Keyword search
My Report
Further to the Annual report of the Board of Directors on the Affairs of the Company appearing on page 03, given below is a summary of the extent of compliance with the requirement of section 168 of the Companies Act No. 07 of 2007 and amendments thereto and other relevant statues.
Statement of compliance
Table – 45| Disclosure Requirement | Reference to the relevant statute/rule |
Page reference for Compliance and other necessary disclosures | ||||||||||||||||||||||||||||||||
| Mandatory Disclosures as required by the Companies Act No. 07 of 2007 and amendments thereto (CA) | ||||||||||||||||||||||||||||||||||
| 01. | The nature of the business of the Group and the Bank together with any changes thereof during the accounting period | Section 168 (1) (a) | Notes to the Financial Statements: Item 1.3: Principal business activities, Nature of operations of the Group and ownership by the Bank in its subsidiaries and Associate |
|||||||||||||||||||||||||||||||
| 02. | Signed Financial Statements of the Group and the Bank for the accounting period completed in accordance with Section 152 | Section 168 (1) (b) | Financial Statements of the Group and the Bank for the year ended December 31, 2023 | |||||||||||||||||||||||||||||||
| 03. | Auditors’ Report on the Financial Statements of the Group and the Bank | Section 168 (1) (c) | Independent Auditors’ Report | |||||||||||||||||||||||||||||||
| 04. | Accounting Policies of the Group and the Bank and any changes therein | Section 168 (1) (d) | Notes 6 to 10 to the Financial Statements: Material Accounting Policies adopted in the preparation of the Financial Statements of the Group and the Bank | |||||||||||||||||||||||||||||||
| 05. | Particulars of the entries made in the Interests Registers of the Bank and its Subsidiaries during the accounting period | Section 168 (1) (e) | The Bank and all its Subsidiaries maintain Interests Registers. All Directors have made declarations as required by the Section 192 (1) and (2) and all related entries were made in the Interests Registers during the year under review. The Interests Registers are available for inspection by shareholders or their authorised representatives as required by the Section 119 (1) (d). “Directors' Interest in Contracts with the Bank” disclosed in the Annual Report. | |||||||||||||||||||||||||||||||
| 06. | Remuneration and other benefits paid to Directors of the Bank and its Subsidiaries during the accounting period | Section 168 (1) (f) | Note 21 to the Financial Statements: Other Operating Expenses | |||||||||||||||||||||||||||||||
| Report of the Board Human Resources and Remuneration Committee | ||||||||||||||||||||||||||||||||||
| 07. | Total amount of donations made by the Bank and its Subsidiaries during the accounting period | Section 168 (1) (g) | Note 21 to the Financial Statements: Other Operating Expenses | |||||||||||||||||||||||||||||||
| 08. | Information on Directorate of the Bank and its Subsidiaries during and at the end of the accounting period | Section 168 (1) (h) | Governance and Risk Management | |||||||||||||||||||||||||||||||
| "Board of Directors and Profiles" for details of members of the Board of Directors of the Bank | ||||||||||||||||||||||||||||||||||
| "Group Structure" for details of members of the Board of Directors of the Group | ||||||||||||||||||||||||||||||||||
| Recommendations for Re-election | ||||||||||||||||||||||||||||||||||
(i) In terms of Article 85 of the Articles of Association, two Directors are required to retire by rotation at each Annual General Meeting (AGM). Article 86 provides that the Directors to retire by rotation at an AGM shall be those who (being subject to retirement by rotation) have been longest in office, since their last re-election or appointment. |
||||||||||||||||||||||||||||||||||
(ii) The Board recommended the re-election/election of the following Directors, after considering the contents of the Affidavits and Declarations submitted by them and all other related issues: |
||||||||||||||||||||||||||||||||||
(a) Re-election of Directors who retire by rotation
|
||||||||||||||||||||||||||||||||||
(b) Election of the Director who was appointed to fill the casual vacancy
|
||||||||||||||||||||||||||||||||||
(iii) Directors who served on the Board for nine years – None as at end of 2023. [In terms of the Banking Act Direction No. 11 of 2007 on “Corporate Governance for Licensed Commercial Banks in Sri Lanka”, the total |
||||||||||||||||||||||||||||||||||
| 09. | Separate disclosure on amounts payable to the Auditors as Audit Fees and Fees for other services rendered during the accounting period by the Bank and its Subsidiaries | Section 168 (1) (i) | Note 21 to the Financial Statements: Other Operating Expenses | |||||||||||||||||||||||||||||||
| 10. | Auditors’ relationship or any interest with the Bank and its Subsidiaries (Lead auditor's independence) | Section 168 (1) (j) | Independence Confirmation has been provided by Messrs. Ernst & Young as required by Section 163 (3), in connection with the audit for the year ended December 31, 2023, confirming that Ernst & Young is not aware of any relationship with or interest in the Bank or any of its subsidiaries that in their judgement, may reasonably be thought to have a bearing on their independence within the meaning of the Code of Professional Conduct and Ethics issued by CA Sri Lanka, applicable as at the reporting date.
