The Commercial Bank (CB) has forwarded a legal opinion raised by some CB union members pertaining to major shareholder DFCC's directorship in CB, to the bank’s lawyers, according to CB officials.
This issue was raised by CB's Union Secretary M.R. Shah when he read out a legal opinion relating to the DFCC directorships and as requested by the CB management, tabled it at the recently concluded Annual General Meeting (AGM).
A CB official told The Sunday Times FT that the union has got a legal opinion to the effect that DFCC cannot hold a single directorship (let alone the two it currently holds) as per the directive by the Court of Appeal a few years ago.
"We have sent this document which was tabled at the AGM to our lawyers to be looked at," Mahendra Amarasuriya, Chairman CB told The Sunday Times FT.
“Clause 74 (i) of the Articles of Association of CB states that a shareholder who maintains a shareholding not less than 12% of the voting shares of the company is entitled to nominate one non executive director to the CB board. According to the interim order issued by the Court of Appeal, the DFCC Bank is not entitled to vote at any meeting of the bank on the basis of shares exceeding 10%. Also Section 16 of the Companies Act says that subject to the provisions of Section 89, the articles of a company shall bind the company and its shareholders. The company is bound by its Articles and therefore DFCC Bank will not be entitled to nominate a Director under Clause 74 (i) of the Articles of Association, which is the legal opinion that we got,” a union official explained.
He said in this context the union pointed out at the AGM that DFCC Bank no longer has voting rights in excess of 10% attributable to the ownership of shares held by DFCC Bank. “As such DFCC cannot nominate any Director to CB as per Clause 74 (i) of CB,” he added. DFCC has Dinesh Weerakkody and Shiromi Wickremasinghe as DFCC nominee directors at CB.