DirectorThe

VOLUME 17 ISSUE 04DirectorThe

VOLUME 17 ISSUE 04

SLID GAINSINSIGHT TO

ANJANA REDDY’S AMAZING

JOURNEY TOSUCCESS

A GLITTERING EVENING OF FINEDINING AT SLID’S

ANUUALDIRECTOR’S DINNER

SLID LAUNCHES ANINDEPENDENT

DIRECTORS FORUM

DirectorThe

VOLUME 17 ISSUE 04

SLID GAINSINSIGHT TO

ANJANA REDDY’S AMAZING

JOURNEY TOSUCCESS

A GLITTERING EVENING OF FINEDINING AT SLID’S

ANUUALDIRECTOR’S DINNER

SLID LAUNCHES ANINDEPENDENT

DIRECTORS FORUM

T H E S R I L A N K AI N S T I T U T E O FD I R E C T O R S

4 SLID POSIED TO TAKE OFF TO BETTER HEIGHTS

6 IMPROVING BANK AND FINANCE COMPANY GOVERNANCE

11 SLID GETS INSIGHT TO ANJANA RADDY’S AMAZING JOURNEY OF SUCCESS

13 A GLITTERING EVENING OF FINE DINING AND FABULOUS ENTERTAINMENT AT SLID’s ANNUAL DIRECTORS DINNER

17 SLID LAUNCHES AN INDEPENDANT DIRECTORS FORUM 18 SLID PARTNERS WITH IFC AND CSE TO STRENGTHEN CORPORATE GOVERNANCE PRACTICES IN FAMILY OWNED BUSINESSES

21 AUDIT COMMITTEE FORUM DISCUSSION NO.14

22 ASK THE SLID GURU

24 NEW MEMBERS

25 UPCOMING SLID EVENTS

Chairman1 Mr. Preethi Jayawardena

Senior Vice Chairman2 Mr. Rasakantha Rasiah Vice Chairman3 Mr. Faizal Salieh Immediate Past Chairperson4 Ms. Shiromal Cooray Council5 Ms. Dilani Alagaratnam6 Ms. Aroshi Nanayakkara7 Mr. Prakash Schaffter8 Mr. Dinesh Weerakkody9 Mr. Vish Govindasamy10 Mr. Dilshan Rodrigo11 Ms. Kasturi Wilson

CEO SLID12 Ms. Chaminda de Silva

Past ChairmanDesh. Ken Balendra - Founder President (2000 - 02) Mr. Ranjit Fernando - President (2002 - 04)Mr. Richard Juriansz - President (2004 - 07)Ms. Marina Tharmaratnam - President (2007 - 09)Mr. Mahen Dayananda - President (2009 - 11)Mr. Ronnie Peiris - President/Chairman (2011 - 13)Mr. Pravir Samarasinghe - Chairman (2013 - 15)Ms. Shiromal Cooray - Chairperson (2015 - 17)

DirectorThe

OFFICE BEARERS AND COUNCIL

No 434, R. A. De Mel MawathaColombo 03 Telephone: 2301646 – 8 Email: iod@slid.lk, info@slid.lk Web: www.slid.lk EDITOR: Rasakantha RasiahPRINTED BY: Sanvin (Pvt) Ltd.ART DIRECTOR : Shenal Burkey(The Palette)

SLID OFFICE

Enron and WorldCom scandal, crash of Lehman Brothers and closer home, the collapse of Pramuka Bank and Golden Key Credit Card Company Ltd., to name a few, brings to mind the importance of boardroom ethics and the need for a director to be alive to what is happen-ing inside his/her own company without being solely dependent on others for such information.Sri Lanka’s Companies’ Act of 2007 also holds directors’ accountable. It even em-powers the law to seize a director’s own private assets for the recovery of losses suffered by a company.

Therefore, subscribing to boardroom ethics is not only crucial for the survival of a company or a director’s character, but is also important to safeguard his/her s own personal assets, to prevent a director from being pauperized. The law has no mercy on sleeping directors. It requires all to be ‘hands on.” This is no trifle matter.However, the SLID Board Leadership Director Certification Programme, also known as the Board Leadership Training Programme (BLT) addresses this critical need.

Sri Lanka Institute of Directors (SLID) Chairman Preethi Jayawardena told “The Director” that BLT has a specific focus on grooming young directors and associate directors. “It’s even good for so called ma-ture directors to prevent them from getting rusty and to fine tune them”, he said.

BLT is mainly about corporate governance in practice and in action and is not limited to theory only. BLT makes a complete director. It’s also a training programme specifically designed to enhance the lead-ership skills of Board Members.

“SLID is looking atsubmitting a proposal to make this certification programme mandatory for new directors in public quoted companies” BLT, with a focus on corporate govern-ance runs over two full days over four months and comprises four parts and sixteen modules covering topics such as corporate governance, the business case for corporate governance, disclosure & transparency, shareowners & stake-holders, Board’s role, directors duties & liabilities, the effective Board: Composi-tion& structure, Board practices, Board procedures, governance of strategy, evaluating strategy delivery and executive directors’ performance, the governance of risk, corporate responsibility, financial oversight, reporting, corporate finance, and the control environment.

The programme is delivered by a faculty comprising renowned professionals and corporate personalities such as Dr Harsha Cabral (PC), Ms. Dilani Alagaratnam, Ms. Aroshi Nanayakkara, Dilshan Rodrigo, Manil Jayasinghe and Suren Rajakarier.

