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The validity of the Vanik article restricting the ownership of shares by any single shareholder to only 10 per cent has been questioned by Asia Capital, who say that the provision may be against the listing rules of the CSE which require free transferability of shares.
CSE requirements on memorandum and articles of association require inter alia, that fully paid shares shall be free from any restriction on the rights of transfer....;
Restrictions are permitted to conform to statutory or governmental requirements.
Asia Capital insists that this provision requires Vanik to permit one shareholder to own more than 10 per cent of equity.
The mandatory article which has to be included in all articles of association prior to giving a CSE quotation says, Notwithstanding anything to the contrary in these presents if and so long as the companys shares are quoted in any licensed stock exchange, the Board may register without incurring any liability therefore any transfer of shares in accordance with the requirements of the rules and regulations in force for the time being and from time to time of such licensed Stock Exchange and agency whose primary objective is to act as Central Depository for such Exchange.
It was also said that restrictive articles were not included in the prospectus issued to the public. Article 12 which contained a 10 per cent restriction applied only to allotments and not to subsequent purchases.
However Vanik Chief Justin Meegoda says a proviso in article 38 clearly prohibited the ownership of more than 10 per cent of stock by a single shareholder and article 12 was highlighted in the prospectus because only allotments were made at the time of the public issue.
The articles were a public document and could have been inspected by anyone he added.
The stock exchange and the SEC had also approved the provision and such provisions were not unique, he said. Sampath Bank for example had a restriction of 5 per cent on ownership.
In addition he says the listing rules referred to the transferability of shares and not to a limit.
In an unprecedented move Asia Capital had appealed to the members of the SEC directly questioning an earlier decision by the SEC secretariat regarding the validity of the Asia offer in the face of the 10 per cent restriction on ownership.
There are also questions as to the legal validity of Asias appeal SEC said.
However the Commission had been unable to sit for a lack of quorum through the lalst week.
The proposed takeover of Banque Indosuez branch in Colombo by ABN Amro has fallen through and the Hatton National Bank would now acquire Indosuez operations, The Sunday Times Business learns.
"We have made a firm offer for Banque Indosuez which has been accepted," HNB Managing Director Rienzie Wijetilleke said.
The transaction had been submitted to the Monetary Board of the Central Bank for approval.
ABN Amro and Banque Indosuez made a joint announcement earlier that ABN would be taking over the assets and liabilities of Banque Indosuez's commercial banking operations, in Sri Lanka.
But Banque Indosuez would continue to have an interest in merchant banking through Asia Capital Ltd in which it has an interest the statement said.
"We have officially advised Indosuez that we have no further interest in the transaction", ABN General Manager Rajan Ray said.
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