No prohibited non-audit services have been provided by Messrs. Ernst & Young as per the Direction issued by the CBSL on 'Guidelines for External Auditors relating to their Statutory Duties'. The Directors are satisfied as the BAC has assessed each service, having regard to auditor’s independence requirements of applicable laws, rules and regulations, and concluded in respect of each non-audit service or type of non-audit service that the provision of that service or type of service would not impair the independence of Messrs. Ernst & Young. |
|||||||||||||||||||||||||||||||
| 11. | Acknowledgement of the contents of this Report/Signatures on behalf of the Board of Directors | Section 168 (1) (k) | The Board of Directors have acknowledged the contents of this Annual Report as disclosed. | |||||||||||||||||||||||||||||||
| Other Disclosures as required by Recommended Best Practices (RBP), Listing Rules (LR) of the Colombo Stock Exchange, Companies Act No. 07 of 2007 and amendments thereto (CA) and the Banking Act Direction No. 11 of 2007 (the Direction) | ||||||||||||||||||||||||||||||||||
| 12. | Vision, Mission and Corporate Conduct | RBP | The business activities of the Group and the Bank are conducted maintaining the highest level of ethical standards in achieving our "Vision and Mission", which reflect our commitment to high standards of business conduct and ethics. The Bank issues a copy of its Code of Ethics to each and every staff member and all employees are required to abide by the provisions contained therein. |
|||||||||||||||||||||||||||||||
| 13. | Review of Business operations of the Group and the Bank and future developments | RBP | “Message from the Chairman” and “Managing Director’s/ Chief Executive Officer's Review” |
|||||||||||||||||||||||||||||||
| Management Discussion and Analysis | ||||||||||||||||||||||||||||||||||
| Note 61 to the Financial Statements: Operating Segments | ||||||||||||||||||||||||||||||||||
| 14. | Gross Income | RBP | Notes 12 & 61 to the Financial Statements: Gross Income & Operating Segments |
|||||||||||||||||||||||||||||||
| 15. | Dividends on Ordinary Shares | RBP | Notes 25 & 68 to the Financial Statements: Dividends on ordinary shares & Events after the reporting period |
|||||||||||||||||||||||||||||||
| Item 3 of "Investor Relations" | ||||||||||||||||||||||||||||||||||
| 16. | Reserves and appropriations | RBP | Statement of Changes in Equity | |||||||||||||||||||||||||||||||
| Notes 53, 54 & 55 to the Financial Statements: Statutory reserves, Retained earnings & other reserves | ||||||||||||||||||||||||||||||||||
| 17. | Corporate Social Responsibility (CSR) |
RBP | "Community Engagement- Outreach” | |||||||||||||||||||||||||||||||
| 18. | Extents, locations, valuations and the number of buildings of the Bank’s land holdings and investment properties | LR 7.6 (VIII) | Note 38 to the Financial Statements: Property, Plant and Equipment & Right-of-use assets | |||||||||||||||||||||||||||||||
| Note 39 to the Financial Statements: Investment Property | ||||||||||||||||||||||||||||||||||
| Note 57.2 to the Financial Statements: Capital Commitments | ||||||||||||||||||||||||||||||||||
| 19. | Significant changes in the Bank’s or its subsidiaries’ fixed assets and the market value of land, if the value differs substantially from the book value | LR 7.6 (XII) | Note 38.5 (b) to the Financial Statements: Information on freehold land and buildings of the Bank and Group Valuations |
|||||||||||||||||||||||||||||||
| Note 39.1(b) to the Financial Statements: Information on investment properties of the Group – Valuations |
||||||||||||||||||||||||||||||||||
| 20. | Issue of Shares and Debentures | |||||||||||||||||||||||||||||||||
| 20.1 | Issue of Shares by the Bank | LR 7.6 (XIII) | Notes 51 & 51.1 to the Financial Statements: Stated Capital and Movements in number of shares |
|||||||||||||||||||||||||||||||