Ordinary members of SLID who complete the SLID Leadership Training programme will be qualified to become graduate mem-bers of SLID and are eligible to use the acronym “GSLID” after their name. GSLID members are included in a database and their names are shared with companies looking for independent directors.

na. This training programme is continu-ously renewed and upgraded, he said. It is on the job, practical training to the directors and not just theory alone, the SLID Chairman said.It is a must for good boardroom practice. SLID together with IFC conducted an exclusive Corporate Governance Board Leadership Training of Trainers workshop last year for SLID’s faculty which built on their capacities, to create an interactive environment for the BLT programme.

SLID also has a Power Evening series of knowledge sharing sessions which are held regularly as panel discussions on topics of interest for directors with globally renowned international and local present-ers. The last couple of events were on the topics of what a director should know about cyber security, women on Boards, “the other duty of corporate governance” and family business on taking over the mantle. There are focus groups such as the Audit Committee Forum and the Inde-pendent Directors’ forum which is in the process of being set up.Jayawardena also has a passion for the development of the country’s small and medium enterprises (SMEs) sector, the backbone of the island’s economy.

An accountant by profession with interna-tional experience, and currently serving in several Boards of blue chip companies, he emphasized the importance of avail-ing cheap credit to SMEs, the country’s biggest employer.

But the biggest handicap is that Sri Lanka has no development banks to provide cheap credit to the SME sector, Jay-awardena told “The Director”.’

The banking sector is operated by com-mercial banks. Therefore, lending to the SMEs in the absence of development banks is considered as being high risk by the island’s banking sector, he said.

It’s therefore imperative that the Govern-ment should step in and facilitate the SME sector, by making available to this critical cog in the island’s economy, cheap credit, the SLID Chairman said.

SLID POISED TO TAKE OFF TO GREATER HEIGHTS

An interview by Paneetha Amersekere

BLT is based on material developed by the International Finance Corporation (IFC) Global Corporate Governance Forum customized and updated to suit Sri Lanka and accredited by the Secu-rities and Exchange Commission of Sri Lanka. The Programme is delivered by the SLID faculty of trainers who have the knowledge base, experience and skills set to lead director education programmes. In-cluded in the SLID faculty are certified IFC Corporate Governance Board Leadership trainers.

Preethi Jayawardena FCAChairman Sri Lanka Institute of DirectorsDeputy Chairman Commercial Bank of Ceylon PLCGroup Director CIC Holdings PLC

As a result, exorbitant interest rates are charged by commercial banks when lend-ing to the SME sector.

“We must have such training programmes for upcoming directors,” said Jayawarde-

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Nonetheless, to alleviate the burden of the SME sector somewhat, SLID has embarked on a programme of educating the drivers in the SME sector, namely its owners, directors and operators, on financial literacy.

Being able to produce a professional set of accounts to banks may help to lessen the burden borne by SME operators, by banks weaning away from charging high lending rates to this key sector of the economy because of orderly and profes-sional accounting standards adopted and presented by this important sector of the economy.

“We recently conducted such education programmes in the East of the country previously neglected due to the country’s 26 year old internecine war which ended only eight years ago,” he said. SLID has spread the message of corporate govern-ance to the provinces, free of charge to the participants in Kandy, Ratnapura, Trin-comalee, Hambantota, Matara, Gampaha, Batticaloa, Kilinochchi, Jaffna, Mannar, Vavuniya and Ampara.

The programme is conducted in the ver-naculars, interspersed with English. Jay-awardena’s aim is to reduce the inequality vis-à-vis the benign way that banks look at a big corporate as a borrower as opposed to an SME borrower.

SLID which has over 700 members and with associate members, its membership extends to 800.

Membership is also offered to leaders in the public sector but they must realize that there is nothing like a free lunch, the SLID Chairman said.

He said that the “institute of directors” is a worldwide programme encompassing Sri Lanka’s giant neighbour India and embraces other countries in the region such as Pakistan, Singapore, Malaysia, Thailand, Indonesia and Australia. SLID plans to latch itself to this international network, to gain more insights as to how directors could add more value to their organizations and to the country at large.

Most often there is a difference between ownership and management in these fam-

A family member should not have special privileges over other members of the staff, said Jayawardena. For instance, he/she should not be given the advantage to come and go as he/she pleases, he said. If work starts at 8.30 am, that family mem-ber should set an example by coming to work on time, not later, he said. Then only will that family owned company grow.

Such family owned companies should also have independent remuneration commit-tees, audit committees, credit committees, risk assessment committees and so on. Corporate governance should not be a byword. It should be practised. As the company grows, outside talent should be invited and be allowed to foster. Then only will family owned companies become sus-tainable and their future assured, he said.

With Jayawardena at the helm, SLID also has on its radar screen to improve the efficacy of family owned businesses. The SLID Chairman said that there have not been any studies done in Sri Lanka, but he believes that a majority of the compa-nies in Sri Lanka are family businesses and globally studies have shown that more than 66% of businesses are family owned, and estimated to create about 70% of the annual global GDP. Nonethe-less, most of those family run businesses don’t go beyond the third generation, he said.In business literature there is a 30:13:3 rule, which states that around 30% of family businesses survive to the second generation, 13% to the third gen-eration and only 3% beyond the thirdgeneration.

SLID’s other Board members too com-prise some well known figures in the country’s corporate sector. They are: Sen-ior Vice Chairman Rasakantha Rasiah, Vice Chairman Faizal Salieh, Immediate Past Chairman Ms. Shiromal Cooray and Council: Ms. Dilani Alagaratnam, Ms. Aroshi Nanayakkara, Prakash Schaffter, Dinesh Weerakkody, Vish Govindasamy, Dilshan Rodrigo and Ms. Kasturi Wilson.

ily businesses and the need is corporate governance where everyone is treated equally so that there is value.

