Corporate Governance

Good corporate governance is a mechanism that harmonises the interests of a wide range of stakeholders of an institution, while contributing to sustainable growth by attracting outside sources of capital. The Corporate governance practices of DFCC Bank PLC (Bank) are in accordance with the Board-approved Corporate Governance Charter of the Bank.

Bank practices high standards of corporate governance based on the OECD principles of good governance. OECD principles of good governance are based on the following six guidelines:

• Promoting transparency, being consistent with laws and clearly articulating division of responsibilities
• Protecting and facilitating the exercise of shareholder rights
• Equitable treatment of all shareholders
• Recognising the rights of stakeholders and encouraging co-operation between stakeholders in creating wealth and the sustainability
• Timely and accurate disclosure on all material matters regarding the Bank including financial situation, performance, ownership and governance
• Ensuring the strategic guidance of the Bank, effective monitoring of management of the Board, and the Board’s accountability to the Bank and the shareholders

The key corporate governance practices of the Bank are given in this Report with specific disclosures relating to the status of compliance with the mandatory requirements of Direction No. 12 of 2007 of the Central Bank of Sri Lanka (as amended). In view of the application of these mandatory regulatory provisions and disclosures that are required to be made the Colombo Stock Exchange has exempted licensed banks from the application of Section 7.10 of the Listing Rules of the Colombo Stock Exchange relating to corporate governance.

Our Goals of Good Corporate Governance

Board Committees as at 31 March 2015

 

Attendance

Attendance of Directors at Meetings
Name of Director		Main Board		Audit Committee		Human Resources & Remuneration Committee		Nomination Committee		Integrated Risk Management Committee		Credit Approval Committee
Total No. of Meetings		17		13		5		4		4		7
Mr K P Cooray		1/1
Dr L P Chandradasa		12/14				1/3
Mr G K Dayasri		11/17				4/5
Mr T Dharmarajah		14/14		9/9						2/3		2/3
Mr A R Fernando		17/17								4/4
Mr P M B Fernando		17/17		13/13				3/3		4/4
Mrs H M N S Gunawardana		16/17
Mr C R Jansz		17/17				5/5		4/4		4/4		7/7
Mr J E A Perumal		17/17		12/13		5/5		4/4				5/7
Mr R B Thambiayah		12/15						1/1				5/5
Ms S R Thambiayah		1/1

 

Shareholder Rights

The basic rights of shareholders include – (a) the ability to transfer shares freely, (b) to have access to financial and other relevant information about the entity on a regular and timely basis, (c) the ability to effectively participate in shareholder meetings, (d) appoint Directors and Auditors, and (e) equitable treatment relating to the type of shares owned. The shares of the Bank are freely transferable through the Colombo Stock Exchange but subject to limitations stated in the Articles of Association of the Bank and the Banking Act.

The Board approved Corporate Communications Policy ensures that information relating to the financial performance and the progress of the Bank is made available to shareholders through timely disclosure made to the Colombo Stock Exchange (CSE). The Annual Report contains a comprehensive review of performance as well as other information of relevance to the other stakeholders apart from reporting on the financial condition of the Bank and the Group. All important information is given publicity through the press and electronic media and posted on the Bank’s website.

The Bank has procedures to promptly disseminate price sensitive information and trading in shares by the Directors to the CSE as required by the Listing Rules. In instances where this is not possible, the Head of Compliance advises closed periods for the trading in Bank’s shares by employees and Directors. As a general rule, the period commencing two weeks after the end of each quarter up until three market days after the financial information is released, is treated as closed periods. Procedures are in place to detect any violations.

During the year, Bank has shared a reasonable portion of its profit with shareholders in the form of a dividend while retaining the balance to support its growth and development.

All shareholders of the Bank are treated equally on the basis of one vote per ordinary share. The Bank has not issued any non-voting ordinary shares or preference shares.

Annual General Meeting

The Annual General Meeting of the Bank is held within a period of one year from the date of the previous meeting after giving adequate notice to shareholders as required by the Articles of Association. The Annual Report and Notice of Meeting are sent to all shareholders in order to enable effective shareholder participation at the meeting. Shareholders have the opportunity to obtain the Annual Report as an electronic or printed document. Extraordinary General Meetings are held to obtain shareholder approval on matters that require such approval.

