Sri Lanka to make separation of chairman, CEO roles mandatory
ECONOMYNEXT – Sri Lanka’s stock market regulator is to make mandatory the separation of the role of chairman and chief executive in listed companies in efforts to improve good governance standards and minority investor protection, an official said.
The mandatory separation of the two roles would help Sri Lanka improve its position in the World Bank’s Ease of Doing Business Index, said Harshana Peiris Suriyapperuma, Director Corporate Affairs of the Securities and Exchange Commission (SEC).
Provision aimed at better protecting minority investors would be handy in making improvements in the index, he said.
The gains would come from the extent in which conflicts of interest are removed or minimised and better shareholder governance, he told a forum on reforms to improve Sri Lanka’s ranking in the Doing Business Index held by the Ministry of Development Strategies and International Trade.
The SEC had earlier introduced voluntary guidelines on the separation of the role of chairman and chief executive in firms listed on the Colombo stock exchange.
“Now the law is silent on whether the same individual can be chairman and CEO at the same time,” Suriyapperuma said.
“The SEC is going to make the rule mandatory. No listed firm can have same person as chairman of the board and chief executive in charge of day-to-day operations.”
Of the 300-odd listed companies, only about 40 companies have voluntarily separated these two roles.
(COLOMBO, March 12, 2019-SB)