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IMPROVING BANK & FINANCE COMPANY GOVERNANCE

The dust is yet to settle on the collapse of CIFL and the Ceylinco Group’s Golden Key Credit Card Company.Many of its depositors are still awaiting settlement of their dues. A Bank or NBFI Board’s principal duty is to create and deliver sustainable shareholder value through setting strategy and overseeing its imple-mentation.In doing so, a Board needs to give due regard to matters that will affect the future of the Bank or NBFI, such as the effect the Board’s decisions may have on employees, the environment, commu-nities and relationships with suppliers. The Board also must ensures the man-agement team achieves the right balance between promoting long-term growth and delivering short-term objectives. Mem-bers of the Board are also responsible for maintaining an effective system of internal control that provides assurance of efficient operations and for ensuring that the top management team maintains an effective risk management and oversight process across the company. Today the Financial Sector is constantly being buffeted by waves of capital issues, talent, regula-tory and technological challenges. The increased regulatory burden and related costs impact every financial institution in both the approach to doing business and the expense of doing business.

of interest between board members and the institutions they serve, or when board members experience financial difficulties of their own. A board can also lose its effectiveness when there are personality clashes in the boardroom or when one or more board members seek to domi-nate the deliberations. The best time to avoid such issues is during the selection process for new directors. Compromise and in the selection of directors will almost always dilute the effectiveness of the board as a whole

Director Criteria

Directors add value to a bank and NBFI board when they: 1. Have a good level of financial acumen 2. Are aware of risk fundamentals and techniques

TranstionThe industry is in transition, with many challenges ahead. As a result, there

3. Are able to manage dynamics with top executives 4. Demonstrate emotional intelligence, when addressing tough issues.

has never been a greater need for well functioning, informed and upright boards of directors. There has also never been a more important time for board members to keep in mind that their responsibilities go beyond the institution they serve. To achieve long-term value for shareholders bank boards would need to look for ways to strengthen their institutions, to do that they need to strengthen themselves as a board. One way of doing that is to adopt the practices of effective boards- getting competent and credible directors to their boards. Well performing companies on many occasions have been destroyed by bad governance... that is what the Enrons, the Worldcoms, the Satyams and all the scam tainted companies like GK and CIFL are all about. Almost always it is the Board and the top management of these companies that ruin these firms and take them rapidly down. These are classic examples of Board Room and top management failure in discharging their fi-duciary responsibility to shareholders and their failure to ensure the long-term health of the company. Most legislative and reg-ulatory action by most Governments post 2008 was geared towards preventing such episodes in the future.

The most challenging and distracting issues a board can face are those re-lated to its own members. These issues typically arise in connection with conflicts

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A group of good, solid and dependable board members could be far more effec-tive than an all-star line-up of directors. A board is far more effective when it acts as a group, where all members can voice their opinions, and where diffi-cult questions can be asked. Dominant shareholders and board cultures in which constructive debate never occurs have contributed to the demise of many finan-cial institutions. Therefore careful selec-tion of new board members, keeping in mind the strengths and weaknesses of the other members of the board, is well worth the time and effort involved. The Board of a Financial institution that runs on public deposits is accountable as a group, since their functioning is essentially collegial in nature, and is expected to promote a shared point of view about what decisions the firm should make to create lasting value.

The composition of a board, and the in-terpersonal dynamics among its members are critical for the success of a financial institution. A bank board is like any other working group can be heavily influenced by members who dominate the conversa-tion, or by members who actively discour-age discussion or dissent. A board is not intended to merely rubber stamp the pro-posals of management. If the responsibil-

Board Composition

Most codes now insist that one third of the number of directors are independent non-executive directors. However, Inde-pendence is not about ‘no-Shareholding’, and it is more about how independent the director is in his thinking beyond and his ability to challenge proposals at the Board meeting. Non-executive directors are the ones who really should perform the real role of independent directors, since executive directors are often left to defend decisions and proposals in Board meetings. Also, most codes now require nomination committees to recommend the appointment of new directors. The main purpose of having a nomination committee is to ensure that there is a transparent ap-pointment process, which is not under the control of the Chairman or the CEO, and to ensure that the right balance of skills, experience and independence is brought to the board table, while giving due con-sideration to shareholder demands

Independent Directors

Most directors’ only visit the institution they represent once or twice a month,

Education and Development

To play that role; directors need to have the following key characteristics:

1. Independence and care about the progress of the institution deeply - being free of conflicts. 2. Time to devote to the job - to prepare for board meetings and to participate in committees. 3. Competent - being fully engaged and proactive as a board member. 4. Courage and credible - ability to deal with tough issues. 5. Willingness to learn

ities are to be effectively discharged, it is important that the composition of a board, and the interpersonal dynamics among its members are right. While integrity is an essential pre-requisite, this alone is not sufficient and directors must be people who are alert and have the capacity to understand the inherent risks taken on by an institution and objectively analyze the proposals submitted by management on various aspects of a firm’s operations. However, it is equally important that the board has competence within it which embraces other disciplines such as Law, Economics, marketing, Human Resource Management and Technology, so that a multidisciplinary approach is taken to managing risks and growing the bank business.

‘The Writer is an HR Thought Leader’

which makes a full understanding of the operations very challenging. Also given the limited scope of the role most direc-tors don’t understand the business well enough to challenge the executives. Therefore there certainly needs to be an educational element brought into board meetings and beyond to ensure the directors properly understand the busi-ness they are overseeing and also have the competence to get under the skin of the institution and follow up on things that don’t seem quite right. Most directors are expected to focus continuous professional development to ensure they stay ahead of the game. With such education, directors can become far more effective in identify-ing and understanding of the risks to be managed, as well as the key drivers that most influence a bank’s performance. This also means getting people on the board who are experts in things like branding, HR, learning, and the like—not usually the kind of people boards look to right now. That is why most boards miss major risks that they should have caught in the first place. In the final analysis Board Members are now expected to provide oversight and perspective to the executives running the institution by bring their own experiences from other institutions they have managed to the table to help the institution to make better quality decisions and to help build a sustainable banking business. If they fail to do that they will face the wrath of the depositors and employees and face legal action.