Annual Corporate Governance Report for the Year Ended 31 March 2015 published in terms of Section 3 (1) (xvi) of the Banking Act Direction No. 12 of 2007

Rule	Governance Principle	Compliance	Remarks
3.1 Responsibilities of the Board
3.1 (i)	Safety and soundness of the Bank The Board has strengthened the safety and soundness of the Bank through the implementation of the following:
	(a) Strategic objectives and corporate values	Compliant	The corporate values approved by the Board are posted on the internal web and all employees are guided by these values.
	(b) Overall business strategy	Compliant	Bank’s strategic plan for the medium term was approved by the Board in February 2014. The Board engages in the strategic planning and control of the Bank by overseeing the formulation of business objectives and targets and assessing risks by engaging qualified and experienced personnel and delegating them with the authority for conducting operational activities and monitors the performance through a formal reporting process.
	(c) Principle risks	Compliant	The identification of principle risks, approving of overall risk policy and risk appetite is carried out through the Board Integrated Risk Management Committee which are reviewed annually.
	(d) Communication with stakeholders	Compliant	The Board approved Corporate Communications Policy ensures that information is made available to shareholders and other stakeholders through timely disclosure made to the Colombo Stock Exchange (CSE) and by publicity through the press and electronic media and posted on Bank’s website. The Bank has an internally developed code of conduct for its employees which is posted on the internal web and is accessible by all employees.
	(e) Bank’s internal control and management information systems	Compliant	The Audit Committee assists the Board in reviewing and evaluating the effectiveness of the internal control system including the controls over financial reporting of the Bank. The Internal Audit carries out periodic reviews to ensure that the internal control systems are functioning as appropriate. The Report by the Board of Directors on internal control over financial reporting is given here. The Independent Assurance Report by the External Auditor on the Directors’ Statement on Internal Control is given here.
	(f) Key Management Personnel (KMP)	Compliant	The Board has identified and designated its Key Management Personnel. Please refer Note 58.6.1 to the financial statements.
	(g) Authority and responsibility	Compliant	Board has identified matters reserved for Board. The duties and responsibilities of other KMP’s are formally documented in their job descriptions.
	(h) Oversight of the affairs of the Bank by KMPs	Compliant	Oversight exercised through Board Committees with reporting to the Board as appropriate.
	(i) Board’s own governance practices	Compliant	The effectiveness of the Board’s own governance practices are reviewed by the Board. An annual self assessment is carried out on a structured format and areas for improvement are discussed for necessary action.
	(j) Succession plan for KMPs	Compliant	The Bank has in place a succession plan for senior management which is reviewed annually and approved by the Board.
	(k) Regular meetings with KMPs to monitor	Compliant	Meetings are attended by relevant executives when required. Additional information sought by Directors on papers submitted to Board is clarified by the respective officers. Board has free access to senior management.
	(l) Regulatory Environment	Compliant	Chief Executive Officer briefs the Board on specific issues. Directors attend the Annual Symposium conducted by the Central Bank. Board Secretary provides all regulatory information required to the Board members. Senior management maintains continuous dialogue with the Regulator.
	(m) Due diligence in hiring and oversight of External Auditor	Compliant	The primary responsibility for making recommendations on the appointment of the External Auditor rests with the Audit Committee. A formal Policy approved by the Board on Engagement of External Auditor to perform non-audit services is in place.
3.1 (ii)	Appointment and segregation of the roles of the Chairman and CEO	Compliant	The Board elects the Chairman and appoints the Chief Executive Officer while the Chairman provides leadership to the direction, oversight and control process exercised by the Board. The CEO is responsible for management of the Bank.
3.1 (iii)	Board meetings	Compliant	The Board held 17 Board meetings during the year. The Directors actively participated in the Board decision-making process as evident from the Board minutes. Seeking approval of the Board by circulation of written circulars was done only in exceptional circumstances due to urgency.
3.1 (iv)	The Board to ensure that arrangements are in place for Directors to include items and proposals in the Agenda of Board meetings	Compliant	Whenever the Directors provide suggestions of topics for consideration at the Board meetings, they are included in the Agenda under ‘open discussion’ which is an integral part of every Board meeting and other supporting data, reports, documents etc. relevant for the subject matter are circulated among the Directors for information.
