A top shareholder of Ceylinco Insurance has complained to the Securities and Exchange Commission (SEC) over an assault and a wrongfully-held special Extraordinary General meeting on Tuesday. Officials from the Global Rubber Industries (Pvt) Ltd (GRI) which has a 22.86 per cent stake in the company, met Harshana Suriyapperuma, Director Corporate Affairs SEC on Wednesday [...]

The Sunday Times Sri Lanka

GRI complains to SEC over assault and intimidation by Ceylinco staff at EGM

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A top shareholder of Ceylinco Insurance has complained to the Securities and Exchange Commission (SEC) over an assault and a wrongfully-held special Extraordinary General meeting on Tuesday.

Officials from the Global Rubber Industries (Pvt) Ltd (GRI) which has a 22.86 per cent stake in the company, met Harshana Suriyapperuma, Director Corporate Affairs SEC on Wednesday and made a written as well as a verbal complaint alleging that Ceylinco staff was behind the assault.

“One person was hospitalised after arguments and fisticuffs broke out at this stormy meeting and we met with Mr. Suriyapperuma on Wednesday afternoon to file a complaint,” Parakrama Weerasinghe, Group General Manager GRI told the Business Times.

However the company strongly denied allegations that their staff had allegedly assaulted some shareholders.

Asked to respond to GRI’s claims, R. Renganathan, Managing Director/CEO of Ceylinco Life said that at the meeting a proxy holder had bit a steward who was serving food. “He bled and a complaint was lodged at the Police station,” he said.

With reference to the dispute over the segregation of the life and general units, he said that “any matter pertaining to the Companies’ Act is dealt at the Commercial High Courts which has ruled that Ceylinco Insurance doesn’t need shareholder approval to segregate”.

Responding to GRI allegations that the Ceylinco Insurance will be a shell company, he said “they lack understanding of financial statements. This model is approved by the Insurance Board. We are only complying with the regulations”.

Biting and assault

At a hastily-called media briefing on Tuesday afternoon GRI also showed a video of how shareholders were assaulted.

Earlier in the morning, one shareholder present told the Business Times that at one point during the meeting a shareholder bit a security guard’s chest which turned bloody when guards intervened to break up opposing factions.

More than 200 shareholders were present at the meeting.

The company was holding two meetings, one at the request of a shareholder, and the second one to endorse a proposal for segregation of life and general units as separate entities.

The trouble flared at the first meeting where GRI had wanted an explanation accusing the company of ‘surreptitiously transferring the business and assets without shareholder approval’.

Ceylinco Insurance promised an EGM as far back as January 2013 to provide shareholders with information on the segregation model that the board has decided to use in order to segregate its insurance business, according to Sanjaya Senaratne, CFO GRI. Earlier insurance regulator, the Insurance Board of Sri Lanka had directed all insurance companies that are carrying out the life and general insurance business to segregate or split their insurance business into separate companies by February 2015. Ceylinco was given four years by the IBSL to segregate their insurance business. Most insurance companies have almost completed their segregation.

“We requested information from time and time again on the segregation and because we were not provided with this information, we, exercised our rights as a shareholder and called for an extraordinary general meeting”.

The purpose of the meeting was to get further information regarding the segregation model that the board has decided to use in order to segregate its insurance business,” Mr. Senaratne told media.

Surrounded, intimidated, scolded

He added that the EGM was called for on Tuesday at 9.00am. “Without allowing the resolutions to be put in front of the shareholders, the Chairman terminated the proceedings. When shareholders asked questions about the segregation, the shareholders were surrounded, intimidated, scolded in filth and assaulted, and forced to leave. One of the assaulted was injured and is in hospital,” he said and proceeded to show video footage of the harassment of the shareholders.

This is the second instance that the company has intimidated shareholders at a general meeting in this manner when shareholders tried to exercise their lawful rights of asking questions about the management decisions of the company, Mr. Weerasinghe said.

He said that it is customary at the beginning of any general meeting for the proxy vote count to be announced, and this was suspiciously avoided by Ceylinco Insurance.

According to him the real reason for not holding the meeting was due to the proxy inspection done by GRI, when it was evident that majority shareholders have voted in favour of the GRI resolutions which were to be called at the first meeting. “These three resolutions were only asking for information on the segregation. It was also noticed during the proxy inspection of the second meeting held at 11 am (after the first meeting) that once again the majority of shareholders had voted against the resolution on the split proposed by Ceylinco Insurance. This information can be easily verified if Ceylinco Insurance makes the proxy vote count public,” Mr. Weerasinghe alleged.

Mr. Senaratne said that the company tried to rely on some court proceedings to say that they don’t need shareholder approval to segregate.

“The court proceedings however, clearly state that the application of the company is only in respect of consequential matters and not the segregation. Why would the company want to hide behind court orders instead of giving shareholders information on the segregation?” he asked.
He pointed out that all other insurance companies have gone to their shareholders and got shareholder approval to segregate their insurance business. “It is very disturbing that Ceylinco Insurance, being the largest insurer of this country, is seemingly trying to find all the ways possible to not to go before their shareholders on the segregation. They convene EGMs, then terminate EGMs saying there’s no need for the EGM.”

Fight for rights

He added that Ceylinco tried to get District Court approval for the segregation but the District Court has held that the approval granted for segregation is per incuriam because the company did not inform the court of the requirement of shareholder approal.

“We urge the regulator, the Insurance Board, to investigate this matter and to give the required relief to us as a key shareholder as well all other minority shareholders of this company. We also urge the stock exchange and the SEC to investigate this matter and the harassment of shareholders,” he reiterated, adding that they won’t allow this company to use the segregation to cause any injustice to the shareholders and lock the shareholders into a shell company.

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