| 20.2 | Issue of Debentures by the Bank |
LR 7.6 (XIII) | Note 50 to the Financial Statements: Subordinated Liabilities | |||||||||||||||||||||||||||||||
| 20.3 | Issue of Shares and Debentures by the Subsidiaries and the Associate | CA S.168 (1) (e) | During the year, the subsidiaries and associate of the Bank did not make any share or debenture issues. |
|||||||||||||||||||||||||||||||
| 21 | Share information and Substantial Shareholdings | |||||||||||||||||||||||||||||||||
| 21.1 | Distribution Schedule of Shareholdings, names and the number of shares held by the 20 largest holders of Voting & Non-Voting shares and the percentage of such shares held, Float adjusted Market Capitalisation, public holding percentage, number of public shareholders, and the option under which the Bank complies with the minimum public holding requirement. | LR 7.6 (III) LR 7.6 (IV) LR 7.6 (X) LR 7.13.1 | Items 4.2, 4.3 and 4.5 of "Investor Relations" | |||||||||||||||||||||||||||||||
| 21.2 | Financial ratios and market price information | LR 7.6 (XI) | Financial Highlights Item 2 of the “Investor Relations” | |||||||||||||||||||||||||||||||
| Information on Earnings, Dividends, Net Assets and Market Value per share | Decade at a Glance Items 3 and 11 of the “Investor Relations” | |||||||||||||||||||||||||||||||||
| Information on listed debt securities | Refer items 10 and 11 of the “Investor Relations” | |||||||||||||||||||||||||||||||||
| Annex 2 – Basel III – Disclosures under Pillar III as per Banking Act No. 01 of 2016 – Disclosure 6 – Main features of regulatory capital instruments |
||||||||||||||||||||||||||||||||||
| Any changes in credit rating (for the Bank or any other instrument issued by the Bank) | Refer item 12 of the “Investor Relations” | |||||||||||||||||||||||||||||||||
| 21.3 | Information on Number of shares representing the Bank’s stated capital | LR 7.6 (IX) | Note 51 to the Financial Statements | |||||||||||||||||||||||||||||||
| Item 7 of the “Investor Relations” | ||||||||||||||||||||||||||||||||||
| 21.4 | Own Share Purchases | CA S.64 | The Bank does not purchase its own shares. | |||||||||||||||||||||||||||||||
| 21.5 | Equitable Treatment to Shareholders | RBP | Statement of Directors' Responsibility for Financial Reporting – item (k) | |||||||||||||||||||||||||||||||
| 22. | Information on Directors' Meetings and Board Committees | |||||||||||||||||||||||||||||||||
| 22.1 | Directors' Meetings | RBP | Composition of the Board and attendance (Principal A.4 and A.5) Board meetings (Principal A.1.1 and A .10.1) | |||||||||||||||||||||||||||||||
| 22.2 | Board Committees | RBP | Board Committee Reports | |||||||||||||||||||||||||||||||
| 23. | Disclosure of Directors' dealings in shares and debentures | |||||||||||||||||||||||||||||||||
| 23.1 | Directors’ Interests in Ordinary Voting and Non-voting Shares of the Bank | LR 7.6 (V) | Item 4.4 of "Investor Relations" | |||||||||||||||||||||||||||||||
| Directors’ shareholdings in Ordinary Voting Shares and Ordinary Non-Voting Shares have not changed subsequent to the date of the Statement of Financial Position up to February 05, 2024, the date being one month prior to the date of Notice of the AGM. | ||||||||||||||||||||||||||||||||||
| 23.2 | Directors’ Interests in Debentures | LR 7.6 (V) | Mr R Senanayake and Dr Selliah, Directors held 22,800 and 183,200 debentures of the Bank as at December 31, 2023. Except for the above, there were no debentures registered in the name of any other Director as at the beginning and at the end of the year. | |||||||||||||||||||||||||||||||
| 24. | Employee Share Option Plans and Profit-sharing Plans | LR 7.6 (XIV) | Note 52 to the Financial Statements: Share-based payment | |||||||||||||||||||||||||||||||
| The Group and the Bank have not, directly or indirectly, provided funds for the ESOPs. |
||||||||||||||||||||||||||||||||||