3.1 (v)	Notice of Board meetings – At least 7 days notice of regular meetings and reasonable notice of other meetings to be given	Compliant	Dates for the regular monthly Board meetings are agreed by the Directors at the commencement of each year and any changes to dates of scheduled meetings are decided well in advance. The Board circulars and other documents pertaining to meetings are made available well in advance to enable the Directors to participate in deliberations.
3.1 (vi)	Attendance at Board meetings	Compliant	All Directors attended more than two-thirds of Board meetings and no Director was absent for three or more consecutive meetings. Attendance details are given here.
3.1 (vii)	Duties and qualifications of the Company Secretary	Compliant	The Company Secretary possesses the qualifications specified in the Section 43 of the Banking Act. The Company Secretary while performing the secretariat services to the Board and shareholders’ meetings is responsible to the Board in ensuring that Board procedures and applicable rules and regulations are followed. All new Directors are provided with the necessary documentation on Directors’ responsibilities and specific banking-related directions/policies that are required to perform their function effectively.
3.1 (viii)	The Directors’ access to the Company Secretary	Compliant	All Directors have access to the advice and services of the Company Secretary directly.
3.1 (ix)	The Company Secretary’s duty to maintain minutes of Board meeting and ensure the Directors’ access to them	Compliant	The Company Secretary compiles the minutes of the Board meetings which are subject to approval of the Board and signed by the Chairman. Copies of minutes are provided and Directors have access to the original minutes at all reasonable times.
3.1 (x)	The form and contents of the minutes of board meetings	Compliant	The Board minutes are drawn with reference to Board Circulars with sufficient details to indicate the decisions made by the Board of Directors. The information used in making such decisions, the reasons and rationale of making them and each Director’s contribution if considered material is included in the minutes.
3.1 (xi)	Independent professional advice on request to Directors to perform their duties	Compliant	The Board has put in place a procedure where the Directors can obtain independent professional advice, at the Bank’s expense, to perform their duties.
3.1 (xii)	The Directors’ avoidance of conflict of interest	Compliant	DFCC Act and/or the Companies Act No. 07 of 2007 required Directors who are directly or indirectly interested in contracts or a proposed contract with the Bank to declare the nature of such interest and not to participate in the decision-making.
3.1 (xiii)	Schedule of matters reserved for the decisions of the Board	Compliant	Schedule of matters reserved for the Board have been decided on.
3.1 (xiv)	Reporting insolvency to the Director of Bank Supervision	Compliant	Solvency is a matter constantly monitored by the Treasury Department, Integrated Risk Management Committee and the Board of Directors. During the year, the Bank remained solvent and no event has or is likely to occur that would make the Bank not able to meet its obligations.
3.1 (xv)	Adequacy of capital	Compliant	The Bank is capitalised well above the minimum levels required by the Monetary Board in terms of the capital adequacy and minimum required capital.
3.1 (xvi)	Corporate Governance Report	Compliant	The annual Corporate Governance Report forms an integral part of the Directors’ Report of the Bank’s Annual Report.
3.1 (xvii)	Self-assessment of the Board of Directors	Compliant	The Board has a structured scheme of self-assessment which is carried out annually. The performance of the respective sub-committees are also evaluated by the other members who are not members of the respective sub-committees in order to ensure that they function effectively. The findings are discussed at the Board meetings and action is taken on areas identified for improvement. The performance assessment criteria of CEO are given in 3.5 (xi).
3.2 Composition of the Board
3.2 (i)	Number of Directors	Compliant	The Board of Directors comprised nine Directors at the end of the period under review.
3.2 (ii)	Period of service of a Director	Compliant	No Director has held the position of a Director of the Bank for more than nine years.
3.2 (iii)	Number of Executive Directors	Compliant	The Chief Executive is the only Executive Director of the Board. He is an ex-officio Director.
3.2 (iv)	Number of Independent Directors	Compliant	There were five Independent Directors at the end of the period under review.
3.2 (v)	Alternate Directors	Compliant	All persons who are appointed as Alternate Directors to an existing Director of the Board are subject to the same criteria applicable to Directors.
3.2 (vi)	The skills, experience and track records of Non-Executive Directors	Compliant	All Non-Executive Directors who held office had professional backgrounds, strong track records and high level managerial experience in banking, business, industry, law, auditing or community service sectors.
