Financial Times

Commercial Bank AGM rescheduled for Thursday
The Commercial Bank annual general meeting last Thursday was postponed by a week due to a quorum issue, but not before a shareholder questioned the legality of two of DFCC’s directors serving on the board.

K.C. Vignarajah, a shareholder said that since the courts had restrained the Distilleries Corporation (DCSL) and Sri Lanka Insurance Corporation (SLIC), together with related parties including DFCC limiting their voting rights to 10 percent in total, Commercial Bank Article 74 stipulates that a shareholder can nominate a director only if he maintains the shareholding of not less than 12 percent of the issued and outstanding voting shares.

“Therefore it would only be correct if the two nominee directors of DFCC resign forthwith,” he told The Sunday Times FT on the sidelines of the AGM.
“The character of DFCC has drastically changed from that of a state-controlled development corporation at its inception, to a privately controlled, intensely competitive bank, with interests directly conflicting with those of Commercial Bank. Therefore the DFCC nominee directors should not continue to act in contempt of all decent principles by remaining on the Board,” he said.
He further pointed out that National Asset Management Limited (NAMAL) which is a public deposit taking company under the control of DFCC, has sold a controlling interest to its indirect controller, Milford Investments.

“That is a tremendous let down to the investors of DFCC as well as NAMAL and a similar fate could have befallen Commercial Bank, if DFCC and related parties took control,” he said. The employees of the bank who gathered at the AGM in numbers, expected the meeting to be short due to the lack of quorum because of the provincial council elections on the same day of the meeting.

For a meeting to be conducted shareholders controlling a minimum 50 percent of the company should be present which has become a problem due to the dispute over Mr Jayawardene’s stake.

It was announced by the Chairman of Commercial Bank, Mahendra Amarasuriya that the next meeting would be held this Thursday ‘at the same time, same venue and will need only 30 percent of the shareholding to be present, to hold the AGM’.

Mr Amarasuriya came up against former majority shareholder Harry Jayawardena, who moved a resolution through an extra ordinary general meeting to oust him last year which failed when the Appeal Court ruled against his excessive shareholding of more than 10 percent. Also there was an issue of shareholders not being notified 21 days prior to the EGM of the change of venue.

Some employees said that they are trying to get an employee representative to the director board. Vignarajah echoing this comment said it would be good to have one or two employee directors with a definite stipulation of minimum shareholding, sufficient to retain equity interest on their own. “The Employee Share Options (ESOP) scheme should help,” he said.

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