ECONOMYNEXT – A governance activist has called for immediate disclosure of a deal involving conflicts of interest or related parties by banks, non-bank lenders, insurance companies, stock brokers and primary dealers, as soon as they are planned.
Chandra Jayaratne, a former chief of the Ceylon Chamber of Commerce, said immediate disclosure was needed in the light of recent "serious financial crimes and financial irregularities" that have come to light.
He called for deals involving "conflicts of interests of directors, key managers and shareholders" to disclose when they are "contemplated, approved or concluded, whichever comes first."
The full statement is reproduced below:
Governor, Central Bank Colombo 01, Chairman, Securities Exchange Commission, Colombo 1. Chairperson, Insurance Board, Colombo 1.
Dear Sirs/Madam,
Immediate Disclosure of Significant Related Party Transactions /Transactions with Conflicts of Interests
In the light of recently publicly reported serious financial crimes and financial irregularities, it is recommended, (if not already so required by currently applicable regulatory provisions), that
1.Banks, Non Banking Financial Institutions, Finance Companies, and Primary Dealers, supervised by the Central Bank of Sri Lanka,
2.Stock Exchanges, Securities Traders, Stock Brokers, Fund Managers, Unit Trusts, and other Financial Services entities supervised by the Securities Exchange Commission of Sri Lanka,
3.Insurance Companies and Insurance Brokers supervised by the Insurance Board of Sri Lanka
be required by appropriate regulations to immediately report to the relevant regulator, when any significant/major
01.Related Party Transactions or
02.Transactions impacted by conflicts of interests of directors, key managers and shareholders
is contemplated, approved or concluded , whichever comes first.
The regulations to be promulgated must make such immediate non disclosure a serious offence carrying penal consequences.
Significant/major transactions for this regulatory purpose to be defined in relation to Equity and/or Free Cash Reserves of the entity, as determined to be appropriate by the relevant regulator.
The public notice of significant/major Related Party Transactions and Transactions impacted by conflicts of interests of directors, key managers and shareholders, made via published quarterly and annual financial statements will not serve the purpose of transparency on a timely basis required in controlling / minimizing any such transactions, where such transactions are deemed to be financially irregular or a part of transactions that are classified as penal offenses.
I trust that the above recommendation will receive your early attention
Yours Sincerely, Chandra Jayaratne
cc. Prime Minister, Minister of Finance, Attorney General, Registrar of Companies, Chairman, Colombo Stock Exchange, Auditor General, President, Institute of Chartered Accountants of Sri Lanka Director General, Sri Lanka Accounting and Auditing Standards Monitoring Board Director General Financial Intelligence Unit Media for Publication