Business

The proposed new Companies Act will have a clause to revive sick companies.

Lawyer K.V. Nihal Jayawardene speaking at a seminar on the new law on Wednesday said that provision is there for the creditors, acting on their own, or together with the existing shareholders to form a new board of directors and infuse more capital as a last attempt to revive such a company.

But if that attempt fails, then there is no choice, other than to liquidate such a company, he said. Jayawardene who had been in the Company Law Advisory Commission that was responsible for drafting the new law (their work began as far back as 1993), said that the existing Companies Act does not have provision to bail sick companies.

The present Act, which came into being in 1982, had been formulated, based on the old Companies Act of the UK of 1948. He further said that in addition the Law Commission which is headed by the Chief Justice, plans to draw-up a wholly new law, based on the USA’s Chapter Seven and Chapter 11 bankruptcy laws, which aims at reviving sick companies, instead of closing them down.

The present Companies Act is not user friendly and there is a greater need to keep up with the times, said Jayawardene. The size of the proposed application form to set-up a new company is only of the A 4 paper size. It is investor friendly and simplifies the incorporation process, he said.

This is in contrast with the current memorandum of association, which asks the applicant a lot of unnecessary details, with several of the object clauses that has to be completed, being of no use. However, in the proposed law, there is no necessity to state the objects of the company. That way their business activities are not restricted. Investor interests are protected in the proposed Act by providing escape clauses. This is in the event the company deviates from its original line of business and starts on an altogether new line of commercial activity, the investor can then exit from the company by selling his shares to the company or to its shareholders. It also has provisions for minority buyout rights and solvency tests, the latter, in order to ensure that the company is healthy from a financial point of view. And in order to facilitate "genuine" investors, the proposed law also has provision for pre-incorporation contracts.

There is also provision for the setting-up of a Companies Dispute Board in order to solve disputes through mediation or arbitration, rather than going through the costly and long drawn out process of seeking redress in courts, Jayawardene said.

The story of the proposed new Companies Act which is yet to see the light of day has a history spanning a period of no less than 13 years.

Lawyer K.V. Nihal Jayawardene who has been a member of the Company Law Advisory Commission since 1993, when it was decided to reform the present Companies Act, told The Sunday Leader that the draft law was originally presented to the then Commerce Minister Kingsley T. Wickramaratne in 1997.

However, for two years no action was taken by the Ministry to make it law. They finally got activated in 1999. But then the Presidential Election was held in 1999 and subsequently several other elections, that resulted in the draft Act once again going back into limbo.

In the meantime, SLMC leader Rauf Hakeem was appointed as Commerce Minister and Jayawardene in 2001 brought to his notice about the proposed law. But then Hakeem crossed-over to the opposition and a new government came into power towards end 2001, said Jayawardene. However, the then newly appointed Commerce Minister Ravi Karunanayake was interested in making the proposed Act law, but was stopped in his tracks by the then Finance Minister K.N. Choksy, who said that the proposals were not compatible with English law. Jayawardena was however confident that despite these delays, the new law would ultimately see the light of day in another two months time. This law, now, is in the form of a bill in parliament, and has met with no opposition. Jayawardena said that the proposed law, in form, except for some minor changes, is no different to the draft that had been presented to Wickramaratne nearly 10 years ago, in 1997.

Defence bill to zoom to $ one bn.

Central Bank (CB) bought Rs 2.5 billion worth of treasury bills last week, thereby fuelling inflationary pressure, but at the same time keeping yield rates stable.

According to reports, the defence bill, which was originally pegged at $ 70 million this year, may zoom to $ one billion due to the escalation of the conflict, hence government measures to keep interest rates down, due to borrowing from the market to meet increased defence commitments.

The CB in a press release describing the treasury bill auction said that the weekly primary auction for the week ended September 22 for the re-issue of Rs. 6,718 million maturing treasury bills was held on September 20.

The auction was oversubscribed with bids amounting to Rs. 10,755 million being received. Rs. 3,280 million treasury bills were accepted from the market, Rs. 2,450 million purchased by the CB and the balance Rs. 988 million retired.

Bids received for 91 day bills amounted to Rs 4,409 million, the amount accepted Rs 1,411 million at the weighted average yield (WAY) of 10.53% per annum, the same as that of the previous week.

For 182 day bills, the value of bids received, Rs 3,409 million, amount accepted, Rs 1,361 million at a WAY of 10.65%, the same as the previous week and for 364 day bills, the value of bids received, Rs 2,937 million, amount accepted, Rs 508 million at a WAY of 10.71%, the same as the previous week. The CB said that no bids were accepted at the two year treasury bond auction held on September 19, though the auction was over-subscribed, with bids received totalling Rs 1.2 billion as against the offered amount of Rs 1.2 billion.