3.2 (vii)	Number of Non-Executive Directors required to form a quorum of Board meetings	Compliant	The Bank has been compliant with this rule at all times as monitored by the Company Secretary.
3.2 (viii)	Disclosure of Details of Directors	Compliant	The names and the composition of the Directors by category are disclosed in the Annual Report of the Board of Directors.
3.2 (ix)	Appointment of new Directors	Compliant	Appointment of all new Directors is formally evaluated by the Nominations Committee and recommended to the Board of Directors for approval.
3.2 (x)	Appointment of a Director to fill a casual vacancy	Compliant	The Articles of Association of the Bank provide that the Directors appointed by the Board of Directors hold office until the following AGM at which they have to be elected by the shareholders.
3.2 (xi)	Resignation or removal of a Director	Compliant	The retirement/resignation of Directors from office during the period under review are given in the Directors Report. No Director was removed during the period under review. There were no matters that need to be brought to the attention of the shareholders as a consequence to the resignation of Dr Chandradasa as he resigned due to a personal reason.
3.2 (xii)	Appointment of a Director or an employee to another bank	Compliant	No Director or employee of the Bank is a Director of another bank except the subsidiary company, DFCC Vardhana Bank, which is a permitted exception.
3.3 Fitness and Propriety of Directors
3.3 (i)	Maximum age of Directors	Compliant	All Directors who reached the age of seventy have relinquished office.
3.3 (ii)	Holding of Director’s position in more than 20 companies in all	Compliant	All directors comply with this requirement.
3.4 Management Functions Delegated by the Board
3.4 (i)	Delegation arrangements	Compliant	The Board of Directors has delegated authority to the management subject to specific criteria, limitations, safeguards and monitoring mechanisms.
3.4 (ii)	Extent of Delegation	Compliant	The delegation of authority made by the Board is designed to facilitate efficient management of the affairs of the Bank and to aid the oversight role exercised by the Board. It is not of an extent to hinder the ability of the Board to discharge its functions. The Board retains the authority to expand, curtail, limit or revoke such delegated authority.
3.4 (iii)	Review of delegation process	Compliant	The delegation process is subject to periodic review by the Board in order to ensure that necessary amendments are approved to meet the requirements of the Bank. Material decisions made under delegated authority are reported to the Board for information.
3.5 The Chairman and Chief Executive Officer
3.5 (i)	Separation of the roles of the Chairman and CEO	Compliant	The Chairman and the Chief Executive Officer are two separate individuals.
3.5 (ii)	The Chairman to be a Non-Executive Director	Compliant	The Chairman is a Non-Executive Director. The Board appointed an Independent Director as the Senior Director as disclosed in the Annual Report. The Board has approved a terms of reference for the Senior Director.
3.5 (iii)	Disclosure of relationship between the Chairman, CEO and other Directors	Compliant	No relationships exist between the Chairman, CEO and the other Directors according to the declarations made by them except being Directors of subsidiaries.
3.5 (iv)	Role of the Chairman	Compliant	The Chairman provides leadership to the Board and ensures that the Board discharges its responsibilities effectively and encourages members to actively participate and to raise their independent judgment on all key and appropriate issues in a timely manner.
3.5 (v)	Agenda of Board meetings	Compliant	The Agenda of each Board meeting is drawn by the Company Secretary under the direction of CEO and Chairman and any matters relevant to the policies and operations of the Bank proposed by other Directors are included in the agenda upon approval by the Chairman.
3.5 (vi)	Providing information to the Directors	Compliant	The Chairman ensures that all Directors are properly briefed on issues which arise at the Board meetings and ensures that they receive adequate information in a timely manner.
3.5 (vii)	The Board to act in the best interest of the Bank	Compliant	The Chairman encourages exercise of independent judgment by the Directors on matters under consideration by the Board in order that the best interests of the Bank can be assured.
3.5 (viii)	Effective contribution of Non-Executive Directors	Compliant	The Chairman facilitates contributions by the Non-Executive Directors in making decisions.
3.5 (ix)	The Chairman not to engage in executive functions	Compliant	The Chairman is Non-Executive and does not supervise any management personnel of the Bank directly.
3.5 (x)	Communication with shareholders	Compliant	The Chairman has assigned the CEO to maintain a dialogue with institutional investors and bringing any matters of concern to the notice of the Board. During the year, the CEO participated in an international forum which attracted over 146 participants including institutional and high net worth investors and fund managers and also had one on one meetings with 5 potential institutional investors and briefed the Board on the discussions held as appropriate.