| The Group and the Bank do not have any employee profit sharing plans, except the variable bonus scheme. |
||||||||||||||||||||||||||||||||||
| Tabulated below are the details of options available/exercised by the Executive Directors under the ESOPs. |
||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||
| 25. | Directors’ Interests in Contracts or Proposed Contracts and Remuneration & other benefits of Directors during the year under review | CA S.192 | Directors declare their outside business interests on appointment and quarterly thereafter, details of which are recorded in the Directors’ Interests Register, and available for inspection in terms of the Companies Act. | |||||||||||||||||||||||||||||||
| Note 21 to the Financial Statements: Other Operating Expenses | ||||||||||||||||||||||||||||||||||
| Note 62 to the Financial Statements: Related Party Disclosures | ||||||||||||||||||||||||||||||||||
| RBP | As a practice, Directors have refrained from voting on matters in which they were materially interested. Directors have no direct or indirect interest in any other contract or proposed contract with the Bank other than those disclosed in the Directors’ interests in contracts with the Bank. | |||||||||||||||||||||||||||||||||
| CA S.168 (1) (e) LR 7.6 (XIV) | There are no arrangements that enable the Non-Executive Directors of the Group and the Bank to acquire shares or debentures of the Bank or its Subsidiaries, other than via the market. | |||||||||||||||||||||||||||||||||
| CA S.217 (2) (d) | There are no restrictions on the approval of loans to Directors in the Bank’s ordinary course of business, subject to compliance with all applicable regulations. | |||||||||||||||||||||||||||||||||
| 26. | Director’s and Officers’ Insurance | CA S.218 | The Bank has, during the financial year, paid an insurance premium in respect of an insurance policy for the benefit of the Bank and the Directors, Secretaries, Officers and certain employees of the Bank and related body corporates as defined in the insurance policy. In accordance with commercial practice, the insurance policy prohibits disclosure of the terms of the policy, including the nature of the liability insured against and the amount of the premium. | |||||||||||||||||||||||||||||||
| 27. | Environmental Protection | RBP | The Group and the Bank have not, to the best of their knowledge, engaged in any activity, which was detrimental to the environment. | |||||||||||||||||||||||||||||||
| Specific measures taken to protect the environment are disclosed in the section on "Community Engagement – Outreach" | ||||||||||||||||||||||||||||||||||
| 28. | Declaration on Statutory Payments |
RBP | Statement of Directors' Responsibility for Financial Reporting – item (h) | |||||||||||||||||||||||||||||||
| 29. | Events after the reporting period |
RBP | Note 68 to the Financial Statements: Events after the reporting period | |||||||||||||||||||||||||||||||
| 30. | Going Concern | RBP | Statement of Directors' Responsibility for Financial Reporting – item (m) | |||||||||||||||||||||||||||||||
| 31. | Directors’ Responsibility for Financial Reporting |
CBSL Direction 3 (8) (ii) (a) | Statement of Directors' Responsibility for Financial Reporting | |||||||||||||||||||||||||||||||
| 32. | Appointment of Auditors and their remuneration |
