Proposed association to shareholders must not be infiltrated by ‘controlling interests’ or mafia, says good governance activist
View(s):The proposed association promoted by Sri Lanka’s Securities and Exchange Commission (SEC) representing the interests of small shareholders should not be controlled by any ‘controlling interests’ (groups that control a company) or the stock market mafia, top sharemarket governance activist has said.’
In a letter to the SEC containing his proposals for the formation of such an association, K.C.Vignarajah, a long-time proponent of a vibrant, healthy and well-regulated market, said that “I like to emphasize that the Independent Minority Shareholders (IMS) forming the Association should be truly independent and not be controlled or connected to the Controlling Interest or Related Parties (CI&RP) of the PLCs. The stock market mafia should not be allowed to infiltrate the organization”
His representations follow a call by the SEC for public comments and input towards the formation of a “Minority Investors Association” (MIA).
Mr. Vignarajah has suggested that the name of the association should be the Association of Independent Minority Shareholders (AIMS) and it should be a private company limited by guarantee with a sole objective of assisting, representing truly Independent Minority Shareholders (IMS) (Voting and Non-voting) of Companies.
Members will have to be IMS with genuine minority stakes which do not form part of controlling groups or related parties shareholdings and are not controlled, connected or influenced by the controlling interest and related parties(CI&RP). The most important aspect would be the members’ commitment to the progress, wellbeing and growth of the company, equity market and the capital market, he has said.
IMS should have a meaningful stake in the equity shareholdings of companies or even significant shareholdings so as to be more committed to the success and good governance of the companies. The Association will promote the rights of all Independent Minority Shareholders (IMS), irrespective of whether they are members or not. He suggested the formation of a research unit to analyse results of companies and liaise with other research organizations which analyse the macro economic situation, fiscal policies and the impact on the stock market and individual companies.
He said there should be a legal support unit consisting concerned and committed lawyers who have the interest of justice and fair play to all decent law abiding citizens of Sri Lanka which would strengthen and enhance the spirit of individual choice, free enterprise and the wellbeing of everyone.
He said impunity and tolerating wrongdoing or exploitation would guarantee corruption, unjust enrichment, manipulation and malpractices in the stock market to create the worst image of Sri Lanka.
He said the Colombo Stock Exchange (CSE) has popularly been referred to as a ‘Club of Stockbrokers’. Conflicts of Interest (CoL) are growing and many IMS have serious complaints about the stockbrokers and the CSE as their CoL has caused severe losses to IMS.
In the context of who the SEC should seek consultations with in discussing the public proposals, Mr. Vignarajah has suggested the following:
Ms. Indrani Sugathadasa Weeratunge- former Chair SEC, Chair IBSL; Chari P de
Silva- former Chair SEC; Ken Balendra- former Chair SEC; M.J.C. Amarasuriya- former Chair Commercial Bank; Dinesh Weerakkody – former chair Commercial Bank and Tilak Karunaratne – former Chair SEC.
He has also suggested that the following parliamentarians from all parties should also be asked to study discuss and support required amendments to the Companies Act, SEC Act and rules and regulations applicable to the capital market. They are:
D.E.W. Gunasekera Chairman COPE; Wijedasa Rajapakse, former Chairman COPE, eminent lawyer; M.A. Sumantharan, Good Governance Specialist, eminent lawyer; Anura K. Dissanayake-Good Governance, HR Activist; Sunil Handunneththti -JVP; Rev. Athuraliye Rathana Thero – JHU; Rauf Hakeem-Minister of Justice; Vasudeva Nanayakkara -representing leftist interests; Prof. Tissa Vitarana-LSSP – on welfare of average decent citizens; Dr. Sarath Amunugama, Minister; Dr. Harsha de Silva-economist and rights activist; and Eran Wickramaratne- former banker and rights activist.