3.5 (xi)	CEO to be in charge of the management of operations and business	Compliant	The Chief Executive is the Head of the management team and is in charge of the day-to-day management of the Bank’s operations and business. At the beginning of each year the Board discusses the business plan with the CEO and senior management and agrees on the medium and short-term financial and non-financial targets to be achieved and action plans to be implemented by the Bank. Progress is monitored on an ongoing basis and the assessment of the performance of the Bank is carried out by the Board at the end of each year based on the initiatives laid down in the business plan.
3.6 Board Appointed Committees
3.6 (i)	Four Board appointed committees	Compliant	The Board has appointed the four committees required by the Direction. The reports on their duties, performance and roles are published in the Annual Report.
3.6 (ii)	Board Audit Committee –		Please refer this report
	(a) Chairman of the Committee	Compliant	During the year, the Audit Committee was chaired by an Independent Non-Executive Director who is a qualified Chartered Accountant.
	(b) Composition of the members	Compliant	All members of the Committee are Non-Executive Directors.
	(c) External Auditor	Compliant	The Audit Committee assists the Board in implementing a transparent process in the engagement and remuneration of External Auditor and assist in the general oversight of financial reporting, internal controls and compliance with laws, regulations and codes of conduct. The Committee ensures that the engagement of the audit partner does not exceed five years.
	(d) Independence and effectiveness of the audit process	Compliant	The Committee reviewed the statement issued by the External Auditor pursuance to Section 163 (3) of the Companies Act No. 07 of 2007.
	(e) Non-audit services	Compliant	A formal policy approved by the Board on Engagement of External Auditor to perform non-audit services is in place.
	(f) Nature and Scope of external audit	Compliant	The Committee met with the External Auditor to discuss and finalise the scope of the audit to ensure that it is in compliance with guidelines issued by Central Bank.
	(g) Review of financial information of Bank	Compliant	The committee reviewed all quarterly non-audited interim financial statements and the financial statement for the year ended 31 March 2015.
	(h) Meetings with External Auditor	Compliant	The committee met with the External Auditor on 4 occasions and 2 meetings without the presence of the management.
	(i) Review of Management letter	Compliant	The committee considered the management letter issued by the External Auditor for the year ended 31 March 2014 and the management responses thereto.
	(j) Internal Audit Function	Compliant	The committee reviews the adequacy of the internal audit function to ensure that it is in conformity with the Audit Committee Charter. The annual audit plan and the annual performance appraisal of the head of Internal Audit is reviewed by the committee. The committee with the approval of the Board continued to supplement the internal audit function by engaging two firms of chartered accountants to carry out the periodic audits of some business units. The Internal Audit function is independent of the activities it audits and the findings are reported directly to the Audit Committee.
	(k) Internal Audit findings	Compliant	The committee reviewed the internal audit reports and considered the findings, recommendations and corrective action.
	(l) Attendance of non-audit committee members	Compliant	Senior Vice-President – Group Internal Audit attends all committee meetings. Executive Vice-President (Finance) attends meeting where matters relating to finance are considered. The External Auditors attend meetings on invitation. During the year, the committee met with the External Auditor on two occasions without the presence of the CEO.
	(m) Terms of reference	Compliant	The committee is guided by the Audit Committee Charter.
	(n) Meetings	Compliant	During the financial year ended 31 March 2015 13 Meetings were held. Attendance of committee members is given in this table.
	(o) Audit Committee activities	Compliant	Please refer Committee Report
	(p) Secretary	Compliant	Senior Vice-President – Group Internal Audit serves as the Secretary of the committee.
	(q) Process of raising issues in confidence	Compliant	The Board has adopted a whistle blowing policy to encourage employees to communicate legitimate concerns if any of illegal or unethical practices. Arrangements are in place to ensure that all employees are duly informed of the effective use of this process.
3.6 (iii)	Board Human Resources and Remuneration Committee –		Please refer Committee report
	(a) Remuneration Policy	Compliant	A formal Remuneration Policy approved by the Board is in place.
	(b) Goals and Targets for KMPs	Compliant	The business plan which is approved by the Board encompasses the annual goals and targets of the CEO and other Key Management Personnel.