Blue Ocean Group ventures intofacility management for its luxury Condominiums

‘’At Blue Ocean Group, striving for excellence is at the core of our business. Our business philosophy revolves around innovating through our own style of quality construction. That’s how we have come to be a front runner in this thriving industry’’ Mr.S.Thumilan, Chairman, Blue Ocean Group.

As Sri Lanka sails forth towards unprecedented development, Real Estate sector has become ever so significant as the back bone of the country’s economy. Sri Lanka’s real estate industry is driven forward by a set of expert players that place emphasis on innovation, strategy and sustainable growth. This was evident in the manner the industry quickly made up for three decades of intermittent building activity due to the civil war and pro-gressed fast, contributing much to the country’s economy. Recognizing the fast progressing industry in Sri Lanka, Asia’s most renowned property awards programme PropertyGuru Asia Property Awards in-cluded Sri Lanka for the first time in history and Blue Ocean Group emerged the winner of coveted Best Developer in Sri Lanka award whilst bagging the awards for Interior Design, Condo Architecture Design and Sustainable Development as well.

‘’At Blue Ocean Group, striving for excellence is at the core of our business. Our business philosophy revolves around innovating through our own style of quality construction. That’s how the Blue Ocean Group has come to be a front runner in this thriving industry. Our achievement at the recently concluded Asia Property Awards 2017 where Sri Lanka was included for the first time tells much about that’’ commented Mr. S. Thumilan, the chair-man of the Blue Ocean Group. Blue Ocean Group, reputed for their professionalism, integrity and expertise, has been in the forefront of real estate industry evolution in Sri Lanka. The group’s construction arm, Link Engineering is one of the pioneering construction companies with a history of over four decades. With Link Engi-neering being awarded projects valuating to twenty billion rupees in the last three months, Blue Ocean Group has already cemented a sound financial plan for the next two years. Earning Blue Ocean Group, the due reputation as Sri Lanka’s largest property developer, Link Engineering is currently involved in over 30 condo-minium projects for the Blue Ocean Group and over 32 construction projects for the government in Jaffna, Kilinochchi, Polonnaruwa, Trincomalee, Batticaloa, Kandy, Nuwara-Eilya, Matara, Ratnapura, and Colombo. The company’s professionalism and integrity keeps winning more projects as the Indian High Commission recently awarded their 4th consecutive project to Link Engineering which is to construct a multilingual school in Polonnaruwa.

Having lived through Sri Lanka’s real estate boom right from the beginning, through the war years and the post-war boom, S.Thumilan, the chairman of the Blue Ocean Group, shared some of his insights on the fundamentally sound nature of the real estate boom in the country. ‘As a market leader, we are quite aware of the behavioural aspects of the market. In a recent speech, Honourable Prime Minister, Ranil Wickremasinghe, mentioned the scarcity of land in Colombo for real estate development. This statement alone is quite self-explanatory. There is a lack of supply and demand has far outpaced supply. The market is catering to three distinct segments, easily described as first class, business class and economy class based the lo-cation and living ambiance. It’s safe to say that there is a supply shortage in all of these categories, particularly the business and economy segments. However, it’s important to note that the real estate companies also need to ensure their core competencies to thrive in this environment’

Mr.Thumilan points out that the world now shows a keen interest in Sri Lanka thanks to its ongoing socio economic stability and economic growth. While global investors see fresh opportunities for investment in Sri Lanka, many expatriates who moved out during the war years are now slowly mov-ing back to live out their retirement in their own country.

‘’We can clearly see that purchase of condominiums in Sri Lanka by high net-worth expats has seen an exponential growth. It is a growing trend for citizens in countries such as China and the oil-rich Middle East and North Africa (MENA) to immigrate to other countries for a healthier and more convenient life style. Therefore, a vast number of expats are looking to buy apartments for investment, holiday homes and accommodation purposes. Apartment pricing in Sri Lanka continues to be attractive in comparison to property prices in Europe, Hong Kong or China. Also, we cannot forget the vast potential Sri Lanka has to grow as a regional medical and educational hub’’

According to Thumilan, the ratio of condominium units to the population is well below the global average as Sri Lanka’s urbanisation rate is grossly lower than the global average and even than those of its peers. As published by World Bank in 2016, Sri-Lanka’s urbanization rate stood at 18% against the global urbanization rate of 50%. ‘These facts indicate there is still a lot of room for growth. I am happy to say that the market is sound, well and fundamentally driven. We see no impending issue. This is attested by the fact that we at Blue Ocean have, in the last 3 months alone, closed deals worth in excess of eight billion rupees and expect many more deals to be closed within the next 6 months. We’re a 100% Sri Lankan owned company and the land on which our developments are built are all purchased by us outright, prior to commencement of the development, thus allowing us to ensure the highest quality of our end product.’

With over four decades of experience under their belt, Blue Ocean Group has been shouldering a bulk of construction work in the country and across many fields from condominium and commercial projects to government funded development projects. Blue Ocean’s vision to achieve excel-lence in all their endeavors is carried out by the group’s construction arm, Engineering, backed by the sister companies Sisira Builders, Blue Ocean Facility Management, Link Ready-mix, Link Aluminum, Contessa, Link Heavy Machineries. Blue Ocean Group claims that the roots of their success are in their ability to provide professional client oriented services on time. Blue Ocean Group is planning its maiden overseas expansion in the South Asian region and hope to have an active overseas operation during the forthcoming financial year.

