Good Corporate Governance in Practice

Outline What is Corporate Governance?

Regulatory Requirements for Banks in Sri Lanka

DFCC Practices - Key Elements Code of ethics Enterprise Governance Board Composition Board Responsibilities Investor relations Role of Company Secretary Disclosure

What is Corporate Governance?

Many definitions

“The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company’s relationship with its all stakeholders (financiers, customers, management, employees, government, and the community)”.[Source: Business Dictionary.com]

Regulatory Requirements forBanks in Sri Lanka

Mandatory and prescriptive direction issued by Central Bank of Sri Lanka.

Key elements: Board composition Qualifications for directors Demarcation of the roles of Chairman and CEO Prescribed duties and qualifications for Board Identification of Related Parties and prescribed

procedures for Related Party transactions Mandatory disclosures in the Annual Report

Code of Ethics

Based on OECD principles of good governance

Corporate Values Whistle blowing policyCustomer CharterSocial ResponsibilityClosed period-dealing in Co shares,

directors/employees

Enterprise Governance

Strategy formulationReview of performanceAlignment of performance targets to KPI’sRisk ManagementLegal & Regulatory frameworkDelegation – extent & reviewDivision of responsibilityTransparency

Board Composition

Directors - Executive/Non executiveNon executive ChairmanIndependence of DirectorsSeparation of Chairman and Chief Executive

OfficerBoard CommitteesBoard Nomination policySelf Assessment

Board ResponsibilityAct with good faith with due diligence and careTreat all stakeholders fairlyReview of corporate strategyRole of chairman – leadership & stimulates

discussionAttendance at Board meetings Policy on independent professional adviceOversight of related party transactionsAvoidance of conflicts of interestIdentification of matters reserved for Board

Investor Relations

Communication PolicyTimely reporting of financial performanceDissemination of price sensitive informationTimely notification of shareholder

meetings/agendaFree transferability of sharesEqual rightsMaintenance of help desk

Role of Company SecretaryStatutory & regulatory functionsSecretariat services to Board/shareholdersAccess to Directors Guidance on directors responsibilitiesMinutes of meetingsDirectors’ interest register

Disclosures

Financial and operating resultsCorporate objectivesMajor share ownership Remuneration of Board & Key managementRelated party transactionsRisk frameworkInternal Control frameworkAuditors report – external & internal