CBSL Direction 3 (1) (i) (m) | The Board has adopted a policy of rotation of Auditors, once in every five years, in keeping with the principles of good corporate governance. At the end of the five-year period, quotations are called from suitable audit firms, prior to the recommendation of new Auditors as per the rotation policy. In addition, External Auditors submit a statement annually confirming their independence as required by Section 163 (3) of the Companies Act No. 07 of 2007 (as amended) in connection with external audit. Messrs Ernst & Young completed six consecutive years of external audit with the audit of the Financial Statements for year ended December 31, 2023. Although the Bank used to rotate the External Auditor every five years, Messrs Ernst & Young was retained as the External Auditor of the Bank for an additional year, considering the fact that the CBSL deployed Messrs KPMG to conduct an Asset Quality Review on the Banking Sector in the country in year 2023. With the recommendation of the BAC, a resolution to appoint Messrs KPMG as the External Auditor and granting authority to the Directors to fix their remuneration will be proposed at the forthcoming AGM to be held on March 28, 2024, for shareholder approval. | |||||||||||||||||||||||||||||||
| 33. | Material issues pertaining to employees and industrial relations | LR 7.6 (VII) | Item 6 of "Investor Relations" – | |||||||||||||||||||||||||||||||
| 34. | Risk management and system of internal controls | LR 7.6 (VI) | Risk Governance and Management | |||||||||||||||||||||||||||||||
| Report of the Board Integrated Risk Management Committee | ||||||||||||||||||||||||||||||||||
| Note 66 to the Financial Statements: Financial Risk Review | ||||||||||||||||||||||||||||||||||
| Directors’ Statement on Internal Control over Financial Reporting and Risk Management |
||||||||||||||||||||||||||||||||||
| The Independent Auditors’ Report | ||||||||||||||||||||||||||||||||||
| Independent Assurance Report on the Directors’ Statement on Internal Control over Financial Reporting and Risk Management |
||||||||||||||||||||||||||||||||||
| 35. | Corporate Governance | RBP | The Directors declare that - | |||||||||||||||||||||||||||||||
(a) the Bank has complied with all applicable laws and regulations in conducting its business and have not engaged in any activity contravening the relevant laws and regulations. Officers responsible for ensuring compliance with the provisions in various laws and regulations, confirm compliance in each quarter to the Board Integrated Risk Management Committee; |
||||||||||||||||||||||||||||||||||
(b) they have declared all material interests in contracts involving the Bank and refrained from voting on matters in which they were materially interested; |
||||||||||||||||||||||||||||||||||
(c) they have complied with the Direction, Section 9 of the Listing Rules and the Code of Best Practices on Corporate Governance; |
||||||||||||||||||||||||||||||||||
(d) they have conducted a review of internal controls covering financial, operational & compliance controls, risk management and have obtained a reasonable assurance of their effectiveness and proper adherence. |
||||||||||||||||||||||||||||||||||
(e) the Bank has complied with the Section 9.14 of the Listing Rules on Related Party Transactions Review Committee and has made the required disclosures in the Financial Statements and to the market when applicable; |
||||||||||||||||||||||||||||||||||
(f) the business is a Going Concern with supporting assumptions or qualifications as necessary, and that the Board of Directors has reviewed the Bank’s Corporate/Business plans and is satisfied that the Bank has adequate resources to continue its operations in the foreseeable future. Accordingly, the Financial Statements of the Bank, its Subsidiaries and Associate are prepared based on the Going Concern assumption. |
||||||||||||||||||||||||||||||||||
| 36. | Focus on new regulations | RBP | Accounting Standards The Bank is well poised to comply with the amendments made to the Accounting Standards issued but not yet effective as at the reporting date, as disclosed in Note 11 to the Financial Statements. | |||||||||||||||||||||||||||||||
