May, 17, 2019
Sri Lanka’s one of the key minority shareholder of several listed companies who had been continuously representing monitory shareholders’ interests of Sri Lanka’s stock market traders, and a leading good governance advocate, and former Chairman of Ceylon National Chamber of Industries (CNCI), K.C. Vignarajah has called upon the Central Bank and the Securities and Exchange Commission (SEC) to intervene to protect the interests of public and minority shareholders, ‘As certain controlling shareholders and related parties are allegedly on the move to devalue stocks by creating “Shareholder Fatigue”.
Reports outlined that in letters addressed to SEC Chairman, Ranel T. Wijesinha, and Governor, Central Bank, Dr. Indrajith Coomaraswamy, Vignarajah says that it is common knowledge that the market has been manipulated and pushed down. It is now the focus of local and foreign experts, as well as policy makers, and the Aid groups. They have commented on the lack of sufficient protection for Independent Minority Shareholders (IMS).
Further in a letter addressed to the Governor of Central Bank of Sri Lanka (CBSL), he says, that the bankers well know and have an Eagle Eye view of the oppressive Controlling Interest and Related Parties (CI&RP) as well as the oppressed investing public and the robbed Independent Minority Shareholders (IMS).”
“The Central Bank of Sri Lanka (CBSL) has a major role in directing policies with effective follow up action to ensure macro-economic fundamentals which would rapidly restore investor confidence (local and foreign) supporting Enterprise Society (ES) of which an efficient stock market with Good Corporate Governance (GCG) of all companies is at the core. The widely held public listed companies (PLCs) and an effective cooperative system which embraces entrepreneurship talent and the amazing skills of our people will enhance the image of our country. “The Independent minority Shareholders (IMS) investors are accorded all the support of low interest rates, sufficient loan capital to which stand adversity, and access to timely information.
The letter further highlights following:
1) Investors from the Average Decent Citizens (ADC) have to deal with:
a) A debilitating era of bad governance, uncertainty, inconsistency, opaque processes and procedures - the wrongdoers in government and public/private actors in the capital/ stock markets,
b) The oppression and mismanagement, price manipulation and malpractices in the Stock market, which have caused much loss to the investing public, economy, the image and the reputation of our country as an investment destination where good governance, peace, harmony and law and order prevail,
c) Our country and Colombo Stock Exchange (CSE) need much more Equity investments, (instead of the country’s and corporate debt). Foreign Direct Investment (FDI) is a critical need for our economic growth, and for settlement of foreign debt.
We need a clean, efficient stock market to grow an equitable Enterprise Society (ES), sharing the benefits of such enterprise. Many honest, knowledgeable persons have also demanded the same. It is the sacred duty of the CBSL and the banking community. They should achieve this by advising, and act in consultation with the Government to give moratorium on loan repayments and interest rate reductions. The AWPLR in Nov 2014 was 6.45% and in recent months it was double this.
Further in his letter to Chairman, SEC, he points out a few remedial measures which he had suggested many years earlier as well.
1. Re reduction of Public Holding (PH) below stipulated minimum Public Holding (PH).
a) Automatic cancellation of transactions which breach the minimum PH and imposition of severe penalties for the offenders-The Chairman, CEO, Company Secretary and Brokers who are or should be aware of the manipulations,
b) Make the voting shares of Controlling Interest & Related Parties (CI&RP) ‘Non Voting’ if they are in breach of the limit of (PH),
c) To create liquidity and marketability make “share splits”, “scrip dividends”, “Bonus shares”, etc to keep the price below Rs.100 per share,
d) Revalue Assets and capitalize all the Capital Reserves,
e) Declare dividends to ensure that 50% of Net Profit after Tax (NPAT) is distributed as dividends, subject to capital expenditure requirements of confirmed approved plans for expansion,
f) Offer substantial discounts on Companies Products to shareholders in proportion to their shareholding.