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SLID GAINS INSIGHT TO ANJANA REDDY’S AMAZING JOURNEY TO SUCCESS “Success is the result of perfection, hard work, learning from failure, loyalty and persistence” ~ Colin Powell~ which is exactly what Anjana Reddy has done within a short span of time and this achievement recognized by being named in the Forbes’ magazine’s 2017 list of 30 under 30 in Asia

where she set up a table to sell books at a parent teacher meeting.

A fourth generation female entrepreneur, Anjana ventured out of the family business and managed to bring together sports and fashion in a unique way to success-fully build three great celebrity-endorsed brands Collectabillia, Wrogn and Imara. Her brands sell in more than 70 stores, as well as on e-commerce platforms like Myntra. Anjana shared her journey with the Sri Lanka Institute of Directors (SLID) at a Power Evening sponsored by Sunshine Holdings. She was interviewed by senior journalist and editor of the Daily FT Nist-har Cassim who skillfully navigated the discussion to gain insight to her amazing story. As the old saying goes, “If it were easy – everyone would do it.” Preethi Jayawarde-na, Chairman of SLID, shared in his introduction, that her entrepreneurial flair was first seen when she was still in school

When she completed her post graduate studies in 2011, Anjana had a couple of career choices available. She could join her family’s media business, take up a corporate job in the US or venture out on her own. She chose to do the most difficult of all things, which was to become an entrepreneur and to stand on her own two feet without taking the easy way out and relying on the backing of her family. She did it her own way on her terms. She shared the fact that her mother was an entrepreneur herself who is a source of inspiration and influence.

Do your own thing

Interestingly, Anjana, a former national badminton player in India, conceived this idea around sports memorabilia while in college. In her final year in college, she founded ‘Collectabillia’ where she sourced sports products and paraphernalia owned by super stars. She was obsessed with building a brand and worked only with the best sporting names.

She shared her story about how at the beginning when she approached investors

Don’t give up on your dreams

they were skeptical about her plans, her young age and her ability to achieve the ideas that she had. They wanted to know who she was going to sign up as the face of the brand. Without hesitation she auda-ciously named Sachin Tendulkar although she did not know him personally or have any links to him. She had set herself a tall goal and was determined to make it a reality.At that time Sachin Tendulkar was still playing actively and had limited time to discuss commercial opportunities. Besides, he already had a plethora of existing brand commitments that kept him busy. After over a year of getting the an-swer ‘no’ her perseverance paid dividends when he finally agreed to meet her. A chance seating on a flight heading back to the US she sat next to a common friend, whose daughter had played badminton with her, who agreed to put her in touch with him. He believed in her idea and was also an investor in her first round of funding. Later Accel Partners, a US based venture capital firm which has invested in companies like Facebook, Flipkart and Angry Birds, invested in her company.

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She was forthright and open about the challenges and failures that she faced. One of the biggest challenges she faced was when with the World Cup in 2015 she was licensed to manufacture and sell cellphone, tablet and laptop covers fea-turing Lionel Messi. Although at the time it looked as if it was a great venture the idea tanked as it did not take off as envisaged and Anjana was faced with a tough deci-sion to make.

This is when her next idea came about. She had noticed that celebrity endorsed branded apparel were selling well and that in India there was a gap in the 16 -35 age fashion category at an affordable price. Anjana made a quick decision to turna-round the company by launching 2 brands

Whatever you do, be different!

Her biggest risk was to sign up Virat Koli as the brand ambassador for ‘Wrogn’ when he was going through a tough time in his career. Even Virat himself was not sure of signing up with a brand called Wrogn but Anjana’s persistence convinced him to sign up. With her out of the box thinking she has made a positive con-nection with a word that is negative “Two rights make a wrong”. The risk paid off when Virat’s career took off and the brand became successful.

Taking risks

Her success is due to her hard work. She works 18-hours a day, loves cars, cares for eight dogs and builds Lego sets to

Nothing comes easy

ease her mind after a hard day’s work. She admits that she doesn’t have time to have an active social life but she has a close circle of six childhood friends who she spends time with. She is down to earth and when you meet her you would not be able to tell that she runs a suc-cessful business. Her tenacity to succeed is what has made her successful. As she says “Be really passionate about what you do. Gender doesn’t matter, it is what you bring to the table”.

The closing remarks were delivered by SLID CEO Ms. Chamindā de Silva who thanked the Event Gold sponsor Sun-shine Holdings, SLIDs annual corporate partners Janashakthi Insurance, IronOne Technologies, Pyramid Wilmar, Stafford Motors, annual print media partner Wijeya Newspapers, Anjana, Nisthar and the participants for attending the event. The evening concluded with a drinks reception.

Making the right decision at the right time

‘Imara’ for women and ‘Wrogn’ for men. Her goal is to build an Indian brand that is global.

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A GLITTERING EVENING OF FINE DINING AND THE FABULOUS ENTERTAINMENT AT SLID’s ANNUAL DIRECTORS DINNER

The recipe for an enchanting night out: the De Lanerolle Brothers with their mag-nificent voices, a harmonious orchestra playing together for the first time, and delectable cuisine, with a praise-worthy cause. The Sri Lanka Institute of Directors (SLID) organized such an occasion for the fifth consecutive year on 20 October to raise funds for the free workshops that SLID conducts in cities throughout Sri Lanka. There were over 250 directors and their guests who sat to wine and dine over an elegant six course dinner with tasteful entertainment throughout the evening.

executive directors’ performance, the governance of risk, corporate responsibili-ty, financial oversight, reporting, corporate finance, and the control environment. Each part comprises 2 full days, with the whole course running for 8 days over a period of 4 months.He said that it was former SLID Chairman Ronnie Peiris who was responsible for initiating BLT. “We need to have proper boardroom governance training,” Peiris had emphasized, said Jayawardena. He described Peiris as being the father of BLT programme.

