Corporate Governance
The Board and management of SLT Group are committed to operate in accordance with best practices in business integrity and ethics whilst maintaining the highest standards of financial reporting and Corporate Governance. The Directors believe that the Group has complied in good faith with the following steering instruments on governance throughout the year:
- Legislations, particularly the Companies Act No. 07 of 2007 and the Telecommunication Act No. 25 of 1991 as amended by Act No. 27 of 1996.
- Company’s Articles of Association.
- Listing Rules of the Colombo Stock Exchange.
- Internal Company rules and processes and industry codes of best practices.
The Board of Directors
Composition
The Board comprises the Chairman and eight Non-Executive Directors (‘NED’), of which seven are independent Directors. The independence of the Directors was determined in accordance with the requirements of the CSE Listing Rules. The NEDs contribute valuable experience and independent judgment to the Company on business strategies, operations, technology, finance and governance.
The two major shareholders of the Company namely the Government of Sri Lanka acting through the Secretary to the Treasury and Global Telecommunication Holdings N.V., recommend the appointment of five and four Directors respectively to the Board.
Under the terms of the Articles of Association of the Company, all Directors appointed by the Board are required to be elected by the shareholders at the first AGM after their appointment. A Director must also retire by rotation and seek re-election at the AGM if he or she was last elected or re-elected at an AGM held on or prior to three years before the year in question.
Role of the Board and conduct of its affairs
The duty of the Board is to act in good faith in the best interests of the Group, create value for the shareholders and ensure the long-term success of the Group by focusing on the development and implementation of appropriate strategies, business models, controls and risk management processes, and management and compensation framework.
The Board provides leadership to the Group and oversees the business affairs in terms of the corporate strategies, business plans, financial and investment plans, annual budget, financial performance as well as compliance and corporate governance practices. The Board sets the tone for the entire Group in respect of ethics and values.
The Group has established financial authority and approval limits for incurring operating and capital expenditure and has delegated authority for certain operational matters to the management in order to ensure efficiency.
The Board meets on scheduled meeting dates which are agreed at the commencement of the year. The agenda for the meetings includes presentations by senior management and executives as well as external consultants or specialists where required. This allows the Board to develop a good understanding of the Group’s businesses and to promote active engagement with the senior management and executives.
Other specific responsibilities are delegated by the Board to Sub-Committees which operate within clearly defined Terms of Reference. Details of responsibilities and operations of the Sub-Committees are provided in the following section.
Board Sub-Committees
The Board considers the selection of Sub-Committee members carefully to ensure that each Sub-Committee comprises Directors with appropriate qualifications and skills, and that there is an equitable distribution of responsibilities among Directors.
The record of each Director’s memberships and attendance at the Board and Board Sub-Committee meetings during the financial year ended 31 December 2015 is set out on this section.
Audit Committee (AC)
Membership
Mr Chan Chee Beng, Sub-Committee Chairman and NED
Ms Lai Choon Foong, INED
Ms Chandra Ekanayake, NED
Ms Nilanthi Pieris, INED
Role and Key Responsibilities
This Sub-Committee assists the Board in discharging the responsibilities in relation to the Group’s financial results, finance and accounting matters, internal controls and corporate risks.
The Sub-Committee has full access to the management and staff, internal auditors and external auditors. It also has the authority to investigate any matter within its Terms of Reference and to review its Terms of Reference as and when required and recommend changes to the Board.
Remuneration & Nomination Committee (R & NC)
Membership
Mr Jeffrey Jay Blatt, Sub-Committee Chairman and INED
Mr Lawrence Paratz, INED (Stepped down w.e.f. 18.02.2016)
Mr P G Kumarasinghe Sirisena, INED
Mr Chan Chee Beng, NED (Appointed w.e.f. 18.02.2016)
Role and Key Responsibilities
This Sub-Committee provides support and guidance to the Board on the following areas in the Group:
- Nomination, selection and appointment of Non-Executive Directors, Chief Executive Officers and key senior management officers
- Succession planning for the Chief Executive Officer and senior management
- Reviewing composition of the Board particularly in relation to the diversity of background, skills and experience
- Formulating the Group’s policy for determining the fees and allowances for the Chairman and Directors of the Board, Board Sub-Committees and subsidiary companies
- Reviewing and recommending the remuneration for the Chief Executive and senior management
- Proposing appropriate recruitment and retention or incentive schemes.
