Shareholders' Agreements In Mauritius: Is A Fixed Duration Required?

Imagine spending months negotiating a shareholders' agreement, crafting minority shareholder protections, funding arrangements, and governance provisions, only for one shareholder to simply give notice and then walk away. That is the risk when a shareholders' agreement is silent on its duration: it may be treated as a contract of indeterminate duration, leaving any party free to terminate it unilaterally by giving reasonable notice.

In March 2026, the French Cour de cassation delivered a landmark ruling on this very question. But can the same reasoning protect shareholders in Mauritius?

The Mauritian legal framework

Shareholders' agreements in Mauritius sit at the crossroads of two legal regimes: 

• The Companies Act 2001 (modelled on New Zealand's Companies Act 1993) recognises a shareholders' agreement provided it is unanimous and concerns a private company. Such an agreement may override the company's constitution or even certain provisions of the Act itself.
• However, the shareholders' agreement remains first and foremost a contract, governed by the Mauritian Civil Code (inspired by the French Civil Code, pre-2016 reforms). The rules of contract law, including those on duration and termination, apply in full.

Under both Mauritian and French law, the prohibition of perpetual commitments means that:

• A contract with a fixed term cannot be terminated unilaterally before it expires.
• A contract with no fixed term can be ended at any time by any party, provided reasonable notice is given.

The Mauritian Supreme Court very recently confirmed this in Sénéque C.S. v H. Rault Co Ltd: that a contract without a fixed term may be terminated unilaterally, as long as reasonable notice is given and the termination is not abusive. Although that case did not involve a shareholders' agreement, the same principle applies: any contract of indeterminate duration, including a shareholders' agreement, silent on its term, may be terminated in this way.

What happened in France

For over twenty years, French courts treated a shareholders' agreement that was silent on duration as having no fixed term, meaning any party could walk away. The key decisions of the French courts held that such agreements could be terminated unilaterally at any time on giving reasonable notice.

The first shift came in 2023, when the French court ruled that a shareholders' agreement could validly run for the life of the company, and that this did not offend the prohibition of perpetual commitments, because the life of French companies is capped at 99 years.

The decisive reversal came on 11 March 2026. The Chambre commerciale of the Cour de Cassation now holds that a shareholders' agreement without an express term is presumed to run for the remaining life of the company. It is therefore a contract with a fixed term, and no party can terminate it unilaterally.

Why this does not work in Mauritius

The French reasoning depends on one key fact: French companies have a maximum life of 99 years. This gives the shareholders' agreement a finite end-point, making it a fixed-term contract.

In Mauritius, companies do not have a statutory expiry date. Linking a shareholders' agreement to the lifespan of a Mauritian company would therefore produce a contract of unlimited duration, the very thing the prohibition of perpetual commitments is designed to prevent. The French presumption could apply in Mauritius only where a company has a fixed lifespan set out in its constitution, as is the case for limited life companies under the Companies Act 2001.

Our view

In light of the above, it is our view that the principle which prevailed in France prior to the revirement (judicial reversal), namely that a shareholders’ agreement without an express term is of indeterminate duration and may be unilaterally terminated, may remain applicable in Mauritius.

In any event, and at least until Mauritian courts have had the opportunity to rule on this specific point, inserting an express term in the shareholders' agreement is the most prudent course of action. We, accordingly, recommend:

• Stipulating a fixed term: The term may be long or short depending on the needs of the parties but providing for a lengthy period gives the agreement near-permanent effect without inviting any argument that it was intended to last in perpetuity. This should be coupled with the ability to terminate early upon the occurrence of certain trigger events, as set out in the paragraph below.
• Specifying early termination triggers: The agreement should list the events that may bring it to an end before the expiry of its fixed term, such as the winding-up of the company; only one shareholder remaining; the execution of a written agreement by all parties to terminate the shareholders' agreement; or any other event the parties choose to include as a trigger, such as an initial public offering (IPO).
• Avoiding silence on duration: The agreement should not be left silent on the question of its duration. Silence risks the agreement being characterised as a contract of indeterminate duration, which may be subject to unilateral termination by any party upon reasonable notice, an outcome that is unlikely to reflect the parties' intentions.
• Including an insolvency survival clause: The agreement should contain a clause ensuring that certain protections survive the insolvency of a party. This means that, even if a shareholder or the company enter a formal insolvency process, agreed safeguards, such as buy-out mechanisms, non-compete obligations or confidentiality duties, continue to apply rather than falling away.