He also said that there was a need for development banks. Jayawardena said that Sri Lanka needs foreign direct invest-ments rather than fly by night investments in the Colombo stock market.

Guests arrived at the Cinnamon Lakeside Hotel terrace for a drinks reception, giving them the opportunity to meet and mingle with other guests. They then proceeded to the main ballroom at King’s Court where they enjoyed a fine dining experience with specially chosen wine from Wine.lk.

The De Lanerolle Brothers accompanied by the 18 piece National Unity Orchestra set the tone for the evening. The orchestra comprises of highly talented artistes from around the island from all walks of life, ethnicity and religion. It was the National Unity Orchestra’s first public performance together and it was electrifying with the passion and emotion from the group channeled into the music making the live performance wonderful.

Speaking at the event SLID Chairman Mr. Preethi Jayawardena told a full house that SLID’s Board Leadership Director Certi-fication Programme (BLT), based on the IFC Corporate Governance Board Lead-ership Training Resources toolkit (Toolkit), includes relevant content applicable for Sri Lanka by SLID facilitators, and is accredit-ed by the Securities & Exchange Commis-sion of Sri Lanka (SEC) was a must for directors. “BLT encompasses everything a director should know of running a company ethically”, said Jayawardena. BLT comprises 16 modules covering topics such as corporate governance, the business case for corporate governance, disclosure and transparency, shareowners and stakeholders, Board’s role, directors duties and liabilities, the effective Board: composition and structure, Board prac-tices, Board procedures, governance of strategy, evaluating strategy delivery and

Additionally, Richard Ebell runs an “audit forum” for directors and Faizal Salieh runs an “independent directors forum.” SLID also runs workshops, breakfast meetings and coaching programmes for family owned businesses.

He also said that SLID is a firm believer of gender diversity with 40% of its Council comprising women. Jayawardena also paid tribute to SLID’s Immediate Past Chairperson Ms. Shiromal Cooray. He said that when he took over from Cooray, she had already brought SLID to its peak.

He also said that SLID is a firm believer of gender diversity with 40% of its Council comprising women. Jayawardena also paid tribute to SLID’s Immediate Past Chairperson Ms. Shiromal Cooray. He said that when he took over from Cooray, she had already brought SLID to its peak.He said that in the four months he had been heading SLID’s operations, he had raised the bar further by introducing the “independent directors‘ forum.”

Jayawardena also emphasized the impor-tance of the country’s small and medium enterprises (SMEs) sector which compris-es 65% of all businesses in the country. SLID has been tapping this segment by even conducting training programmes in the hinterland. However, the biggest prob-lem that SMEs face is access to credit. The difficulty that banks have in dealing with SMEs is the reliability of their financial statements. Jayawardena said that SLID also has to play the role of changing the inequality of society where 20% of the population contribute to 80% of GDP.

This year’s SLID dinner was memorable in its own right as an evening of entertain-ment, but those involved will have also contributed to knowledge sharing through-out the island through the workshops it will finance. The Platinum sponsor was Brandix Lanka Limited, with support for SLID from Mireka Holdings, and Daily FT & Daily Mirror as the Exclusive Print Media Partner. SLID is supported by Janashakthi Insurance PLC, BoardPac, Pyramid Wilmar (Pvt) Ltd and Honda as the annual corporate partners. The other partners whose expertise made the occasion a success were Wine.lk, Coca Cola Beverages Sri Lanka Ltd. The event was compeered by Ramesh Schaffter who added his own brand of humour keeping the guests entertained whilst contributing to the success of the event.

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The Sri Lanka Institute of Directors (SLID) launched its inaugural Independent Di-rectors’ (INED) Forum last week with the participation of senior and experienced directors from the corporate business sector.

The idea to create such a forum emerged from the post event discussion of SLID Power Evening in February 2017 which was titled “Non Executive Independent Directors: Who are they? What do they do?” with regard to a greater need for the role, responsibility and accountability of INEDs. The initiative was spearheaded by Mr. Faizal Salieh.

SLID LAUNCHES AN INDEPENDENT DIRECTORS FORUM

In keeping with its firm commitment to foster good corporate governance and uphold the value of independent non-ex-ecutive directors in Board processes, HNB Assurance PLC, supported the initiative by providing the venue and refreshments that evening.

SLID’s Chairman Mr. Preethi Jayawarde-na inaugurated the forum and made the opening speech followed by SLID’s Vice Chairman, Mr. Faizal Salieh, who gave an overview of the forum, its purpose and objectives.

The discussions kicked off with Dr. Harsha Cabral, PC, Non-Executive Chairman To-kyo Cement and LOLC Finance making a short key note speech about the role, du-ties and responsibilities of INEDs including their legal obligations interspersed with pertinent examples. The key note address

“The primary objective of this Forum is to provide a constructive platform for the engagement of Independent Non-Exec-utive Directors who are serving on the Boards of listed and unlisted companies in Sri Lanka and enable them to understand their roles and responsibilities, share and learn from each other’s experiences, and discuss issues and problems they encounter in discharging their roles in the boardroom, learn from and engage with those knowledgeable in relevant fields on new legislations, regulations and best practices, and to enhance their knowledge and skills on board processes and practic-

It is expected that INEDs who regularly and actively participate in the Forum will have opportunities to discuss and develop solutions to common and specific issues and problems they experience in the boardroom, stay abreast of legislation, regulations and best practice, sharpen their boardroom process skills and en-hance their effectiveness in the board-room, and interact with one another and build lasting professional relationships.

