By Maheen Senanayake
Lead by a few commercially eminent persons, a group of investors in Colombo have begun the process of forming the Association of Independent Shareholders of Sri Lanka.
The weathered campaigners speaking at a press conference on Thursday revealed its first step as a disgusted Mr. K C Vignarajah, convener of the core group, said " We want to muster the voice of the people to ensure the freedom of enterprise, in particular champion the freedom of the Stock Exchange which has suffered greatly at the hands of a controlling few. Moreover, we are interested in the protection of the interests of minority shareholders."
In this bold move, Sri Lanka’s business stalwarts, Mahendra Amarasuriya, K C Vignarajah, Desamanya Harin de Silva and Desamanya C.P. de Silva hope to use the power of association to cleanse the CSE of the ‘pump and dump’ action and clear the corporate landscape of investor oppression that have destroyed unsuspecting shareholders, the integrity of the stock exchange and the rights of minority shareholder," said Vignarajah.
Warning of possible investor fatigue, Chari de Silva said "we want to work towards a corporate landscape in Sri lanka that abides by a code of conduct." A former Chairman of Aitken Spence and other quoted companies, he also chaired the Ceylon Chamber of Commerce and served on the SEC.
Speaking from the head table, former Commercial Bank Chairman Mahendra Amarasuriya said ``we will work at various level, but our priority will be to create awareness amongst investors and protect them from detrimental factors. There are many issues today, from giving the minority shareholder a voice, one that goes beyond a polite hearing at an AGM, to penal action against companies which violate shareholder rights.
``We also would like to see real wealth distribution among the shareholders, big and small alike. Today, companies are syphoning profits through the formation of spin-off companies registered in tax havens of the likes of the British Virgin Islands, Cayman Islands etc. However, the first step however, is the formation of this association." .
Chari De Silva, said "today’s profits are owned by today’s shareholders. If only the code of conduct of the Ceylon Chamber of commerce is adhered to then most of these oppressive governance issues would not occur. Corporates should recognize that there are certain obligations of boards of directors including the recognition that the owners of the company are the shareholders, and that companies should run at profit and that there should be distribution of reasonable dividends."
Vignarajah expressing disgust and fury over the recent resignation of two top regulators appointed by the President over issues of over regulation. "The situation is far from over-regulated and the opposite is probably true. The president has got it wrong and has lost control of his people.
"There are audit firms who connive with the corporates and despite obvious faltering and obvious misrepresentation of financial positions, they keep being re-appointed at the behest of the controlling interest holder. We must bring in legislation that makes it mandatory for corporates to rotate auditors. That is the only solution," Amarasuriya added.
"It might take about a year for the formation of the association," said Vignarajah. "We hope that many of the individuals who have been championing a free and fair stock exchange will join hands with us to ensure an exchange that is only subservient to market dynamics. We want to lure away unsuspecting investors from getting trapped in short term runs.’’
According to analysts the so called Mafias are relying on the ignorance of independent investors for short term gains which are more often than not day trading efforts.
Two Chairpersons of the Colombo Securities and Exchange commission, Mrs. Indrani Sugathadasa and Tilak Karunaratne have resigned under pressure from various quarters including the president who appointed them in the first place.