Effectiveness of the Board
The Board of Sri Lanka Telecom is composed of ten members. Of these ten, seven members are Non-Executive Directors. Six of these are Nominee Directors of the Government and one is a Nominee Director of NTT. The Chief Executive Officer, the Chief Financial Officer and the Chief Operations and Technical Officer are Executive Directors and also nominees of NTT with whom the Company also has a management agreement. The Non-Executive Board members have a wide range of experience and expertise.

As the Chairman of the Board is separate from that of the Chief Executive Officer the principle of separation of the two functions is maintained.

Directors’ Responsibilities
The Directors’ Report on page 23 to 25 embodies the principle that the preparation of the financial statements is the responsibility of the Board of Directors and not that of the Auditors. The financial statements are reviewed and approved by the Board prior to publication.

The Board of Directors is responsible for the strategic direction of the Company. Towards this, the management prepares an Annual Business Plan for the year along with rolling Financial Projections (budgets) for 10 years. The Annual Business Plan is carefully reviewed and once approved, management is responsible for implementing the Business Plan. The Board of Directors reviews progress at each Board Meeting. The Board also reviews the Business Plan on an on-going basis and makes necessary adjustments to the plan and the corresponding financial projections, as required. Based on the on-going review, management prepares a revised business plan at the middle of the financial year, if required. The Board reviews this mid-term revision and adjustments are approved as appropriate.

Committee Structures for the Board
To help the Board focus attention on specific matters, it has, from time to time, appointed ad-hoc Sub-Committees of the Board to address specific urgent matters. As risk management is a key responsibility of the Board, it has an Audit Sub-Committee. The Board also has a Remuneration Sub-Committee, which addresses remuneration matters.

These Sub-Committees have well defined Terms of Reference. They meet regularly, and they make reports to the full Board as and when necessary. The Board and the Sub-Committees have obtained professional advice as needed in carrying out their respective functions.

The Audit Sub-Committee consists of independent Non-Executive Directors. It reviews the audited financial statements and makes its recommendations to the full Board for approval prior to publication and submission to the shareholders at the Annual General Meeting. The Audit Sub-Committee works closely with the External Auditors and the Internal Auditors in fulfilling its mandate on the review of internal controls. It reviews accounting policies and where necessary, recommends adjustments, to the Board. The Audit Sub-Committee works with the management to streamline processes in the Company.

The Remuneration Sub-Committee, consisting of the Chairman, CEO and two specified Non-Executive Directors, reviews proposals for adjustments to remuneration scales. It has also initiated various actions with a view to strengthening our human resource base.

Board Meetings and Secretary to the Board
The Board of Directors meets at least once a month. At these monthly meetings the financial performance and progress is evaluated. During the year there were fourteen (14) Board Meetings. The Board Secretary, who has the necessary qualifications as required by law, records all decisions taken at these meetings.

Shareholder Relations
The Company has over seven thousand nine hundred shareholders. While the Government of Sri Lanka and NTT are the largest shareholders, with a combined holding of over 96.7% of the Company’s shares, the balance are owned by employees and others. Therefore, the Annual Report which includes the Chairman’s Message, the CEO’s Review and audited accounts is the main source of information for the shareholders, particularly for the minority shareholders.

The Annual General Meeting provides the forum for discussion of the business, its future prospects, and other matters of interest and concern of shareholders.