The Forum will be an interactive platform for knowledge and experience sharing and learning among INEDs across diverse industries and businesses. Participation in the Forum is not restricted to SLID members but will be by invitation. Howev-er, independent non-executive directors on private and public sector Boards who wish to actively and regularly participate in the forum may contact the SLID CEO Ms. Chamindā de Silva on 2301647 and express their interest in joining the Forum.

was followed by a lively and in-depth group discussion on the way forward for the forum.

es” Salieh emphasised.

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SLID PARTNERS WITH IFC & CSE TO STRENGTHEN CORPORATE GOVERNANCE PRACTICES IN FAMILY-OWNED BUSINESSES

The Sri Lanka Institute of Directors together with the Colombo Stock Exchange in partnership with IFC, a member of the World Bank Group organized a workshop themed ‘Family Business and Corporate Governance’ on Saturday, 25th November at the Taj Samudra Colombo. The workshop was specially tailored for family businesses covering the essential principles of modern corporate governance. It also exposed par-ticipants to the dynamics and communication issues in a family setting and was facilitated by Prof. Enrique M. Soriano III, who is a renowned

family business coach, author, and columnist

Father founder, son rich, grandson poor

“Father Founder of the company, Son Rich, and Grandson Poor” is Mexico’s powerful equivalent to Asia’s popular saying about family-owned businesses, “Wealth Shall Not Last Three Genera-tions”!

source, the family with the assistance of a family business advisor, proactively work to ensure that adequate measures are adopted so that those conflicts do not spillover to the other circles (John Davis et. al. Three Circle Model). Lastly, if there are differences, they must not be avoid-ed. This will only postpone the issue and create bigger problems in the future.

Citing an article penned by Lee Iwan, a leading Business Strategist in Mexico, he avers that the “founder works and builds a business, the son takes over and is poorly prepared to manage and make it grow

but enjoys the wealth, and the grandson inherits a dead business and pronto an empty bank account.”

Family Governance Is Non NegotiableI always reiterate that the first step to-wards governance is for family members to be cognizant of the major causes of the tension. Second, after identifying the I strongly encourage the patriarch/ma-

triarch not to waste time in pursuing the

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governance process. Your action now can help your grandchildren avert not just go-ing back to being part of the “poorhouse” but the ignominy of causing the demise of the family business during their watch.

In a Harvard Business Review article with the same title penned by noted Family Business Professor, Dr. John Davies, he adeptly highlights 3 components of Family Governance:1) Periodic assemblies of the family2) Family council meetings for those families that benefit from a representative group of their members doing planning, creating policies, and strengthening busi-

With any multi-generational transition, you can anticipate tension. With more family members, you can expect more complex family issues emerging that will further exacerbate and breed more tension.

But to be truthful and fair about the wealth dissipation issue as to which generation caused the demise of the business? The blame lies on the failure or inaction of the first and second generation to initiate governance and succession early.

When governance is initiated, natural ten-sions occur as they cannot be avoided. In fact, if there is no tension, it can mean that family members are passive, incompetent, either not thinking or trying to improve or have no power to assert. All of which are equally red flags that a family business will not last.

Tension is Normal in aTransition

It is important that Family Business gov-ernance be set in motion, where rules and expectations are articulated and compli-ance integrated in the family ecosystem. It is equally important to note that “every single-owner enterprise passed through various stages of transition and the process improvement is dispersed over time”. But when issues that cause strain and conflict remain unsolved during the governance initiatives, you can expect many of these challenges to manifest and re-appear when the second and subse-quent generations enter the business.

The 3 Components of Family Governance

-ness-family communication and bond.c. A family constitution—the family’s policies and guiding vision and values that regulate members’ relationship with the business. He further points out that for governance to be effective, there should be a working family assembly and family council that focuses on the roles and responsibilities of family members. He outlines the critical areas:1) These are clarity on family member roles and rights. 2) Actions of Family members, family em-ployees, and family owners to act respon-sibly toward the business and the family.3) Regulate appropriate family and owner inclusion in business discussions.

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“Simple control lapses- tip of the iceberg. What’s be-yond?”

While explaining the above, Dulitha stressed on some impor-tant points.

• As simple control lapses could lead to fraud and misappro-priation of funds, the AC should ensure that processes are in place to deny any opportunity.

• Weak internal controls are a warning sign of control lapses and AC should seek to obtain assurance from the manage-ment that all transactions have been done in accordance with agreed policies This assurance could be obtained periodically so that accountability is assigned.

• Management should periodically review user logs of em-ployees who frequently work beyond normal hours as well as super user logs, monitor changes in lifestyle and be vigilant if employees appear to be defensive when discussing an audit issue.

• Since organisations are heavily reliant on information sys-tems, AC should ensure that all changes to IT systems are documented and that no controls have been compromised. Back-end manipulation and record generation by the systems administrator should not be encouraged.Extracting informa-tion from the system and translating it into another document for financial reporting can lead to data manipulation and management should ensure that the linkage is available for verification.

• Integrity and business ethics are critical and employees should be screened at the recruitment stage through back-ground and reference checks.

• A fraud risk assessment should be carried out by identify-ing both internal and external areas which are susceptible to fraud. AC should ensure that there is a documented frame-work for managing fraud risk and put in place a reporting mechanism.

• Basic controls and tools should be in place for proactively determining fraud including surprise verifications/audits, effec-tive questioning and monitoring employee behaviour.

The discussion moderated by Suren began with An-thony asking what the early signs of collusion are. Dulitha said that while collusion is difficult to detect at the outset, it is important to ensure that the nec-essary processes are in place and that accountabil-ity is identified.

