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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2644

Ceylon Chamber of Commerce organizes discussion on New Companies Act

By Quintus Perera - Asian Tribune

Colombo,07 July (Asiantribune.com): Ceylon Chamber of Commerce (CCC) organized a follow-up discussion to their earlier Seminar on the New Companies Act that came into operation recently with Dr Harsha Cabral, PC, Member, Advisory Commission on Comany Law; Sujeewa Mudalige, Partner, Pricewaterhouse Coopers; Naomal Goonewardena, Senior Partner, Nithiya Partners; Aritha Wickramanayake Precedent Partner, Nithiya Partners and Dr Wickrama Weerasooriya, Insurance Ombudsman as panalists. A large number of company directors and officials participated the discussion which was held at the Galadari Hotel.

Dr Harsha Cabral said that the role played by professional bodies in the formation of the New Companies Act has not been satisfactory and The Institute of Chartered Accountants of Sri Lanka, has made very little contribution, while they were concerned only about auditors..

Deva Rodrigo, Immediate Past Chairman, CCC and former senior partner PwC making the opening remarks said that this discussion is a follow-up of the last Seminar organized by the CCC where lots of issues came up and some of the participants wanted clarifications.

He said that this discussion would provide more expert analysis and examine what is given in the Act and he requested the participants’ contribution so that at the end they would all be better informed.

Dr Cabral continuing said that for that matter the contributions made by the Sri Lanka Bar Association towards the Companies Act was not that satisfactory. He said that certain institutions like the CCC have made worthwhile submissions, some of which have even been incorporated.

He said that it is vitally important for the Company Directors and officers to read the new law carefully or otherwise, going by things to be granted would end them up in jail. He advised that the company directors and officials should read both Sinhala and English versions of the New Act as in the case of any inconsistency in the interpretaton the Sinhala Act prevails.

He said that the new companies act is nothing new as drafting the New Act to replace the obsolete 1948 Act commenced in the mid 1990s and was ready by 1995. So the New Companies Act would have been in the Statute Book as far back as 1995.

He said that the director’s duties have been catalogued in a statutory form for the first time in Sri Lanka in the new Companies Act of 2007 and could be taken as a revolutionary step forward in the corporate arena.

He said that hitherto the duties of directors had to be ascertained from the common law. He said that if the directors are to be held responsible for their acts there should be a clear identification of their responsibilities and duties.

Dr Cabral said that duty of directors to act in good faith and in the interests of the company is set out with clarity in the new law. He said that the provisions relating to directors also provide for indemnity and insurance in given circumstances. He said that the new provisions provide a clear set of guidelines to directors in particular and to the commercial world at large.

He dealt with several sections of the New Companies Act where clarifications are necessary and said “Thus it is crystal clear that a perfect balance is achieved by the new provisions of the Act wherein the directors know exactly what the perimeters are, how to protect themselves and what is expected of them when they are on the Board.

Aritha Wickramanayake said that it would not be an easy process as the Directors have to study the Articles to have their requirements included, otherwise, if the act is violated the benefits set out in the Act would be missed. He said things like introduction of Interests Register are very important. He warned that if these provisions in the new act were not carefully followed those directors are asking for prosecution.

He said that most important point is the companies have to take steps which are vital, otherwise the directors are exposed to criminal prosecution. He said that the law now requires that the framework of the company should be harmonized with the other Sections to give life to the new law, indicting that this law would have come long below and that this country is slow in everything.

Other panelists also made their contributions.

- Asian Tribune -

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