Ceylinco’s second biggest shareholder requisitions EGM

Series of questions over segregating life & general business

Ceylinco Insurance PLC has summoned an extraordinary General Meeting (EGM) on January 14 requisitioned by its second largest shareholder, Global Rubber Industries Private Ltd., expressing concern about the proposed segregation of its life and general businesses.

The company has circulated a notice of requisition of the meeting. It has told shareholders that Global Rubber Industries is meeting the cost of circulating the resolutions and related documents among members of the company.

Global Rubber has stated in its resolution that Ceylinco had represented to shareholders in its 2013 annual report that the company will segregate its insurance business by transferring the life and general insurance business of the company to two companies proposed to be fully owned subsidiaries, on the transfer date.

Although the Chairman of Ceylinco Insurance has assured shareholders in the annual report that their interests will be "well safeguarded" and shareholders will be "presented with the relevant details at an EGM for which due notice will be given at the appropriate time," the EGM has not been convened to-date and proper information regarding the segregation of Ceylinco’s insurance business has not yet been placed before the shareholders of the company.

The resolution states that most composite insurance companies listed on the Colombo Stock Exchange have only transferred one class of insurance to a subsidiary while retaining the other class when carrying out the segregation required by the Insurance Board of Sri Lanka.

It complains that Ceylinco has not disclosed with shareholders the manner in which the rights of the shareholders will be protected in a situation where all the assets and business of the company have been transferred to Ceylinco Life Insurance Ltd. and Ceylinco General Insurance Ltd.

The company has also not disclosed what business the company will carry on after the transfer of both class of insurance to Ceylinco Life Insurance Ltd. and Ceylinco General Insurance Ltd.

The resolution states that shareholders of the company are entitled to be fully aware of the manner in which the company will segregate its long term and general insurance business and the consequences of such segregation to the value of their shareholding or investment in the company.

The segregation must be implemented on or before February 7, 2015.

The resolution calls for the preparation and the furnishing to shareholders urgently of a report providing information on the segregation including answers to several questions the resolution raises before any further steps are taken to transfer the assets of business from and out of the company for purposes of the purported segregation.

The questions raised includes:
* Does the company intend to transfer all of the assets in the company to Ceylinco Life Insurance and Ceylinco General Insurance Limited?

* What will be the share structure of Ceylinco Life Insurance Limited and Ceylinco General Insurance Limited upon the transfer of the assets and business of the Company to Ceylinco Life Insurance Limited and Ceylinco General Insurance Limited?

* What is the business that the Company will carry on after the transfer of both classes of insurance to Ceylinco Life Insurance and Ceylinco General Insurance Limited?

* How will the rights of the shareholders in the Company be protected in a situation where all the assets and business of the Company have been transferred to Ceylinco Life Insurance Limited and Ceylinco General Insurance Limited?

* Will the existing shareholders of the Company be issued in Ceylinco Life Insurance Limited and Ceylinco General Insurance Limited the same number of shares that the shareholders hold in the Company?

* What are the qualifications and the credentials of the directors appointed to the boards of Ceylinco Life Insurance Limited and Ceylinco General Insurance Limited?

* How did the company select the directors who have been appointed to the boards of Ceylinco Life Insurance Limited and Ceylinco General Insurance Limited?

*Do the said appointed directors have any personal relationship or acquaintance with the existing directors of the Company?

* Why has the company obtained the approval of the Insurance Board of Sri Lanka for the directors appointed to Ceylinco Life Insurance Limited and Ceylinco General Insurance Limited.

* Will the constitution of the Board of Directors of the Company change following the segregation of the life and general insurance business of the company and if so how will the constitution of the Board of Directors of the Company change?

A second resolution calls for the company to seek the opinion of an independent auditor and/or independent investment advisor and/or independent actuary approved by the shareholders to recommend the model for segregation that is most likely to generate optimum results and best protect and/or enhance the value of the investment of the shareholders of the company.

A third resolution calls on the company to place before the shareholders information contained in and set out in the report to be prepared as well as the independent opinions obtained before proceeding to transfer any assets of the business from and out of the company for the purpose of the purported segregation of the life and general business of the company.
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German company to hold 80% of Bogala despite changes in parent

The change in the ownership structure of Bogala Graphite PLC was disclosed on Friday to the Colombo Stock Exchange by Bogala’s Secretaries who said that despite these changes, with an 80 percent shareholding, AMG Graphite will remain the majority shareholder of Bogala.

AMG Mining AG (AMG Graphite), a company incorporated in Germany owns 90.33 percent of the shares of Bogala Graphite. One hundred percent of the shares of AMG Graphite is owned by AMG Advanced Metallurgical Group N.V. incorporated in the Netherlands.

Friday’s filing said that AMG has entered into an agreement Alterna Capital Partners to sell a 40% equity interest in AMG Graphite by way of a capital increase; and to sell 10.33% equity interest in the company for a combined cash price of USD 38 million.

The filing said that the transaction is expected to close during the first quarter of 2015 and is subject to certain closing conditions including regulatory approvals.
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Sri Lankan stocks mark 6-wk closing high; Commercial Bank leads

COLOMBO Jan 2 (Reuters)) - Sri Lankan shares marked their six-week closing high on Friday, led by top lender Commercial Bank of Ceylon, amid low turnover as investors stayed on the sidelines due to political uncertainty before the presidential election next week.

The main stock index closed 0.68 percent, or 49.44 points, higher at 7,348.39, its highest since Nov. 21.