Risk Management Committee (RMC)
Membership
Mr Jeffrey Jay Blatt, Sub-Committee Chairman and INED
Mr Lawrence Paratz, INED
Ms Lai Choon Foong, INED
Ms Chandra Ekanayake, NED
Mr W K H Wegapitiya (Appointed w.e.f. 18.02.2016)
Mr Rohan De Silva (Appointed w.e.f. 18.02.2016)
Role and Key Responsibilities
The RMC is responsible for identifying, evaluating and reporting on the Group’s risks, and to recommend mitigation strategies and plans to the Board.
The Board and management have established processes for identifying, evaluating and managing the varied and dynamic risks faced by the Group.
Technology Sub-Committee (TSC)
Membership
Mr Lawrence Paratz, Sub-Committee Chairman and INED
Mr Jeffrey Jay Blatt, INED
Mr Krishantha Cooray, INED (Resigned w.e.f. 01.12.2015)
Mr Firodouse Farook, INED (Resigned w.e.f. 07.12.2015)
Mr W K H Wegapitiya (Appointed w.e.f. 18.02.2016)
Mr Rohan De Silva (Appointed w.e.f. 18.02.2016)
Role and Key Responsibilities
The TSC is responsible for ensuring the development and implementation of appropriate network and information technology strategies and systems in response to new technological advances and the needs of the business and customers.
The Sub-Committee consolidates common technical requirements across SLT and its subsidiaries to influence development in both standard bodies and into common strategic vendors.
Senior Tender Board (STB)
Membership
Mr Jeffrey Jay Blatt, Sub-Committee Chairman and INED
Mr Lawrence Paratz, INED
Mr Krishantha Cooray, INED (Resigned w.e.f. 01.12.2015)
Ms Lai Choon Foong, INED
Mr Firodouse Farook, INED (Resigned w.e.f. 07.12.2015)
Ms Nilanthi Pieris, INED
Mr W K H Wegapitiya (Appointed w.e.f. 18.02.2016)
Mr Rohan De Silva (Appointed w.e.f. 18.02.2016)
Role and Key Responsibilities
The STB is responsible for ensuring proper governance and transparency of the Group’s procurement and tenders. It is also responsible for reviewing the Group’s procurement policies, processes and requirements; considering the outcome of tenders over a certain threshold and the recommendations of management; and proposing the recommendations for the approval of the Board.
Directors’ attendance at Board and Board Sub-Committee Meetings during the financial year ended 31 December 2015
| Board Member | Status | Board | Audit Committee (AC) | Remuneration & Nomination Committee (R & NC) | Technology Sub-Committee (TSC) | Senior Tender Board (STB) | Risk Management Committee (RMC) |
| Mr Kumarasinghe Sirisena – Chairman | INED | 7/7 | – | 3/4 | – | – | – |
| Mr Chan Chee Beng* | NED | 6/7 | 5/5 | – | – | – | – |
| Mr Jeffrey Jay Blatt** | INED | 7/7 | – | 4/4 | 7/7 | 7/7 | 6/6 |
| Mr Lawrence Paratz*** | INED | 7/7 | – | 4/4 | 7/7 | 7/7 | 6/6 |
| Ms Lai Choon Foong | INED | 7/7 | 5/5 | – | – | 7/7 | 6/6 |
| Ms Chandra Ekanayake (Appointed on 03.02.2015) | NED | 6/6 | 5/5 | – | – | – | 5/5 |
| Ms Nilanthi Pieris (Appointed on 03.02.2015) | INED | 6/6 | 5/5 | – | – | 6/6 | – |
| Mr Krishantha Cooray (Resigned on 01.12.2015) | INED | 4/6 | – | – | – | 4/6 | – |
| Mr Firodouse Farook (Resigned on 01.12.2015) | INED | 5/6 | – | – | 5/6 | 5/6 | – |
| Mr W H K Wegapitiya (Appointed on 02.12.2015 | INED | – | – | – | – | – | – |
| Mr Rohan De Silva (Appointed on 30.12.2015) | INED | – | – | – | – | – | – |
* Chairman AC ** Chairman RMC, R & NC and STB *** Chairman TSC
Roles and Responsibilities between the Chairman and the Group CEO
The Board recognises the need for the distinct roles and responsibilities of the Chairman of the Board and the CEO. The Chairman of the Board is a Non-Executive appointment and is separate from the office of the Group CEO.