• Preethi asked how employees can be effectively screened during recruitment, particularly as referees always give good references. Dulitha responded that the qualifications, back-ground and experience of the potential employee should be assessed. HR awareness of this is important.Coralie said that the usual practice is dismissal once a fraud is revealed, rather than implementing a process to ensure that it is not repeated. Suren suggested that setting the correct tone at the top and creating the right culture could help.

• Nihal asked if the AC has any responsibility for recovery once a loss has been identified and quantified. Soos said that recovery would fall beyond the AC’s responsibility; however the AC should see that the situation is rectified to ensure that it is not repeated.

• Lionel suggested that continuous audit facilities be built into certain IT systems and that Risk, Fraud Management and the AC should work together to prevent control lapses and potential frauds. He also said that RACI (Responsibility, Accountability, Concerned and Informed) charts are popular in the West.

• Averill said that the challenge is that the AC receives insuf-ficient information and that even the internal audit function is unable to detect all frauds. Being vigilant on repeated basic lapses and maintaining an element of surprise when conduct-ing internal audits could help.

• Lalit said that most frauds occur due to weak management and that a degree of firmness in dealing with such situations may give good results. Soos also added that if the AC is pro-active in such matters it could act as a deterrent.

Presenter – Dulitha Perera, Partner,KPMGThe main thrusts of Dulitha’s presentation were-1. Warning signs for the BAC2. How BAC could respond –Operational and3. How BAC could respond – Strategic

The 14th session was at the ICASL, on Monday the 16th of October 2017

Ask the

guruSLID

Will The Sri Lanka Institute of Directors (SLID) Adopt a Code of Conduct and Ethics binding its Members including within it a binding requirement for members to Respond to Non Compliance with Laws and Regula-tions (NOCLAR)-refer https://www.ifac.org/publications-resources/responding-non-compli-ance-laws-and-regulations

SLID’s philosophy is to provide guidance to its members, educate, train and prepare them to un-derstand their roles and responsibilities as directors and enable them to practice with due care and self-regulation. It is up to the individual members to adhere to laws and regulations. However if mem-bers of SLID are found guilty for non-adherance of Laws and regulations, SLID will look very serious-ly at permitting continuation of membership of the member concerned.

Will SLID Appoint an Independent Advisory Board comprising of Senior Members to Counsel and Guide members facing ethical issues in work situations, including those arising from NOCLAR CommitmentsIf a member requires guidance and counseling in such situations he/she may approach SLID and SLID will certainly take steps assist/advise based on the facts given

What is the percentage of women on Sri Lankan boards? And what is SLID doing to increase this percentage?The statistic is unavailable for women on Sri Lankan Boards but we estimate it to be less than 3%.

SLID is in the process of finalizing its initiative “Women on Board Mentoring Programme” designed to create a supply of Board ready executive women and to also link Board Chairs and CEOs with talented, capable, executive women to enable these two groups to actively engage with each other. The programme will develop a cadre of women to add to the pool of potential women director can-didates in Sri Lanka, develop connections that lead to opportunities for women on corporate boards and reinforce the commitment of leading Sri Lankan companies to the value of gender diversity on boards.

Ask the

guruSLID

Ask the

guruSLID

Ask the

guruSLID

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NEW MEMBERS

Amal SaparamaduSenior Sales ManagerAPI Machinery (Pvt) Ltd

Ayesha DissanayakeGeneral ManagerAPI Traders (Pvt) Ltd

Chamari DiasDirectorMc Larens Holdings Limited

Chandima SamarasingheGeneral ManagerDIMO Private Limited

Deepthi LokuarachchiManaging Director / CEOHNB Assurance PLC/ HNB GeneralInsurance Ltd

Dinusha GopalakrishnanDirectorDelmege (Private) Limited

Kamal KirindageDirectorResinex (Pvt) Ltd.

Nirmal CookeGroup Director Capital Maharaja Organisation Ltd.

Pramith RajapakshaCompany Secretary Serendib Finance Ltd/ Comemrcial bank of Ceylon PLC

Ranjani GamageCompany SeretaryCommercial Bank of Ceylon PLC

Sandhya DharmadasaDirector Nawaloka Group of Companies

Sanjay JayawardenaDirectorIcon Creative (Pvt) Ltd

Lakpriya WijenayakeDirector FinancePapyrus Papaers (Pvt) Ltd.

Shanasz HakeemManaging Director / CEOZai Tun Industrial Projects (Pvt) Ltd

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Tarindra KaluperumaExecutive DirectorStafford Motor Co.(Pvt)Ltd.

Veluppillai MohendranDirectorInnodeax (Pvt) Limited

Senela JayasuriyaCEOWomen Empowered

January 18 Audit Committee Forum – Session 15 29 Award Ceremony - Board Leadership Director Training Certification 5th and 6th Intake

February 01 Workshop: Managing difficult conversations on the Board 06 & 07 Board Leadership Director Training Certificate Intake 7: Part 1 Corporate Goverance 28 Power Breakfast - Building Future-Ready Leadership for Business Success

March 06 & 07 Board Leadership Director Training Certificate Intake 7: Part 2 The Board 08 Celebrating International Women’s Day together with CSE and IFC – ‘Ring the Bell’ 20 Power Evening: Women on Boards

UPCOMING SLID EVENTS

Note:Dates and events may change as the year progresses

Market your brand and products to SLID Members. SLID is able to offer industry leading organizations to each its members via sponsoring of events including the flagship event the annual sit down dinner.

Contact SLID on 2301646/7/8 or info@slid.lk

SLID Event Sponsorship & AnnualCorporate Sponsorships

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News from SLID Secretariat

In November 2017 we bade farewell to Marina Hannan, and welcomed Sarah Boarham in December 2017 as the new Executive Assistant Administration.