Protecting Minority Rights
Securities and Exchange Commission of Sri Lanka (SEC) is in the process of developing a framework to protect minority rights. SEC in their 2011 Annual Report said that most of the companies listed on the Colombo Stock Exchange are family oriented companies in which the major shareholders individually and/or together with other related parties hold more than 75% of the listed company’s voting rights.
Under such circumstances minority shareholders encounter difficulties in voicing their concerns over decisions taken by the director board and/or the major shareholders that can be detrimental to both the company and to the minority shareholders.
Known as Investor Association of Sri Lanka, it will be a body corporate having a legal personality who can sue on behalf of investors.Although the Companies Act No. 07 of 2007 contains provisions that can provide relief to investors and shareholders, these provisions remain dormant due to limitations caused by high litigation costs.
Additionally minority shareholders of listed companies in Sri Lanka are unaware of their rights and are unable to obtain redress to their grievances, the report further said