The Court of Appeal on Friday extended the stay order on firms controlled by Harry Jayawardena which, together have a major stake in Commercial Bank, restricting its shareholding in the Bank to 10 percent.
Hatton National Bank, Lanka Milk Foods, Distilleries together with DFCC Bank were restricted from exercising their voting rights exceeding more than 10 percent of the Bank.
Presently, under Section 12 of the Banking Act an individual, partnership or corporate body shall not either directly or indirectly or through a nominee or acting in concert with any other individual, partnership or corporate body acquire a material interest in a licensed commercial bank (LCB) without the prior written approval of the Monetary Board. The threshold limit in the Act is 10 percent.
Mr. Jayawardena’s direct and indirect shareholdings of Commercial Bank amounts to 42.6 percent. In November 2005, four Ceylon Bank Employees Union (CBEU) members including its President M. R. Shah filed a petition in the Court of Appeal seeking an order to prevent Mr Jayawardena from acting directly or indirectly from casting a vote at any shareholders meeting on the basis of shares exceeding 10 percent of the issued share capital of the Commercial Bank.
Meanwhile, the Court on Thursday made another ruling in a connected case where DFCC is seeking an order that it would a financial loss if they comply with the Central Bank (CB) directive issued to DFCC to reduce its current stake in Commercial Bank before October 23 (Thursday). The Court rejected the plea and said DFCC should comply with the directive.