Ceylinco Insurance submits details of employee share allocation to CSE; dividends to Court
Monday, 12 May 2014 00:17
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Ceylinco Insurance PLC has submitted specific employee share allocation details to the Colombo Stock Exchange (CSE) apart from furnishing to Supreme Court dividends paid during the past 13 years.
Of the 3,000 employee base, around 1,700 qualify under guidelines specified in the Ceylinco Insurance Employee Share Ownership Trust (CIESOT) deed. CIESOT owns a 23% stake in Ceylinco Insurance PLC.
Following requests from the CSE, share allocated/transferred to qualifying employees had been furnished by the management. Separately, dividends paid for the past 13 years with cheque numbers too had been submitted to Court. This document apparently had spanned over 1,000 pages.
CIESOT has been in the news because customers of the collapsed Golden Key have been urging for the sale of its stake in Ceylinco Insurance PLC (CINS) on the premise that founder Lalith Kotelawala owns 50% stake in the CIESOT. The plan suggested is sell the stake and repay Golden Key depositors.
At last week’s closing price this stake is worth Rs. 6 billion and at CINS’ net asset per share the value is around Rs. 3 billion.
However Ceylinco employees in an open letter have emphasised that the CIESOT is theirs and Kotelawala doesn’t hold a single share. CIESOT was set up in 2000 to act as trustee of the employee trust and reward employee loyalty. Employees also said the Ceylinco Insurance scheme is similar to Seylan Bank’s SESOT and in the Golden Key settlement the latter was termed as owned by employees and hence not considered for possible liquidation.
The submission of specific share allocation and dividend payment records by CINS management is in view of earlier notions that there was no distribution.
As per the SEC rules, by 2015 ESOPs will have to transfer voting rights to employees or divested as there had been cases where purported employee schemes have been floated to exercise control on the company by promoters.
The CSE in 2012 had asked CINS to makes its stand clear on SEC directive. After some divergent views, the company had said it will comply. The latter is confirmed by the submission of the breakdown of qualifying employees’ shareholdings via CIESOT.
Apart from CIESOT, several internal funds also hold stake in CINS. The breakdown is as follows Ceylinco Insurance PLC A/C No. 03 (Employees’ Gratuity Trust Fund) – 9.27% stake; Ceylinco Insurance PLC A/C No. 04 (Pension Fund) 3.69% stake; Ceylinco Insurance PLC – A/C No. 05 (The Pension Trust Fund of Ceylinco Insurance PLC) – 2.74% stake, Ceylinco Insurance PLC – A/C No. 07 (Gratuity Trust Fund of Ceylinco Insurance PLC Life Division – 0.42% stake.
