position

A receiver may be appointed under certain instruments that confer on a chargee (person entitled to the benefit of an instrument) the power to appoint a receiver.

Post Covid-19 Act position

Such appointment of a receiver during the COVID-19 period shall be of no effect and shall be void.

Appointment of Receiver or Receiver & Manager

Pre Covid-19 Act position

Where an instrument confers on the chargee the power to appoint (i) a Receiver or (ii) a Receiver and Manager, the chargee may appoint a receiver or a receiver and manager.

Post Covid-19 Act position

Such appointment during the COVID-19 period shall be of no effect and shall be void.

First Creditors’ Meeting

Pre Covid-19 Act position

The First Creditors’ Meeting has to be called within 10 days after the date on which the administration begins.

Post Covid-19 Act position

Where the period of 10 days expires, or falls wholly or partly, during the COVID-19 period, the meeting shall be held not later than 30 days after the COVID-19 period lapses.

5.           Foundations, Limited Liability Partnerships & Limited Partnerships

Practice Directions, Guidelines or other Instructions

The respective Registrars are empowered during the COVID-19 period (and such further period, as the Registrars may determine, after the COVID-19 period lapses) to issue such Practice Directions, Guidelines or such other Instructions as may be necessary for the proper administration of the respective Acts.

Such Practice Directions, Guidelines or other Instructions issued shall be published in the Gazette and shall remain in force unless amended or revoked.

6.            TAXATION & REVENUE

Who is liable to pay the Covid-19 Levy?

Every employer who has benefited from an allowance under the Wage Assistance Scheme shall be liable to pay the Covid-19 levy.

Exceptions:

(a)          No levy shall be payable where the employer to whom an amount has been paid under the Wage Assistance Scheme is not liable to income tax with respect to the year of assessment specified,

(b)         The Minister may, by regulations, exclude certain categories of employers from the levy.

When is the Covid-19 levy payable?

• Where the employer is –

(i)           an individual, or

(ii)         a resident société or

(iii)       a company whose accounting period ends on any date during the periods starting on 1 May 2020 and ending 31 December 2020, and starting on 1 May 2021 and ending 31 December 2021, the levy shall be payable in respect of the years of assessment commencing on 1 July 2020 and 1 July 2021.

• Where the employer is a company whose accounting period ends on any date during the periods (i) starting on 1 January 2021 and ending on 30 April 2021, and (ii) starting on 1 January 2022 and ending on 30 April 2022, the levy shall be payable in respect of the years of assessment commencing on 1 July 2021 and 1 July 2022.

What is the quantum of the Covid-19 levy?

• Where the employer is an individual, the levy payable –

(i)           in respect of the year of assessment commencing on 1 July 2020 shall be equivalent to - the lower of the following:

(A) the total amount paid to him under the Wage Assistance Scheme, or

(B) fifteen percent of the gross income derived by him [under section 10(1)(b), (c) and (g) after deduction of any expenditure allowable under sections 18, 19 and 24],

(ii)         in respect of the year of assessment commencing on 1 July 2021 shall be equivalent to - the lower of the following:

(A) the total amount paid to him under the Wage Assistance Scheme reduced by the amount of levy payable for the previous year of assessment, or

(B) fifteen percent of the gross income derived by him [under section 10(1)(b), (c) and (g) after deduction of any expenditure allowable under sections 18, 19 and 24].

• Where the employer is (i) a resident société or (ii) a company whose accounting period ends on any date during the period starting (i) on 1 May 2020 and ending on 31 December 2020, and (ii) starting on 1 May 2021 and ending on 31December 2021, the levy payable –

(i)           in respect of the year of assessment commencing on 1 July 2020 shall be equivalent to the lower of the following: 

(A)       the total amount paid to it under the Wage Assistance Scheme; or

(B)        fifteen percent of his chargeable income for levy* (i.e. fifteen per cent of the aggregate amount remaining after deducting from the gross income all allowable deductions except the unrelieved amount of a loss carried forward from a previous year of assessment).

(ii)         in respect of the year of assessment commencing on 1 July 2021 shall be equivalent to the lower of the following: 

(A)       the total amount paid to him under the Wage Assistance Scheme reduced by the amount of levy payable for the previous year of assessment, or

(B)        fifteen percent of his chargeable income for levy.

