Corporate Governance
Chairman’s Statement
Dear Stakeholder,
We at Commercial Bank continually strive to satisfy the legitimate claims of all stakeholders and to fulfil the Bank’s economic, environmental and social responsibilities in an accountable and transparent manner. To achieve this goal the Board ensures that the right strategy and controls are in place in order to deliver value to shareholders, employees and the community. As a well-governed Bank we place a strong emphasis on corporate governance, striving to both align business practices with the best interests of all our stakeholders, and maximise transparency through timely information disclosure and financial reporting. As the Chairman of the Bank, I wish to state to all our stakeholders that your Board of Directors is committed to raise the bar to realise the Bank’s strategy while nurturing ethical behaviour and promoting good governance practices across all units of the Bank.
This Section of the Annual Report demonstrates the Corporate Governance Mechanism in place at Commercial Bank and its adherence to the requirements of the Code of Best Practice on Corporate Governance issued jointly by The Institute of Chartered Accountants of Sri Lanka (ICASL) and the Securities and Exchange Commission of Sri Lanka (SEC) and the Banking Act Direction No. 11 of 2007 on ‘Corporate Governance for Licensed Commercial Banks in Sri Lanka’ issued by the Central Bank of Sri Lanka and subsequent amendments thereto.
While assuring you that we take every effort to improve our Corporate Governance Philosophy, we hope that this Report will be of value to you realising how the requirements of the aforesaid regulations are in place within the Bank. Your valuable feedback is most welcome to continue with our commitment to practice corporate governance at the highest levels at Commercial Bank.
I wish to confirm that to the best of my knowledge, I am not aware of any material violations of any of the provisions of the said Codes issued jointly by the ICASL and the SEC and the Direction of the Central Bank.
Yours Sincerely,
D.S. Weerakkody
Chairman
Colombo
February 09, 2012
I wish to confirm that to the best of my knowledge, I am not aware of any material violations of any of the provisions of the said Codes issued jointly by the ICASL and the SEC and the Direction of the Central Bank.
Yours Sincerely,
D.S. Weerakkody
Chairman
Colombo
February 09, 2012
Highlights
- Mr. D.S. Weerakkody, a member of the Board since 2005 and the Deputy Chairman was appointed as the Chairman of the Bank effective from December 30, 2011, upon resignation of the long standing former Chairman of the Bank, Mr. M.J.C. Amarasuriya.
- Mr. K.G.D.D. Dheerasinghe, an eminent economist and former Senior Deputy Governor of the Central Bank of Sri Lanka was appointed as the Deputy Chairman of the Bank effective from December 30, 2011, upon resignation of the former Deputy Chairman/Director, Mr. B.R.L. Fernando. Mr. Dheerasinghe is an Independent Non-Executive Director.
- The Bank further refreshed its Board by appointing Mr. M.P. Jayawardena as a Non-Executive Director to fill a casual vacancy created due to Dr. H.S. Wanasinghe ceasing to be a Director effective from December 31, 2011.
- The Board of Directors formed two more Board Sub-Committees, namely the Board Credit Committee and the Board Technology Committee, with the view to further strengthen the governance structure of the Bank.
- During the year, the Bank engaged the services of Ernst & Young to seek an assurance on the Bank’s compliance with the requirements of the Banking Act Direction No. 11 of 2007 on ‘Corporate Governance for Licensed Commercial Banks in Sri Lanka’ issued by the Central Bank of Sri Lanka and subsequent amendments thereto.
- Since the Bank is in compliance with the requirements of the aforesaid Direction of the Central Bank of Sri Lanka, the Colombo Stock Exchange exempted the Bank from complying with the requirements stipulated in Section 7.10 on ‘Corporate Governance’ of the Continuing Listing Requirements of the Colombo Stock Exchange in 2010.
