Financial Times

DFCC wrecks Combank meeting
By Duruthu Edirimuni
DFCC, the major shareholder of Commercial Bank, shook-up its annual general meeting (AGM) last week, along with other Harry Jayawardena-controlled entities with shareholding at the bank, resorting to “uncalled for” disruption and dragging the meeting to nearly five hours .

Agitated shareholders called for extreme measures asking some directors to resign from the board. DFCC which has agreed to appoint a trustee to the employee share ownership plan (ESOP) of the bank through an extra ordinary general meeting (EGM) dropped a bombshell when Nihal Fonseka representing the DFCC as a board director at the bank announced that DFCC will not participate at the EGM.

“This was an act of sabotage and disruption, because DFCC knew that if they do not participate, the EGM cannot be held as the quorum for the EGM which needs 30 percent would be reduced to 28 percent,” an employee, who was also a shareholder participating at the AGM said.

The regulator had stipulated to appoint a trustee to the employee share ownership plan (ESOP) the bank has, subsequent to the amendments to the Banking Act. This has been directed by the Director Bank Supervision through a letter to the Commercial Bank, which chairman Mahendra Amarasuriya showed the house.

DFCC said that based on legal advice the company has received, the bank will not participate at the EGM. Nihal Fonseka, CEO DFCC, told The Sunday Times FT that DFCC was advised legally that according to the Banking Act the loans can be given either to an employee or to a trust. “Because of this the employees can continue to have the same scheme as earlier,” he said.

Employees were shocked and demanded Fonseka’s resignation vehemently.
“Mr. Nihal Fonseka, being a director and having agrees at the board to go ahead with the resolution to amend the articles is opposing now. He is not acting at the interest of the bank, but to a hidden agenda. Also he is going against the Central Bank and what right has he to do this? We denounce the actions of the DFCC,” M.R. Shah, Secretary of the Union told The Sunday Times FT.

Shah said that the Union is contemplating their next step, but did not give details.

Back to Business