• Where the employer is a company whose accounting period ends on any date during the period (i) starting on 1 January 2021 and ending on 30 April 2021, and (ii) starting on 1 January 2022 and ending on 30 April 2022, the levy payable –

(i)           in respect of the year of assessment commencing on 1 July 2021 shall be equivalent to the lower of the following:

(A)       the total amount paid to it under the Wage Assistance Scheme; or

(C)        fifteen percent of his chargeable income for levy*.

(ii)       in respect of the year of assessment commencing on 1 July 2022 shall be equivalent to the lower of the following: 

(A)       the total amount paid to him under the Wage Assistance Scheme reduced by the amount of levy payable for the previous year of assessment, or

(B)        fifteen percent of his chargeable income for levy*.

7.            LANDLORD AND TENANT ACT & OTHER LEASES

Where rent has not been paid in respect of premises for the months of March 2020, April 2020, May 2020, June 2020, July 2020, August 2020 (and such other subsequent month as may be prescribed), such non-payment will not constitute a breach of a tenancy agreement.

Provided that the rent for the months of March 2020, April 2020, May 2020, June 2020, July 2020, August 2020 (and such other subsequent month as may be prescribed) is fully paid in instalments by 31 December 2021 (or such other date as may be prescribed).

• The statutory moratorium applies to all premises, whether business or residential premises, let under the Landlord and Tenant Act or under any other enactment.
• A Court may not make an order of eviction, whether to protected tenants under the Landlord and Tenant Act or any other tenants for failure by such tenants to pay rent (for the months of March 2020, April 2020, May 2020, June 2020, July 2020, August 2020 and such other subsequent month as may be prescribed, provided that the rent for the months of March 2020, April 2020, May 2020, June 2020, July 2020, August 2020 and such other subsequent month as may be prescribed is fully paid, in instalments, by 31 December 2021 or such other date as may be prescribed).

Caution: the law has not specified -

(i)     when the payment of the instalments has to start,

(ii) whether equal instalments have necessarily to be made consecutively every month.

8.          WORKERS' RIGHTS & EMPLOYMENT RELATIONS

Work from home

Employers may require workers to work from home.

A notice of at least 48 hours must be given to the worker.

Flexitime

Employers may request workers to work on flexitime.

A notice of at least 48 hours must be given to the worker.

A worker is also entitled to request to work on flexitime.

Unless there are reasonable business grounds to refuse, the employer shall grant the request.

No allowance for work performed on night shift

A worker who is employed on shift work shall not be entitled to any allowance for work performed on night shift during the COVID-19 period (and such further period as may be prescribed).

Rate of Overtime

A worker (other than a watchperson) who is employed in any of the sectors specified in the Ninth Schedule* and who works from the commencement of section 57 of the Covid-19 (Miscellaneous Provisions) Act until such further period as may be prescribed may be remunerated as follows -  

(i)           for work performed on a public holiday: at not less than twice the basic hourly rate for every hour of work,

(ii)         for work performed in excess of 45 hours (or such lesser number of hours as specified in the employment agreement) in any week, (not being hours of work performed on a public holiday): at not less than one and a half times the basic hourly rate per hour for every additional hour of work performed.

Ninth Schedule*

SECTORS

·       Blockmaking, construction, stone crushing and related industries

·       Manufacturing sector governed by the Factory Employees (Remuneration) Regulations 2019

Paid time off in lieu of payment

Paid time off, in lieu of the overtime, may be granted to a worker by the employer or at the request of the worker.

Deferral of paid time off

Where a worker has not been granted paid time off whether wholly or partly, any outstanding period of time off shall be accumulated up to (i) the date the worker ceases in any manner whatsoever to be in the employment of the employer or (ii) the 31 December 2021 or (iii) such other date as may be prescribed, whichever is applicable.

Where a worker cannot avail himself of the total number of hours of time off accumulated, he shall be paid remuneration in lieu of any time off left.

Such payment shall be made (i) at the time the worker ceases, in any manner whatsoever, to be employed by the employer or (ii) as at 31 December 2021 or (iii) such other date as may be prescribed, whichever is applicable.