"Market is seeing more positive direction. Some bargain hunters took opportunities ahead of the election," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

The central bank said the economy would grow annually at 8 percent in the six years between 2015 and 2020 after achieving an estimated growth of 7.8 percent in 2014.

The gain in the stock index was boosted by a 2.28 percent rise in Commercial Bank of Ceylon and a 10.41 percent jump in Ceylon Brewery Plc.

Turnover was 742.9 million rupees ($5.66 million), half of last year's daily average of 1.42 billion rupees, stock exchange data showed.

Foreign investors were net sellers of 10.8 million rupees worth of shares, data showed. They bought a net 22.07 billion rupees worth stocks last year, a little less than the previous year's 22.88 billion inflow.

The stock index gained 23.4 percent in 2014 after rising 4.8 percent in the previous year. It has lost 3.5 percent since Nov. 19 when President Mahinda Rajapaksa announced his decision to hold a snap presidential election on Jan. 9.

Analysts said uncertainties in domestic politics have hurt sentiment. Twenty six lawmakers have quit the ruling United People's Freedom Alliance since the election announcement, including former health minister Mithripala Sirisena, who is challenging Rajapaksa's bid for a third term. Two opposition legislators have joined the ruling party. 

($1 = 131.3000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Seven new insurance companies

The Insurance Board of Sri Lanka has granted licences to seven new insurance companies, to commence business operations from yesterday. These new companies were established by composite insurance companies to comply with the segregation requirement laid down in the Regulation of Insurance Industry (Amendment) Act, No. 3 of 2011. The law requires composite insurers to segregate the two classes of insurance businesses (Long Term and General) in to two separate companies by February 2015.

The new insurance companies to which licences have been granted are: AIA General Insurance Lanka, Amana Takaful Life Ltd, Asian Alliance General Insurance ,Cooplife Insurance, HNB General Insurance, Janashakthi General Insurance and Union Assurance General Ltd. 

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Muthoot Finance acquires Asia Asset Finance

Muthoot Finance Ltd. (MFL) has acquired 51% equity shares of Colombo-based Asia Asset Finance PLC (AAF), the company told the National Stock Exchange (NSE) Wednesday.

“Pursuant to open offer given by MFL for acquisition of shares of AAF in Colombo Stock Exchange, the company has acquired 56,059,084 shares at 1.60 LKR,” MFL Chief General Manager K.R. Bijimon informed the NSE. MFL said it had received the necessary approvals from Colombo Stock Exchange and Securities Exchange Commission in Sri Lanka for transferring the shares acquired via open offer to MFL’s account.

India’s largest gold financing company, MFL now holds 428,011,711 shares in AAF representing 51% of total equity shares.

“Pursuant to the present acquisition, AAF has become a subsidiary of MFL,” Bijimon said.
AAF offers leasing, mortgaging and short-term loans in Sri Lanka.
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Vidullanka acquires more shares

Vidullanka PLC has acquired 10,500,000 ordinary shares on December 22. Subsequent to this share transaction the shareholding of Vidullanka PLC now amounts 50,858,630 shares coming on to 10.172% voting rights of Panasian Power PLC.

A BOI approved company founded in 1997, Vidullanka constructs and operates hydroelectric power projects.

This company was also the first power company to be listed in the Colombo Stock Exchange (CSE). 

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Colombo Stock Exchange records stellar performance in 2014

The CSE is on an upward growth trajectory and has recorded positive growth in the past year, surpassing several previous records. In 2014 the S&P SL20 crossed the 4000 mark for the first time since its launch, market capitalization reached Rs 3 trillion closing the year on Rs 3, 104.9 Mn and the All Share Price Index (ASPI) crossed the 7500 mark and closed the year on 7, 298.95.

The daily average turnover increased by 71 percent over the previous year from Rs 828 Mn in 2013 to 1.415 Bn in 2014.

Most notably foreign purchases have been the highest in history, a record
Rs 105,812. 5 Mn as at 31st December 2014. Continuing its strategy of attracting high net-worth foreign investors to the market, the CSE in association with the Securities and Exchange Commission of Sri Lanka held Investor Forums in Singapore, London and New York. There is widespread interest among overseas institutional investors as indicated through the Capital Market Conference held in October; which showcased the multifarious sectors of the capital market to over 80 International Institutional Fund Managers and over 250 local industry participants .

The primary market remained active during 2014 with over Rs 77. 7 Billion being raised through equity and debt IPO's, rights issues, and private placements.

During the course of 2014, there have been five Equity IPO's, one Equity Introduction and 20 Debt IPO's. The five equity IPO's raised a total of Rs 2,693.8 Million, the highest since 2011.

The market is also performing positively in comparison to global markets; being within the top six best performing markets internationally and within the top five best performing markets in the region, with the ASPI showing a year to date growth of 23.4%.

The technological infrastructure of the CSE has undergone numerous advancements in 2014; with the replacement of the 19 year old legacy Central Depository System (CDS) with a new generation Central Depository System in November 2014 - laying the platform for future enhancements relating to post trade Clearing and Settlement services and moving to a Delivery Versus Payment" (DVP) system of settlement and a Central Counter Party (CCP) System.

Investors are now able to access and monitor their investments in the stock market, easily and cost effectively as a result of a range of new services introduced by the CSE. Investors can subscribe for SMS alerts for secondary market transactions and CDS monthly statements are also available on email. Meanwhile the CSE mobile phone apps, available both on android and iOS, provides live market data.

Furthermore the CSE online properties have made the foray into social media with active Facebook, Twitter and LinkedIn pages providing users with timely information.
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