| Section 9 of the Listing Rules on Corporate Governance The CSE along with the Securities and Exchange Commission of Sri Lanka (SEC), revised the Corporate Governance Rules for the Listed Entities on the Main Market Segment from October 01, 2023, subject to certain transitional provisions. Refer Annex 1.3 on Compliance with Section 9 of the Listing Rules issued by the CSE. The Bank conducted a gap analysis on revised Corporate Governance Rules and ensured the compliance with rules which became effective from October 01, 2023 and is in the process of ensuring the compliance with new Rules that are to be effective in the year 2024. | ||||||||||||||||||||||||||||||||||
| IFRS Sustainability Accounting Standards IFRS S1- General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2- Climate-related Disclosures are the first IFRS sustainability disclosure standards that have been issued by the ISSB in June 2023. The two standards are globally effective for reporting periods starting January 01, 2024 and the effective date in the local context has not yet been announced. The Bank is in the process of conducting a gap analysis, developing a roadmap for early application. | ||||||||||||||||||||||||||||||||||
| 37. | Sustainability | RBP | The Bank is an early champion of adopting sustainability practices and sustainability reporting. The Bank has considered the sustainability aspects when formulating its business strategies. As explained under item 36 above, the Bank expects to early adopt IFRS S1 and S2. |
|||||||||||||||||||||||||||||||
| Annex 3: GRI Content Index | ||||||||||||||||||||||||||||||||||
| 38. | Human Resources | RBP | The Bank continues to invest in Human Capital Development and implement effective Human Resource Practices and Policies to improve workforce efficiency, effectiveness and productivity and also to foster collaborative partnerships that enrich the work and learning environment for our staff. | |||||||||||||||||||||||||||||||
| Specific measures taken in this regard are detailed in the “Report of the Board Human Resources and Remuneration Committee”. | ||||||||||||||||||||||||||||||||||
| Refer Management Discussion and Analysis | ||||||||||||||||||||||||||||||||||
| 39. | Technology | RBP | As encapsulated in the Vision and the Mission, our business processes are underpinned by technology. All of our processes involve information technology, and we use technology to deliver superior products and services to our customers. Correspondingly, the business is more heavily intertwined with technology than ever before. | |||||||||||||||||||||||||||||||
| Key achievements in this regard during the year are detailed in the “Report of the Board Technology Committee”. | ||||||||||||||||||||||||||||||||||
| 40. | Operational excellence | RBP | To increase efficiency and reduce operating cost, the Bank has ongoing initiatives to drive policy and process standardisation and to optimise the use of existing technology platforms. | |||||||||||||||||||||||||||||||
| 41. | Outstanding Litigation | RBP | In the opinion of the Directors and in consultation with the Bank’s lawyers, litigation currently pending against the Bank will not have a material impact on the reported financial results or future operations. |
|||||||||||||||||||||||||||||||
| Note 59 to the Financial Statements: Litigation Against the Bank | ||||||||||||||||||||||||||||||||||
| 42. | Disclosure on Related Party Transactions | LR 9.14.8 (1) and (2) | Note 62 to the Financial Statements: Related Party Disclosures | |||||||||||||||||||||||||||||||
| LR 9.14.8 (3) | Report of the Board Related Party Transactions Review Committee | |||||||||||||||||||||||||||||||||
| LR 9.14.8 (4) | Statement of Annual Report of the Board of Directors | |||||||||||||||||||||||||||||||||
| 43. | Annual General Meeting and the Notice of Meeting | CA S.133 and CA S.135 (a) | The 55th AGM of the Bank will be held at the Galadari Hotel, “Grand Ballroom”, No. 64, Lotus Road, Colombo 01, on Thursday, March 28, 2024 at 2.30 p.m. Notice relating to the 55th AGM of the Bank is enclosed at the end of the Annual Report. | |||||||||||||||||||||||||||||||