Sri Lanka bans Swarnamahal Financial Services related party transactions
ECONOMYNEXT – Sri Lanka’s markets regulator has prohibited Swarnamahal Financial Services (SFS) from related party transactions including the write-off of outstanding debt saying it was in ‘dire’ financial straits with negative net asset value of over a billion rupees.
The Securities and Exchange Commission said in a statement that SFS had “extensive” related party transactions without required checks and balances.
The firm was also guilty of “repeated non-compliance with mandatory corporate governance requirements” that affected the interests of investors negatively, it said.
SFS also had “significant issues relating to going concern status” and was unable to infuse capital despite Central Bank regulatory requirements, the SEC said.
In the interest of investors, the SEC said it banned SFS from entering into related party transactions including any write-off of outstanding or making of adjustments that will reduce the outstanding balances, except by way of recovering outstanding debt from related party transactions.
The prohibition is effective until SFS complies with corporate governance requirements of the Colombo stock exchange listing rules.
(COLOMBO, Jan 18, 2016)