Statement of Compliance
The Bank is fully compliant with the requirements of the Code of Best Practice on Corporate Governance issued jointly by The Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission of Sri Lanka. See the tables for the requirements of ‘Corporate Governance Principles’ and the response of the Bank on its adherence to the said requirements.In addition, the Bank’s adherence to the requirements of the Banking Act Direction No. 11 of 2007 on
‘Corporate Governance for the Licensed Commercial Banks in Sri Lanka issued by the Central Bank of Sri Lanka and subsequent amendments there to is given here.
Further, the Board of Directors to the best of their knowledge and belief and is also satisfied that all statutory payments due to the Government, other regulatory institutions and those payments related to employees, have been made on time.
Further, the Board of Directors to the best of their knowledge and belief and is also satisfied that all statutory payments due to the Government, other regulatory institutions and those payments related to employees, have been made on time.
Summary of Compliance
The compilation below summarises the requirements of the Governance Code issued jointly by the ICASL & the SEC and the Direction No. 11 of 2007, amendments thereto of the Central Bank of Sri Lanka.This is not an exhaustive list and is provided purely for the convenience of the readers of this Report in assessing the Bank’s level of adherence to the aforesaid Code and the Direction.
| Summary of Requirements as per the joint Code of the ICASL and the SEC |
Disclosed | |
| Chairman and Chief Executive Officer | √ | |
| Board Balance | √ | |
| Appointment of New Directors | √ | |
| Nomination Committee | √ | |
| Appraisal of Board Performance | √ | |
| Board-related disclosures | √ | |
| Disclosure of Remuneration | √ | |
| Major Transactions | √ | |
| Audit Committee | √ | |
| Code of Business Conduct and Ethics | √ | |
| Going concern | √ | |
| Remuneration Committee Report | √ | |
| Directors’ Report | √ | |
| Financial Statements | √ | |
| Management Report | √ | |
| Corporate Governance Report | √ | |
| Audit Committee Report | √ | |
| Summary of Requirements as per the Directions of the Central Bank of Sri Lanka |
Disclosed | |
| Responsibilities of the Board | √ | |
| The Board’s Composition | √ | |
| Criteria to Assess the Fitness and Propriety of Directors | √ | |
| Management functions delegated by the Board |
√ | |
| Chairman and Chief Executive Officer | √ | |
| Board Appointed Committees | √ | |
| Related Party Transactions | √ | |
| Disclosures | √ | |
| Transitional and Other General Provisions | √ |
Governance of any institution should be aimed at protecting the interests of all stakeholders. For us at Commercial Bank, Corporate Governance is about effective, transparent and accountable governance of affairs by the management including the conduct of the Board, the highest governing body. Among many balancing acts that banks perform on a day-to-day basis such as managing liquidity vs profitability, risk vs return, capital vs growth, establishing and enacting a well-structured corporate governance regime too entails a balancing act. Corporate Governance is of paramount importance subsequent to a number of financial failures, frauds and questionable business practices that have adversely affected investor confidence around the globe.
The Bank conducts its business according to a clearly defined values and standards of conduct that go beyond the laws and regulations to deliver the promised highest standards of corporate governance embracing the best practices as enumerated in various Codes and guidelines applicable to the Bank. It is not the policies and decisions themselves, but how polices and decisions are implemented and practiced in its letter and spirit. The System of Governance at the Bank is built on the basic value of integrity encompassing our commercial principles and guidelines as well as internal and external control and monitoring mechanism which will be morefully described in the forthcoming sections of this Report on Stewardship.
The Bank conducts its business according to a clearly defined values and standards of conduct that go beyond the laws and regulations to deliver the promised highest standards of corporate governance embracing the best practices as enumerated in various Codes and guidelines applicable to the Bank. It is not the policies and decisions themselves, but how polices and decisions are implemented and practiced in its letter and spirit. The System of Governance at the Bank is built on the basic value of integrity encompassing our commercial principles and guidelines as well as internal and external control and monitoring mechanism which will be morefully described in the forthcoming sections of this Report on Stewardship.