The Chairman leads the Board and is mainly responsible for ensuring the effectiveness of the Board and its governance processes including unrestricted and timely access to relevant information necessary for decision making. This includes setting the agenda of the Board meetings and promoting an open dialogue among the Directors, as well as between the Board and the Group CEO. The Chairman maintains communication with the major shareholders, Government and regulators.
The Group CEO reports to the Board and is responsible for implementing the Group’s strategies and policies as approved by the Board, and developing business plans and budgets to support the Group’s strategies.
Access to Information
Prior to each Board meeting, SLT’s management provides the Board with reports and information relevant to matters on the agenda for the meeting. In-line with SLT’s commitment to conservation of the environment and technology advancement, SLT has implemented a paperless Board meeting solution where the Directors are provided with iPad devices to enable them to access and read Board and Board Committee papers.
The Board has separate and independent access to the senior management and Company Secretary. The Company’s Articles of Association provides for Directors including Board Sub-Committee members to seek independent professional advice where required.
Role of the Company Secretary
The Company Secretary supports the Board in facilitating compliance with the Listing Rules of the CSE and Companies Act No. 07 of 2007 and other relevant laws and regulations. In performing this duty, the Company Secretary performs the following responsibilities:
- Statutory duties as specified under the Listing Rules of the CSE and Companies Act 2007
- Organising and attending the Board and Board Sub-Committee meetings and ensuring that the Board meetings are properly convened and the proceedings are properly recorded
- Maintaining records that meet statutory requirements
- Providing information and assistance to the Board as and when required
- Supporting the Board in ensuring adherence to the Board’s policies and procedures
The profile of the Company Secretary is provided under Board of Directors.
Codes of Conduct for Employees and Third Parties
SLT Group has a strict code of conduct for all employees and another code for third parties dealing with the Group with the purpose of promoting responsible decision making and ethical practices. The code for employees sets out the principles to guide employees in carrying out their duties and responsibilities to the highest standards of personal and corporate integrity when dealing with its customers, suppliers, competitors and the community. The code covers areas such as equal opportunity employment practices, workplace health and safety, conduct in the workplace, business conduct, protection of the Group’s assets, proprietary information and intellectual property, data protection, confidentiality, conflict of interest, and non-solicitation of customers and employees. The code is accessible on the Group’s internal website.
Remuneration
The R & NC reviews and proposes the Non-Executive Directors’ fees based on the experience and skills of the Directors and the complexity of the Group’s business and operations, for the approval of the Board.
The remuneration for the Chairman and Non-Executive comprised of a monthly fixed fee for attendance of the Board meetings and review of key matters in the Group. Additional fees are not paid to Directors for attendance at Board Sub-Committees meetings or Board meetings of subsidiaries. The travelling and accommodation costs of non-resident Directors are reimbursed by the Group. The fees paid to the Directors remained unchanged since 2008. The aggregate fees of Rs. 19 million was paid to the Directors for the financial year 2015.
Communication with Shareholders
The Board uses the Annual General Meeting (AGM) to communicate with the shareholders on the affairs and matters of the Group. The Chairman of the various Board Sub-Committees will be available at the AGM to answer questions raised by the shareholders.
Major Transactions
There were no major transactions entered into by the Group for the year 2015 in terms of the definition stipulated in the Companies Act No. 07 of 2007.
Related Party Transactions
The Board has appointed a Related Party Transaction Review Sub-Committee comprising 2 NEDs and 2 INEDs. The objective of the Sub-Committee is to ensure that the interests of shareholders are taken into account when entering into RPTs and to enhance corporate transparency and promote fair transactions between SLT and its subsidiaries and other related parties. The related party relationship with its subsidiaries is disclosed in the Notes to the Financial Statements. However, the Board believes those transactions are exempted in accordance with exceptions specified in the Code of Best Practices on Related Party Transactions issued by SEC. [All these are recurrent transactions and are in the ordinary course of business of the Company.]
Statement of Compliance
SLT is fully compliant with the requirements stipulated in Section 7.10 on ‘Corporate Governance’ of the Continuing Listing Requirements of the Colombo Stock Exchange.