Withholding of annual leave

During a period of 18 months following the expiry of the COVID-19 period, an employer may withhold up to 15 days’ annual leave (or such other number of annual leave as may be prescribed) from the aggregate of the annual leave* specified in subsection 45(1) which accrues to a worker as from the beginning of the year of the COVID-19 period or such further period as may be prescribed. [Separate provisions apply to part time workers].

However, if during the COVID-19 period a worker has performed work as required by his employer, no annual leaves shall be withheld.

Method of Computation of aggregate annual leave accruing to a worker*

      N/12 x Y 

“N” means the number of annual leave under subsection 45(1).

“Y” means the number of months in the period of less than 12 consecutive months.

Prohibition against termination of employment

An employment agreement shall not be terminated by an employer during any month in respect of which the employer is in receipt of financial assistance.

The powers of the employer in cases of misconduct by the employee are not limited by this prohibition.

Portable Retirement Gratuity Fund

Retirement or death

If –

(i)                a worker retires or dies on or after 1 January 2020, and

(ii)              no contribution is made in respect of the worker by his employer,

any gratuity to the worker or to his heirs shall (notwithstanding any provision to the contrary) shall be paid by the employer.

The amount of such gratuity shall be calculated in such manner as may be prescribed.     

Resignation or termination

If –

(i)                a worker resigns, or his employment is terminated, on or after 1 January 2020, and

(ii)              no contribution is made in respect of the worker by his employer,

any contribution to be made to the PRGF shall be calculated in such manner as may be prescribed.       

Reduction of Workforce - Fast Track for certain employers

An employer who provides services in the sectors specified in the Third Schedule to the Employment Relations Act* may be exempted by the Minister from the application of section 72 concerning the reduction of workforce and closure of enterprise.

The process of reduction of workforce or closure of the enterprise is fast tracked for such exempted employers:

(i)                the employer shall give written notice to the Redundancy Board, together with a statement showing cause for the reduction or closure at least 15 days before the intended reduction or closing down (30 days for non-exempted employers),

(ii)              the Redundancy Board shall complete its proceedings within 15 days from the date of notification by the employer (30 days for non-exempted employers),

(iii)            The delay for the Redundancy Board to complete its proceedings may not be extended (extension possible only for non-exempted employers).

Third Schedule*

Air traffic control

Civil aviation and airport, including ground handling and ancillary services

Customs

Electricity

Health

Hotel services

Hospital

Port, including cargo handling services and other related activities in the ports including loading, unloading, shifting, storage, receipt and delivery, transportation and distribution, as specified in section 36 of the Ports Act

Radio and television

Refuse disposal

Telephone

Transport of passengers and goods

Water supply

Unpaid leave instead of termination for certain enterprises

Where the Board finds that the reasons for the reduction of the workforce or the closing down are justified, the Board shall (i) in lieu of the termination of employment, (ii) at the request of the employer and (iii) subject to the consent of the worker concerned, order–

(i)           that the worker, or such category of workers as the employer may designate, shall proceed on leave without pay for such period as the employer may specify in his notification, and

(ii)      same to be subject to the condition that the resumption of employment be on such new terms and conditions, including pension benefits, as the employer may, prior to resumption of work, offer to the worker.

Transition Unemployment Benefits

A worker shall be entitled to a Transition Unemployment Benefit where-

(i)                he proceeds to leave without pay pursuant to an order made by the Redundancy Board, and

(ii)              he has not taken any other employment during the period when he is on leave without pay.

Labour Dispute - Fast Track for certain service industries

Pre Covid-19 Act position

Where a labour dispute is reported, the Commission for Conciliation and Mediation has a period extending up to 60 days to complete its proceedings, where an agreement has been reached.

Where no agreement is reached, the Commission has up to 7 further days to submit a report to the parties and refer the labour dispute to the Employment Rights Tribunal if requested by the party who reported the dispute.

Post Covid-19 Act position

During the Covid-19 Period (or such further period as may be prescribed), where any party to a labour dispute is from any service industry specified in Part I of the Third Schedule*, the President of the Commission for Conciliation and Mediation has to forthwith refer the dispute to the Tribunal [subject to its powers under section 65].

