July, 23, 2019
Securities and Exchange Commission of Sri Lanka (SEC) has said it is time to segregate the Chief Executive Officer (CEO) and Chairman roles performed by one individual in listed entities and called for public comments on the move.
“The best practice on Corporate Governance discourages concentration of power in one individual. An established norm is that there should be a clear division of responsibilities at the level of Board of Directors (BOD) of the Company, which will ensure a balance of power and authority, such that no one individual has unfettered powers of decision,” it said in a published consultation paper.
As best practice, the Chairman is expected to be an independent non executive director and shall not perform the role of the CEO.
The Securities and Exchange Commission of Sri Lanka (SEC) is pleased to invite the public and all stakeholders to submit written comments to this consultation paper to reach the SEC on or before 19th August 2019, under the title “Public Consultation on Segregation of CEO and Chairman Role Performed by One Individual in Listed Entities”.
Comments received may be publicly available and will not be treated as confidential unless a special request is made in that respect.
Currently, as per the Listing Rules of Colombo Stock Exchange (CSE), there is no specific rule relating to the separation of the CEO and Chairman positions.
Due to absence of such rule, the SEC notes that certain Public Listed Companies have the role of Chairman and CEO/ Managing Director (MD) performed by the same individual.
As per the CSE, following are details of CEO and Chairman Segregation as at date.
Based on above analysis, it is clear a vast majority of listed entities (83% from Total Listed Entities) have already segregated the roles of Chairman / CEO and have an independent or a non-executive director as Chairman.