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Monday, 19 October 2015 00:08 - - {{hitsCtrl.values.hits}}
In a landmark case in which shareholders Global Rubber Industries Ltd., Prabash Subasinghe and Global Sea Foods Ltd. sought 15 interim orders against insurance giant Ceylinco Insurance Plc, the Commercial High Court turned down all of these.
This was one of a series of cases which involve Ceylinco Insurance PLC, Prabash Subasinghe and his two companies Global Rubber Industries Ltd. and Global Sea Foods Ltd. in various courts. In this case, Global Rubber, acting in concert with its Managing Director Subasinghe and Global Seafoods filed the petition in terms of the Companies Act, alleging oppression and mismanagement of Ceylinco Insurance Plc and against its entire Board of Directors and sought 15 interim orders.
Subasinghe, if successful, would have jolted the well-established insurance company, which is the market leader in Insurance in Sri Lanka.
Subasinghe sought an interim order in the manner of a forensic audit to be effected on Ceylinco Insurance.
Appearing on behalf of Ceylinco Insurance Plc, its General Division Managing Director/CEO and Director Finance, President’s Counsel Kuvera de Zoysa made extensive submissions for a period of four days.
President’s Counsel Romesh de Silva appeared for the Chairman and Managing Director of the Life Division. President’s Counsel M.U.M Ali Sabry, President’s Counsel Faizer Musthapha, President’s Counsel Nihal Fernando and President’s Counsel Palitha Kumarasinghe appeared for the other directors.
It was submitted to court by the counsel appearing for the company and the respective Directors that the Global Seafood and Subasinghe had intentionally suppressed material facts.
Counsel also said that the appreciation of the share price was the best evidence that the company was profitable and revealed the immense public confidence placed in it. At the very outset an issue was raised by the counsel appearing for Ceylinco Insurance as to how a company which has doubled in its asset value over a period of two years could in fact be mismanaged as alleged by Subasighe.
It was also brought to the attention of the court that Ceylinco Insurance Plc was the market leader of the Insurance industry in Sri Lanka. Moreover in the financial year for 2014 it had recorded a consolidated profit of Rs. 2.9 billion and the company has been able to pay one of the highest dividends of Rs. 20 per share to its shareholders in the financial year ended 2014 and these factors clearly confirm that the shareholders of the company had profited twofold through the company by way of dividends and capital gains on an average of 36% per annum for the past six years in terms of share price appreciation.
It was also submitted to the court by the Counsel appearing for the company, Kuvera de Zoysa, P.C., that there could not be any oppression in terms of the law when the rights recognised in terms of the Companies Act and its articles given to the shareholders had not been violated.
Furthermore, the counsel appearing for Ceylinco Insurance submitted that the Sri Lanka Insurance Board, which is the only body empowered to inquire into such matters in Sri Lanka, could not find anything or any possibility that Ceylinco Insurance Plc had in any event violated such regulations.
After extensive submissions by the complainant, the judge of the respective Commercial High Court, Amendra Seniviratne, on 7 October delivered a 58-page comprehensive order which found that Subasinghe’s allegation against Ceylinco Insurance was inconclusive and baseless.
The judge, in his order, separately addressed each of the interim orders sought and found that there was no basis to issue 15 interim orders and therefore refused to grant them.
This case was novel because the interim orders took more than 11 months due to the complexity of the matter, the star-studded Counsel who appeared for all the concerned parties, the petition filed in Court by Global Rubber consisted of more than 54 pages and the mammoth documentation filed in court made it the most talked-about cases in the Commercial Court.
