Little or no corporate governance in Sri Lankan companies

A recent article on business value of corporate governance though well written, lectures the need to move beyond rules, to principles. Day-dreaming? In Sri Lanka, even the rules are flouted sometimes even by the regulator like the Central Bank or other authorities. For example Central Bank regulators are appointed to private banks, a day after their retirement; directors with a questionable past are appointed to development banks and businessmen who are living off banks are appointed to banks.

Related party transactions are not disclosed. Executive Directors join other banks without a mandatory cut off period taking insider information to other rival institution, when even low level sales representatives are barred from joining other rival companies. There is little or no hope for principles in Sri Lanka other than with rules. The very people who cre- attention to, hence at least the investor in those companies should force directors to focus on key governance considerations and governance structures, and even help those involved to understand the challenges of the governance landscape to protect their investments. In the future, ongoing regulatory and investor scrutiny of corporate governance structures and approaches in the world will impact companies of all shapes and sizes. Given the many rules and requirements facing boards, along with increasing shareholder demands, addressing governance issues early and thoughtfully will make Lankan companies look more attractive, to potential initial investors and to subsequent investors. But with the current set of regulators and shareholders there is not much we can expect. R. Fernando

(Via email)