No hope without peace for market

With no progress in the peace front, resulting in a negative impact on the economy in general and on the stock market in particular, the market registered a low Rs 189 million turnover at Friday’s trading. Turnover was "boosted" because of two local purchases of JKH shares comprising parcels of 200,000 and 150,000 each and executed at Rs 132.50 a share, contributing Rs 46.4 million ( 25%) of turnover. Foreign purchases were a lowly Rs 14.1 million and sales, Rs 2.1 million. The benchmark ASPI closed at 2,329.18 points, 0.09 points down over Thursday’s closing figure, while the more sensitive MPI closed at 2,911.59 points, 2.79 points down over its previous figure. Among the main contributors to the day’s turnover were JKH Rs 65 million on a share volume of 496,800. JKH closed at Rs 132.50, 50 cents less than its previous . Touchwood, Rs 39.9 million on a share volume of 346,600; Touchwood closed at Rs 116, Rs 5.50 more than its previous . Investor interest on Touchwood was on speculation in the backdrop of its AGM due on Friday and its recent announcements of a "three for one" bonus issue.

HSBC and Sampath Bank recently announced the successful completion of a $25 million one-year committed term loan facility for Sampath Bank.

A statement said that the success of this loan epitomises HSBC’s resourcefulness as well as the bank’s continued commitment to develop and support the local financial industry. The Hongkong and Shanghai Banking Corporation Ltd., is the founding and a principal member of the HSBC Group which, with over 9,500 offices in 76 countries and territories, and assets of $ 1,738 billion at June 30, 2006, is one of the world’s largest banking and financial services organisations.

HSBC has had a presence in Sri Lanka, spanning over 114 years. The bank has 10 branches, one HSBC Premier Centre and 13 "day and night" automated banking centres. With strong local and foreign currency lending capabilities and an extensive global network, HSBC has a comprehensive range of financial solutions as well as a strong reputation with the competence to provide working capital and/or trade financing in Sri Lanka. The awards HSBC has won in the areas of cash management, trade services and global markets bear witness to this repute. The Bank has been named the Best Cash Management Bank in Asia (2003-2006) and Best Bank for Payments and Collections in Asia (2003-2006) by Global Finance. Sampath Bank is one of the forerunners in the local banking industry and enjoys an ‘AA’ local currency debt rating by Fitch. The Bank is reputed for introducing state-of-the-art electronic banking delivery channels amongst local commercial banks.

Sampath’s financial results for the year ended December 31, 2005 reflects a healthy and an improving performance in terms of both income growth and asset quality. The bank recorded a profit before-tax result of $14 million in 2005, an increase of 33.5% from 2004. Loans and Advances grew by 32% to $ 553 million whilst customer deposits also grew at a similar pace ($ 625 million). During this period, the Bank’s equity grew by 45% to $ 59 million, largely due to rights issued and retained profits. Reported Tier I and 11 capital as at December 31, 2005 were 10.86% and 15.14% respectively.

The current Hatton National Bank (HNB) Pathum Vimana (PV) draw is offering gifts worth well over Rs. 80 million, said a statement.

H.M.N.D. Bandara who was the winner of the Audi A4 under the mid year regional draw obtained his gift from HNB Managing Director Rajendra Theagarajah and Assistant General Manager Financial Services and Business Development Sridharan at the PV prize giving which was held at HNB Head-Office recently.

Even better, there is a sleek Mercedes Benz worth millions up for grabs in the year end premium draw. Eligiblity is the maintaining of a balance of Rs 100,000 in a savings account or Rs 50,000 in a current account. Having been active for 14 years, PV was brought to the fore in 1993. HNB’s growing network of branches which currently stands at 151 has helped PV reach to an increasing number of masses.

The scheme has been structured to ensure that PV will reward "you, your family and the nation." The main ethos of this veritable scheme is to "teach the masses the habit of saving and offering rewards for saving."

"The added benefit is that besides getting interest on savings, you also get rewarded with a range of superlative gifts. Up to the present day, HNB has given away 53,456 gifts including 50 houses and 90 vehicles since 1993 under the PV scheme. These aforementioned prizes sums up to Rs. 662 million.

