By Channa Fernandopulle
Securities and Exchange Commission (SEC) Chairman Thilak Karunaratne restated his call for the formation of legally-empowered investor association that emulates examples in Malaysia and Thailand.
Speaking during the first in a series of seminars organised by the Colombo Stock Exchange (CSE) aimed at educating minority shareholders on their rights, Karunaratne noted that minority shareholders face numerous problems in today’s market, the most challenging being the prohibitively expensive cost of litigation.
“We get a lot of complaints from minority shareholders but there is very little that we can do however if you follow the examples of other jurisdictions, they have formed investor associations to look after the interests of investors, particularly minority shareholders.
“Lawyers would say that they have the right to take their case to Court and fight it out there but that is one of the costliest exercises in this country therefore even when minority shareholder rights are violated and they have a legitimate complain, they are still reluctant to go to Court and that is why the formation of such an association has become so important,” Karunaratne explained.
He went on to cite the examples of Malaysia and Thailand which formed strong investor associations through the joint efforts and funding of capital market stakeholders and their regulator.
“When the Malaysian capital market was deregulated they used the money realised there and worked with the regulator to form an investor association to look after the interests of all investors, particularly minority shareholders.
“These associations are quite powerful and can even go to Court on their own if a shareholder makes a complaint. If they feel the complaint has merit then they will take up the case at their own expense and fight it on behalf of the shareholder and this is what is needed here,” he stated.
Karunaratne further stated that he had previously attempted to create such an association in Sri Lanka during his previous tenure as SEC Chairman prior to his controversial removal last in August 2012 but which failed due to interference from powerful majority investors.
“During my previous tenure in office as the Chairman of the SEC we started doing this, in fact we drew up a constitution also held discussions with the CSE at that time but somehow after my departure it did not happen. Thereafter, the Sunday Times Business section also initiated something on similar lines and I gave all my support and even handed over a draft constitution for the association also, but there again it was sabotaged by the majority investors.
“They got into the association, they prevented it from being formed and I must say that very clearly: they did not allow it to be formed. Now again we’re trying to form this investor association and this time hopefully we’ll succeed and that will help to look after the rights of minority shareholders,” he asserted.
www.ft.lk
Securities and Exchange Commission (SEC) Chairman Thilak Karunaratne restated his call for the formation of legally-empowered investor association that emulates examples in Malaysia and Thailand.
Speaking during the first in a series of seminars organised by the Colombo Stock Exchange (CSE) aimed at educating minority shareholders on their rights, Karunaratne noted that minority shareholders face numerous problems in today’s market, the most challenging being the prohibitively expensive cost of litigation.
“We get a lot of complaints from minority shareholders but there is very little that we can do however if you follow the examples of other jurisdictions, they have formed investor associations to look after the interests of investors, particularly minority shareholders.
“Lawyers would say that they have the right to take their case to Court and fight it out there but that is one of the costliest exercises in this country therefore even when minority shareholder rights are violated and they have a legitimate complain, they are still reluctant to go to Court and that is why the formation of such an association has become so important,” Karunaratne explained.
He went on to cite the examples of Malaysia and Thailand which formed strong investor associations through the joint efforts and funding of capital market stakeholders and their regulator.
“When the Malaysian capital market was deregulated they used the money realised there and worked with the regulator to form an investor association to look after the interests of all investors, particularly minority shareholders.
“These associations are quite powerful and can even go to Court on their own if a shareholder makes a complaint. If they feel the complaint has merit then they will take up the case at their own expense and fight it on behalf of the shareholder and this is what is needed here,” he stated.
Karunaratne further stated that he had previously attempted to create such an association in Sri Lanka during his previous tenure as SEC Chairman prior to his controversial removal last in August 2012 but which failed due to interference from powerful majority investors.
“During my previous tenure in office as the Chairman of the SEC we started doing this, in fact we drew up a constitution also held discussions with the CSE at that time but somehow after my departure it did not happen. Thereafter, the Sunday Times Business section also initiated something on similar lines and I gave all my support and even handed over a draft constitution for the association also, but there again it was sabotaged by the majority investors.
“They got into the association, they prevented it from being formed and I must say that very clearly: they did not allow it to be formed. Now again we’re trying to form this investor association and this time hopefully we’ll succeed and that will help to look after the rights of minority shareholders,” he asserted.
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