	(c) Review of performance of KMPs	Compliant	Committee annually reviews the performance against set target of the CEO and other KMPs and the remuneration levels of the CEO and KMPs while ensuring appropriate compensation levels are maintained in order to retain and motivate staff.
	(d) CEO’s presence	Compliant	The CEO attends meeting by invitation and participates in deliberations except when matters relating to him are discussed.
3.6 (iv)	Board Nomination Committee –		Please refer Committee report
	(a) Appointment of new Directors & KMPs	Compliant	During the year the committee considered and recommended to the Board the appointment of two new Directors.
	(b) Re-election of Directors	Compliant	During the year, the committee considered and recommended to the Board the re-election of the Directors retiring under Articles 45 and 47 (ii) while ensuring that they are fit and proper persons to hold such office.
	(c) Criteria relating to appointment of KMPs	Compliant	The committee evaluates the qualifications, experience and key attributes required for eligibility for appointment of KMPs.
	(d) Fit and proper test	Compliant	The fitness and propriety of KMPs are monitored by the committee.
	(e) Succession Planning	Compliant	The committee evaluates the need for additional/new expertise to the Board and succession for retiring KMPs. During the year, a Chartered Accountant was appointed as a Director in order to supplement the Audit Committee.
	(f) Composition	Compliant	The committee consists of 3 Non-Executive Directors and is Chaired by an Independent Director.
3.6 (v)	Board Integrated Risk Management Committee (BIRMC)		Please refer Committee report
	(a) Composition	Compliant	Please refer Committee report
	(b) Assessment of Risk	Compliant	The committee has put in place a Board approved risk framework. The risk exposures of the Bank and its commercial banking subsidiary are assessed on a monthly basis through Key Risk Indicators. Risk assessment of other subsidiaries, joint venture and the associate are reviewed quarterly.
	(c) Review of Adequacy of Management Committees	Compliant	The committee assessed the effectiveness of all Management Committees.
	(d) Controlling risks within prudent limits	Compliant	The committee assesses possible risks, reviews and takes appropriate action to mitigate such risks.
	(e) Frequency of meetings	Compliant	The committee met on a quarterly basis.
	(f) Corrective action on any management failure to identify risks	Compliant	Action is taken by the committee on any officer responsible for failure to identify specific risks and appropriate corrective action is taken to remedy such situations.
	(g) Submission of Risk Assessment Reports to the Board	Compliant	By submitting BIRMC minutes the Board is informed of proceedings. The required approvals are obtained through specific submissions to the Board.
	(h) Compliance function	Compliant	The Compliance Officer reports to the BIRMC. Committee overseas the function and reviewed the quarterly reports on compliance. The compliance function is headed by a Vice-President who is not a KMP. She was appointed as the Acting Compliance Officer in agreement with the Central Bank pending finalisation of the proposed bank amalgamation process.
3.7 Related Party Transactions
3.7 (i) to (iii)	Avoidance of conflicts of interest and favourable treatment in transactions with related parties	Compliant	The Bank has adhered to the law as specified in the Banking Act and the Directions issued there under with regard to transactions with related parties. Board ensures that no related party benefits from any favourable treatment except as indicated in 3.7 (vi). The Bank has put in place a mechanism to obtain on a quarterly basis a confirmation from all Key Management Personnel on a structured format to assist in the process of collating related party transactions.
3.7 (iv)	Accommodation to Directors or their close relations	Compliant	The Bank complies with the law as specified in the Banking Act and the Directions issued there under in granting accommodation to the Directors and/or their close relations.
3.7 (v)	Accommodation granted to Directors prior to appointment	Compliant	The provisions of the Banking Act will be followed if such situations arise and public will be informed if not compliant by the specified date as he/she will cease to hold office. This situation did not arise.
3.7 (vi)	Avoidance of favourable treatment in accommodation to employees, close relations of employees and/or entities in which any employee or close relation of such employee hold substantial interest	Compliant	The accommodation to employees, close relations of employees and/or entities in which any employee or close relation of such employee hold substantial interest are subject to normal commercial terms applicable to such transactions except in case of accommodation under approved schemes uniformly applicable to all or specific categories of employees. The CEO has not participated in these schemes.
3.7 (vii)	Not to remit part of accommodation or interest without prior approval of Monetary Board	Compliant	No such situation has arisen.

