Financial Times

Fresh battle brewing
Unions, shareholders, directors flex muscles for Commercial Bank AGM
By Duruthu Edirimuni
Powerful business tycoon Harry Jayawardena, whose valiant bid to seize control of Commercial Bank last year by ousting its chairman Mahendra Amarasuriya failed, is unlikely to make another attempt when the bank’s annual general meeting is held on March 30.

But, according to stockmarket analysts, things could get ugly at the meeting with unions flexing their muscles and proposing that one of their representatives be appointed to the board while issues are being raised over the appointment of a new auditor and the re-appointment of an ageing director who is unwell.

The meeting could turn stormy with union shareholders pitted against Jayawardena-backed directors. The board has rejected the proposal for a union representative on the board. “We asked the board of directors to appoint one of our corporate management members as a director, where he could function as the employee representative, but we have not received a positive response from the board of directors,” M.R. Shah, Secretary of the Commercial Bank Employees’ Union told The Sunday Times FT.

Analysts said that Jayawardena is not seeking to remove Amarasuriya this time, but could create some excitement with the market waiting with bated breath for a repeat of the skirmish that took place at the boisterous EGM last year called by the former. “He cannot bring in a motion to oust him (Amarasuriya) without 21 days notice,” a shareholder said, adding that the powerful tycoon appears to have – for the moment – withdrawn from the fight to oust Amarasuriya.

However bracing for some possible manoeuvring, the Employees’ Union is not giving up without a fight. An employee said that the union has started collecting proxies already.

“We plan to collect as many proxies as possible and vote against any unfair suggestions or moves by Jayawardena, thereby showing true shareholder power,” he said.

Shareholders are also questioning the good corporate governance of retaining J.S Mather, who is 75 years old as the Deputy Chairman. “He is coming up for re-election and he is not in good health. We need to have directors who are fit to carry out their duties and it is not good corporate governance to re-elect him,” a shareholder said.

Shareholders are also raising an issue over appointing Ernst and Young as new auditors by replacing Ford Rhodes in a move by the bank seen to enforce good corporate governance. They say Mather has been a partner of Ernst & Young from 1966 to 2001 and is now a consultant to them and the hiring of Ernst and Young is perceived as an obvious conflict of interest.

At a high-stakes battle last year which ended with a court ruling against Jayawardena, Amarasuriya came up against Jayawardena who had moved a resolution through an extraordinary general meeting to oust him.

The Appeal Court, acting on a petition by shareholders, ruled that Jayawardena had a shareholding in excess of 10 percent which was against the rules in the Banking Act and that he couldn’t use it to oust the chairman.
The court verdict came just as the EGM, called by Jayawardena, was being held one evening.

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