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CSE to introduce new board for well governed corporates

by Ravi Ladduwahetty 

The Colombo Stock Exchange (CSE) will introduce a new Board which will list well-governed corporates which adhere to standards set out in a new Code on Corporate Governance which will be mapped out shortly.

The move is geared to boost investor confidence as well.

The concept of having a special board for listing well-governed companies is a good idea after the Colombo Stock Exchange adopts a code for good corporate governance. The prospective way forward is for the CSE to adopt the code where it will approve a proposal by the National Committee on Corporate Governance which is headed by Commercial Bank Chairman Mahendra Amarasuriya, CSE Chairman Ajit Gunewardene told the Daily News yesterday.

CSE Director General Hiran Mendis said that the CSE wants to differentiate companies which adopt good corporate Governance Practices so that investors would be aware of what these companies were when it came to investment decisions.

However, the procedure would be two-fold where the auditors of the company in question would have to certify that it was conforming to those needs, he said. He said that there were two schools of thought on what was ideal on the standards which formed the best practices. The first one was the National Committee on Corporate Governance headed by Mahendra Amarasuriya and the other which is being prepared by the Institute of Chartered Accountants.

What will be eventually implemented will be one of the two or even a hybrid of the two, he said.

Chairman of the National Committee on Corporate Governance Mahendra Amarasuriya said that the committee was sitting for the last one year and the process of forming a Commercial Association for Corporate Governance was under way. The Memorandum and Articles of Association was being prepared, he said. President of the Institute of Chartered Accountants of Sri Lanka Asite Talwatte said that his Institute would be releasing its report on Corporate Governance within the next month.

Chairman of the Stock Brokers Association and HNB Stock Brokers CEO/ General Manager Deva Ellepola said that appreciating companies on the basis of good governance was good and timely at a time when developed economies such as the United States had corporate scandals such as Enron.

However, the Colombo Bourse has been regulated well and has been classified under the top range of the Federation of International Bourses (FIB) and the practice of good policies such as good corporate governance would further add to Colombo's image as an ideal stock market, he said.

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