 

Disclosure on Corporate Governance made in terms of Section 3 (8) of the Banking Act Direction No. 12 of 2007 of the Central Bank of Sri Lanka

(i) The Board shall ensure that:
	The Annual audited financial statements and quarterly financial statements are prepared and published in accordance with the formats prescribed by the supervisory and regulatory authorities and applicable accounting standards and such statements are published in the newspapers in an abridged form in Sinhala, Tamil and English.	Complied with.
(ii) The Board shall ensure that the following minimum disclosures are made in the Annual Report:
(a)	A statement to the effect that the annual audited financial statements have been prepared in line with applicable accounting standards and regulatory requirements, inclusive of specific disclosures.	Complied with. Please refer the Statement of Directors’ Responsibility
(b)	A Report by the Board on the Bank’s internal control mechanism that confirms that the financial reporting system has been designed to provide reasonable assurance regarding the reliability of financial reporting and that the preparation of financial statements for external purposes has been done in accordance with relevant accounting principles and regulatory requirements.	Complied with. Please refer to the Directors’ Statement of Internal Control
(c)	The External Auditor’s Certification on the effectiveness of the internal control mechanism in respect of any statements prepared or published after 31 December 2008.	Complied with. Please refer Assurance Report of the External Auditor
(d)	Details of Directors, including names, fitness and propriety, transactions with the Bank and the total fees/remuneration paid by the Bank	Complied with. Please refer to Board of Directors and Notes 20 and 58.5 to the financial statements.
(e)	Total net accommodation as defined in 3 (7) (iii) granted to each category of related parties shall also be disclosed as a percentage of the Bank’s regulatory capital	Complied with. 31 March 2015 Category of related party and type of transaction LKR 000 % Key Management Personnel – Loans 6,278 0.04 Subsidiaries – Finance lease 3,690 0.02 Total net accommodation 9,968 0.06 Regulatory capital – solo basis 17,792,075 The total net accommodation was 0.06% of the Bank’s regulatory capital on solo basis. Maximum limit determined by Directors is 25% of Bank’s regulatory capital on solo basis.
(f)	The aggregate values of remuneration paid by the Bank to its Key Management Personnel and the aggregate values of the transactions of the Bank with its Key Management Personnel, set out by broad categories such as remuneration paid, accommodation granted and deposits or investments made in the Bank.	Complied with. Please refer Note 58.6 to the financial statements.
(g)	All findings of the ‘Factual Findings Report’ of the External Auditor to be incorporated in this Report.	Complied with.
(h)	A Report setting out details of the compliance with prudential requirements, regulations, laws and internal controls and measures taken to rectify any material non-compliance.	Complied with. See Annual Report of the Board of Directors.
(i)	A statement of the regulatory and supervisory concerns on lapses in the Bank’s risk management, or non-compliance with these Directions that have been pointed out by the Director of Bank Supervision, if so directed by the Monetary Board to be disclosed to the public, together with the measures taken by the Bank to address such concerns.	The Monetary Board has not required any disclosure to be made.

 

Independent Assurance

The External Auditors have performed procedures set out in Sri Lanka Related Services Practice Statement 4750 (SLRSPS 4750) issued by The Institute of Chartered Accountants of Sri Lanka, to meet the compliance requirement of the Corporate Governance Direction. Their findings presented in their Report addressed to the Board are consistent with the matters disclosed above and did not identify any inconsistencies to those reported above by the Board.