Rules on corporate governance for listed companies

Rules on Corporate Governance for Listed companies, formulated by the Securities and Exchange Commission of Sri Lanka (SEC) and the Institute of Chartered Accountants of Sri Lanka (ICASL) in consultation with the Colombo Stock Exchange are to be incorporated into the listing rules of the Colombo Stock Exchange with a view to enforcing mandatory compliance by companies listed on the Colombo Stock Exchange.

The SEC said in a statement that these standards relate to the minimum number of non-executive and independent directors, the basis for determining ‘independence’, disclosures required to be made by listed companies in respect of its directorate, the minimal requirements to be met by listed companies in respect of the audit committee and the remuneration committee.

These rules are to be implemented in two stages so that listed companies have adequate time to become compliant.

In the first instance, it will be mandatory for listed companies to publish a Table in the Annual Report relating to the financial year commencing on or after 1 April 2007 confirming that as at the date of the Annual Report they comply with the Corporate Governance standards set out in the Listing Rules and if not, explain why the company has not complied with identified items.

In the second stage, it will be mandatory for listed companies to comply with the Corporate Governance standards in the Listing Rules with effect from the financial year commencing on or after 1 April 2008 and the Annual Report must contain the relevant affirmative statements, the SEC said.

Failure to comply with these rules will attract the penalties relating to the violation of a Listing Rule.

The specially appointed committee which formulated these corporate governance standards comprised of a group of eminent personalities representing different spheres of corporate affairs together with representatives of the SEC. They are Asite Talwatte, Richard Ebell, Nihal Fonseka, Ronnie Peiris, Ms Dilani Alagaratnam, Ms Priyanthi Pieris, Thusantha Wijemanne, Lakshman Perera, S. Sockalingam, Ms Ruvini Bandara, Danushka De Silva, Ms Surekha Sellahewa, Channa de Silva, Ms Marina Fernando, Ms Surana Fernando, Ms Sharmila Panditaratne and Ms Dayanthi Panabokke.