The Insurance Board of Sri Lanka (IBSL) has not 'prohibited' but raised some 'issues' on the Extra-ordinary General Meeting (EGM) announced by Ceylinco Insurance with regard to CIESOT (Pvt) Ltd, company officials.
"IBSL has only raised issues and we have clarified our position to them," one official told The Sunday Times FT. However the company on Thursday in an announcement to the Stock Exchange said it was not holding the May 28 EGM.
Udaya Sri Kariyawasam, Chairman IBSL said that IBSL hadn’t 'prohibited' but reminded Ceylinco of Section 57 of the Insurance Act which permits insurance firms to grant loans to only long-term policyholders. "We reminded them that we will be compelled to take necessary action if they go ahead with this," he said.
He also said that IBSL sanction should have been obtained first, before the company went to shareholders. "If it was vice versa, then shareholders can sanction anything which is against the provisions of the Act," he added.
The company official said their intention was to get shareholder approval first for the proposed Rs. 200 million loan to the company’s Employees Share Ownership Trust (CIESOT) before IBSL sanction.
"The loan was to buy Ceylinco Insurance shares on behalf of the employees," he said. When asked the purpose of buying these shares, he said there was a request from CIESOT to buy shares.
The question as to why grant a loan from the parent firm to an Employee Share Ownership Scheme to buy shares of the parent company was not answered by officials. |
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