Sri Lanka’s NDB cancels EGM on concerns over required votes

July 25, 2016 (LBO) – Sri Lanka's National Development Bank has cancelled its scheduled extraordinary general meeting on fears that it may not obtain the required number of votes at the meeting. The scheduled EGM was convened by the Directors of NDB for the purpose of obtaining approval of the shareholders to amend Articles 36 (iii) and 49 of the Articles of Association of NDB. The said Articles relate to the appointment of the Chairman, by way of a Special resolution. “However, as several major shareholders have intimated their intention to vote against the proposed resolution, the Board is of the opinion that the bank would fail to obtain the requisite approval,” the bank said in a statement. The board has consequently decided to cancel the EGM scheduled for the 27th July 2016. Non Executive Director N.G Wickremeratne is the current Chairman of the NDB. The NDB’s current articles require that its chairman is an "Independent Director’" whilst the Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed Commercial Banks in Sri Lanka does not impose such a restriction. NDB proposing the EGM earlier said the requirement for the chairman to be an independent director is a requirement of NDB and not a regulatory requirement.
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Articles 36 (iii) of the current Articles of Association of NDB states that an independent director shall mean a director who satisfies the criteria specified in the statutes for determining an independent director. The article also states that an independent director shall mean a director who is not a shareholder of the company directly or indirectly holding in excess of 1 percent of the number of shares issued by the company. Section (i) and (ii) of the article 49 says the Chairman of the company shall be an independent director and directors shall elect 1 of their number to be the Chairman of the board.