The Commercial High Court on March 30, heard an application filed by petitioners W. M. V. Perera and W. L. G. Hakmanaarachchi, where they alleged that Seylan Bank had acted in a manner in violation of the provisions of both the Companies Act and the Banking Act.
The petitioners alleged that Seylan Bank had over a period of time utilized its own funds to purchase its own voting shares amounting to 12,752,994 shares which equated to 7.2% of Seylan Bank initially purchased on the basis that it was to be for the benefit of Seylan Bank employees.
Seylan Bank had purchased these shares through the Companies setup by the bank, Seyfest (Private) Limited, SESOT (Private) Limited and SOTSE (Private) Limited.
However, the petitioners brought to the attention of Court that
Seylan Bank thereafter had represented to the Colombo Stock Exchange in 2016 that the these 12 million shares were in fact not held for the benefit of Seylan Bank’s employees and that the Bank could not dispose of these shares because of pending cases in the District Court.
Counsel Nishan Premathiratne brought to the attention of court that given the above representations made by Seylan Bank to the CSE, that the purchase of the material shares by Seylan Bank through the use of its own funds amounted to a a direct violation of the provisions of the Companies Act and the Banking Act.
Thus it was submitted that Seylan Bank should be restrained from voting on the 12 million shares which are now being held in violation of the Law. As a substantive relief, the petitioners further sought to prevent Seylan Bank from continuing to hold the said shares as it would amount to a continuous violation of both the Companies Act and the Banking Act as the Company had violated the laws in purchasing the shares.
High Court Judge Shiran Gunaratne granted an interim order preventing Seylan Bank voting on the said 12 million shares held by the Seylan Bank through the six companies at the AGM scheduled to be held on March 31, 2017 and/or at any other instance where voting on through the said shares may be required.
The case will be called on May 4,2017.The Securities and Exchange Commission and the Monetary Board of the Central Bank has also been named as parties in this action for the purpose of Notice. (LS)
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