Clean Closet

May 20, 2006 (LBO) – Sri Lanka’s securities watchdog is in the final stages of drawing up rules to make corporate governance mandatory among listed companies from January next year, a top official said Friday. The island’s quoted companies are famous for their cronyism in board rooms and lax corporate governance.

The new rules, pushed by the Securities & Exchange Commission (SEC) with the backing of the country’s top accounting bodies, will require companies to have better qualified and equipped board of directors.

“The changes will be incorporated in the Colombo Stock Exchange listing rules and corporate governance and best practice methods will be mandatory from next January,” SECs Director General Channa de Silva told LBO.

The present corporate governance code, was put together by key local accounting bodies, and sets guidelines for audit committees, remuneration committees, independent directors and non-executive directors.

“The code is currently voluntary. But we see a need to make it mandatory to educate everyone involved in capital markets to be transparent in their dealings,” SECs Chairman Gamini Wickramasinghe said.

To drive the message further, de Silva says changes will al