Part I of the Third Schedule*

(i)                Air traffic control

(ii)              Air transport services

(iii)            Civil aviation and airport, including ground handling and ancillary services

(iv)             Health

(v)               Hospital

(vi)             Port, including cargo handling services and other related activities in the ports including loading, unloading, shifting, storage, receipt and delivery, transportation and distribution, as specified in section 36 of the Ports Act

Delay for the Employment Relations Tribunal to make an award

Pre Covid-19 Act position

The Tribunal had to enquire into a labour dispute and make an award thereon within 90 days of the referral. This period could be extended by the Tribunal.

Post Covid-19 Act position

Where a labour dispute is by or on behalf of any party to the dispute in any service industry specified in Part I of the Third Schedule (supra), the Tribunal has to enquire into the dispute and make an award thereon within 30 days of the referral.

9.           FOREIGN NATIONALS

Extension of Validity of Permits

Where a permit issued under the Immigration Act has expired during the COVID-19 period, the permit shall be deemed not to have expired and shall remain valid for a period of 30 days after the COVID-19 period lapses (or for such further period as may be prescribed).

Where a permit issued under the Immigration Act has expired during a period of 21 days after the COVID-19 period lapses, the permit shall be deemed not to have expired and shall remain valid for a period of 30 days after the period of 21 days lapses (or for such further period as may be prescribed).

Permanent Residence permits and Residence permits

Any person who has been issued with a Permanent Residence permit or a Residence permit and who wishes to apply for an extension or variation of the permit may do so whilst being in Mauritius.

Extension of validity of Visa

                  Where, under the Passport Act, a visa expires during – 

(a)   the COVID-19 period, the visa shall be deemed not to have expired and shall remain valid for a period of 30 days after the COVID-19 period lapses (or for such further period as may be prescribed); or

 (b)  a period of 21 days after the COVID-19 period lapses, the visa shall be deemed not to have expired and shall remain valid for a period of 30 days after the period of 21 days lapses or for such further period as may be prescribed.

10.         CUSTOMS & FREEPORT

Time limit for payments by SME or VAT registered person (Customs)

Pre Covid-19 Act position

Where goods were entered and cleared by an SME or a VAT registered person, the duty, excise duty, taxes and any fees or charges leviable on the goods cleared had to be paid (i) in the month of June, not later than 2 working days before the end of that month and (ii) in any other month, not later than 7 working days after the end of that month.

Post Covid-19 Act position

The delay of 7 working days has been extended to 16 working days.

Period of Warehousing (Customs)

Post Covid-19 Act position

Goods entered during the period starting on 2 November 2019 and ending on 31 December 2020 may be warehoused from their date of entry for a period of 36 months.

Warehousing facilities (Freeport)

Pre Covid-19 Act position

Third Party Freeport Developers were authorised to provide warehousing facilities in a freeport zone (i) to an enterprise for the storage of goods free of duty, excise duty and taxes or (ii) to any other enterprise outside the freeport zones for the storage of goods.

Goods entered on or after 1 October 2018 could be stored for a maximum period of 24  months.

Post Covid-19 Act position

The maximum period for storage of goods by Third Party Freeport Developers has been increased to a maximum period not exceeding 36 months where the goods are entered during the period starting on 1 October 2018 and ending on 31 December 2020.

Furthermore, Private Freeport Developers may now also be authorized during the COVID-19 period (and such further period as may be prescribed after the COVID-19 period lapses) to provide warehousing facilities for the storage of goods, which have been cleared from Customs under the Customs Act, in a freeport zone to any person.

11.        LICENCES

Post Covid-19 Act position

A licence which expires during the COVID-19 period or during a period of 30 days after the COVID-19 period lapses, shall be deemed not to have expired and it remains valid for such period as may be prescribed by regulations.

…

Mannish Ajodah

LEGIS CONSULT LAW CHAMBERS

2nd floor, Henessy Court,

Pope Henessy Street, Port Louis

T: 210.10.10, 208.71.00

E: [email protected]

Disclaimer: This article only provides general information concerning the subject matter covered. It is NOT intended to amount to legal advice. It is strongly advised to seek professional advice from a Law Practitioner based on your specific situation.