ISSN: 1391 - 0531
Sunday, April 01, 2007
Vol. 41 - No 44
Financial Times  

CB to reveal bank shareholdings

By Duruthu Edirimuni

Indefinite stay order over Harry’s stake

The Appeal Court on Tuesday gave an indefinite stay order against Harry Jayawardene in the use of voting rights in excess of 10 percent at Commercial Bank.The order will be in force till the completion of the case in which Jayawardena is being challenged by unions in the use of his full voting (direct and indirect) rights – 42.6 percent.

Two other cases in relation to the same issue were taken up and in all cases the court directed Jayawardena to file objections on or before June 30. Arguments have been re-fixed for September 17 to 21.

“Earlier the stay order was granted till the case was taken up on a future date, but now the judge has given an indefinite order till the case is over,” a Commercial Bank official said. He said Jayawardena’s lawyers had moved to remove the stay order on 10 percent voting rights but the judge rejected the submissions.

Last week Jayawardena withdrew his special leave to appeal application in the Stassen’s dispute following a series of technical objections raised by Dr. V.P. Vittachi’s counsel. The objections were on the original affidavit tendered to the Supreme Court not being sworn before a Justice of Peace – as required -- and containing only Jayawardena’s signature. It was also argued that the original petition tendered to court has not been addressed to the Supreme Court but to the Court of Appeal and therefore was not a proper application.

Jayawardena’s counsel sought court consent to file a fresh application which the court said would be considered at that time.
In the meantime, the AGM of the Commercial Bank which took place on Wednesday was postponed to next week due to the lack of a quorum – also arising out of Jayawardena’s disputed stake.

The Central Bank plans to disclose shareholdings of all banks next month in line with its new regulation to limit stakes of both individuals and entities that hold more than 15 percent in a bid to bring about more clarity and transparency to the sector.
This follows the end of the two-month deadline on March 19 where banks had to disclose their shareholdings of over 15 percent of direct or indirect control.

“Some have submitted, but I do not think that all have submitted their shareholdings. We will announce it by mid April but we will not extend the deadline,” Nivard Cabraal, Governor Central Bank told The Sunday Times FT. He added that banks have not requested for an extension of the deadline and as such there will be no need for it. “We believe that this new direction is an improvement on the regulation that we had. These rules do not go by themselves because corporate governance structures and fit and proper tests will also be incorporated soon to back this role,” he said.

The Central Bank issued a direction under sections 12 (1)(d) and 46 (1) (d) in the Banking Act last year stating that any direct or indirect shareholding of a person or an institution should be a maximum of 15 percent. Commercial Bank officials said the bank had written to the Central Bank of the shareholding breakdown two weeks ago. “We wrote about our shareholding to comply with Central Bank direction,” a Bank official said.

He said the bank had written about business tycoon Harry Jayawardena’s direct and indirect shareholdings of Commercial Bank amounting to 42.6 percent. Banking sources said that Cabraal had granted DFCC Bank 18 months in which to reduce its stake of 29 percent in Commercial Bank. In DFCC too, Jayawardena’s stakes which are held indirectly, figure prominently.

Some other banks including Hatton National Bank have also complied with the direction. Under the new rules, banks would be given a specified period in which individuals and institutions would have to limit their stake to a maximum 15 percent stake.

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Copyright 2007 Wijeya Newspapers Ltd.Colombo. Sri Lanka.