PV, being held for the fourteenth successive year, follows the pattern set by the preceding schemes in giving more people more chances to win bigger prizes. This is followed by the "Mid Year Regional Draw" with prizes of nine Maruti cars - one for each of the nine provinces and a total of 18 refrigerators, 45 washing machines and 180 gifts vouchers worth Rs.10,000 and 225 rice cookers. HNB has throughout its existence signified a more focused and privileged place for the customer in the bank. The assurance by the Bank was three-fold: To open the door of opportunity wider, to accelerate processes that have helped Sri Lankans progress in life and an emphatic underlining of commitment to increase the outreach of the Bank’s considerable influence and penchant for innovation to bring even more benefits to account holders - from all walks of life. The Bank substantiated this with a broad outline of their prize plans. PV for instance is an easier way for thousands to graduate to a better lifestyle, by offering more chances to win, to more people in more places.

Dedicated to offering premium quality to many, HNB stands firm in its quest to give better and finer things for the development of the people, the economy and also the nation.

Abans has established itself as a diversified group with 26 companies organized within four strategic business units comprising Trading, Manufacturing, Services and Real Estate Development. It is also involved in environmental sustenance.

Abans has over a $ 70 million turnover and more than 6,000 employees under its wing. Most of the Group companies enjoy leadership position in their respective markets. Abans Office Automation (AOA) is the authorized distributor for many leading mobile phone brands in Sri Lanka and a business partner of Dialog since 1997.

AOA also has the rare distinction of being the authorised agents for three of the world’s top five mobile phone brands Motorola, Sony Ericsson and LG. Additionally the company offers a selected range of Nokia phones and are the exclusive agents for LG, Panasonic and ZTE mobile phone brands in SL.

So far, Abans has the widest range of mobile phones in the country, with over 90 models that are available through their showrooms islandwide. Director / General Manager Abans Office Automation G. P. Daniel told The Sunday Leader that no other company in Sri Lanka offers such a wide range of mobile phones under one roof. "And we have showrooms spread across the country, so a customer can reach us at the closest Abans showroom and have access to the best phones in the market."

Daniel also said that AOA has the largest direct sales force and are also the largest importers of mobile phones to the country. "For those of you on a hunt for a mobile phone, AOA would be the ideal first stop on your shopping spree as the company holds the largest retail network which includes six Dialog arcades, 16 exclusive mobile phone showrooms, 11 Dialog franchise showrooms and over 100 Abans showrooms across the country, not forgetting their dealer network.

It’s more or less a one-stop phone shop, where customers can find the largest selection of phones, all of which are compatible with Sri Lankan service providers, starting from basic phones to smart phones all under one roof.

Daniel said that apart from this, customers also have the benefit of buying phones on three to 12 months interest free schemes through HSBC, AMEX and BOC credit cards.

All mobile phones at AOA come with a 12 month warranty and "excellent" after sales service support. "When a customer buys a phone from us they can be rest assured that their money is well spent on an original phone. I think what’s kept us on top all these years is the fact that we have always offered a wide range of quality products with flexible payment options. Our retail network reach has helped greatly as well." AOA was the first to launch the latest, high end camera phone and smart phones like the Sony Ericsson K 790i, P 990i and the Motorola A1200.

The company also sells CCTV cameras and Remote Surveillance Solutions and PABX systems. Despite stiff competition, the growth of this company has been phenomenal since its inception in 1997.

Internet job sites are popular in many countries, but Sri Lanka never had an e-recruitment site that covers all levels of jobs – executive and professional to clerical, a statement claimed.

But now "topjobs," Sri Lanka’s first executive and professional jobs, careers and recruitment site is receiving "tremendous" attention. Top companies- Aitken Spence, Dialog Telecom, Ceylon Tobacco, Eagle Insurance, Colombo Stock Exchange, Delmege Forsyth, McLarens and other well-known companies and recruitment agencies are using its website for electronic recruitment. For jobseekers, the site is unique for conveniently browsing hundreds of local career opportunities in a user-friendly and well-organised jobs databank. They can apply online, while uploading a CV, photograph and certificates, and the application is sent electronically to the employer’s HR team. Job seekers can create an account for free, and monitor online their status – for example if they are short-listed. New jobs are added daily and are visible 24 hours daily. For employers, the site is an electronic back-office solution that automates all activities in the recruitment process. Employers are notified of applications immediately and through a secure back-office control centre can list and view applicants, compare applicants using standard profiles, grade applicants (by an automatic and customizable grading system), do shortlisting, schedule interviews and record results, make e-notes about applicants and send feedback emails in a paperless environment. The efficiencies and cost savings gained from using an electronic system are significant. GENESIIS (a Finco Group subsidiary) Marketing Manager Shah Navaz says: "The site is receiving hundreds of applications daily and the numbers are doubling . Our topjobs employers have successfully filled vacancies using the site . It is a cost-effective solution as it’s fully internet-based and no hardware installation is required on the employer’s premises."