Minority shareholders of Maskeliya Plantations threaten court action
the shareholders accused the directors of running down many areas of the estates and questioned about the yield being reduced over the years.
Minority shareholders of Maskeliya Plantations Limited (MPL), a subsidiary of Richard Pieris Group triggered a commotion at the MPL annual general meeting last week and threatened to take the directors to court alleging that the shareholders’ interests were not looked after by them.
K. C. Vignarajah, a shareholder of MPL, addressing the directors at the AGM including Dr. Sena Yaddehige, Chairman, Richard Pieris, said that the directors of the company failed to ensure the ‘sanctity of the obligation’ to the shareholder.
“They have taken Rs.100 million as management fees. Many shareholders who were present at the AGM were agitated over the severe conflict of interest and about the directors who were siphoning out money from the company,” he told The Sunday Times FT.
He further said that in reply to these questions the directors responded that the management fees are a legal contract. “One might argue that this is the practice and that it is a legal contract, but now the sanctity of the shareholder - director pact has been betrayed by the MPL directors,” he said.
Another shareholder said that when these allegations were made, Yaddehige vacated the chair and Paul Ratnayake, his co-director on several Richard Pieris & Co Ltd board directors was asked to conduct the meeting.
Vignarajah also said that shareholders raised issues about Rs.4.1 million interest from associated firms not being paid to MPL.
“With escalated interest rates these transactions should have been stated properly. Part of these transactions were called short-term deposits where the interest had been paid to MPL, but in the majority of the large transactions, the interest was not paid,” he explained, adding that on top of the management fee component, there was administrative expenses charges at Rs.40 million and a finance cost of Rs.60 million.
He also said that the shareholders accused the directors of running down many areas of the estates and questioned about the yield being reduced over the years.
Vignarajah said the shareholders had pointed out that the ‘reasonable’ dividend for them was at Rs. 2.50, but the directors agreed to offer only fifty cents per dividend.