Budget proposal on appointment of directors
The so-called ‘Yahapalanaya’ regime’s second budget seems to have disturbed not one, but several hornets’ nests in numerous sectors. It is possibly the most contentious budget ever presented in a Sri Lankan parliament.Permit me to draw attention to another curious aspect that has not as yet attracted much attention, but is nonetheless of immense importance to public listed companies. I refer to the entitlement to a place on the Board of Directors of a PLC of a person holding 15 per cent of that company’s stock.I believe that only one other country has such a law, and that is Cambodia!
Elsewhere, listed companies are allowed to appoint directors of their choice, taking into consideration the domain knowledge, management experience, reputation and contribution required from the directors to guide the business.In recent times, there has also been pressure on companies to appoint independent directors in the interest of good governance.By making it possible for anyone that can get control of 15 per cent of the shares of a company to demand a place on its board, isn’t Sri Lanka moving backwards, and making our companies more vulnerable to manipulation by unscrupulous and unethical ‘mudalalis’ of the sort that held sway in the past?
Oscar R. Siritunga
Battaramulla