April 26, 2008 (LBO) – Sri Lankan finance companies should improve governance practices voluntarily before external rules are imposed and whistle-blowers get active under new laws, a corporate lawyer says. Good corporate governance practices could yield direct financial benefits to finance companies while giving them a lifeline if wrongdoings are uncovered, says Arittha Wikramanayake, senior partner, Nithya Partners.
He advised directors of finance companies to adopt a code of corporate governance voluntarily and caution any potential ‘black sheep’ before disaster strikes and the regulator imposes tough rules.
The new company law introduced last year imposes stiff sanctions against company directors, such as very heavy fines of millions of rupees personally on directors and also jail terms, he said.
“The new law also makes it easier for people to enforce the rights of director a single shareholder can take you to court under the new law,” he told directors of registered finance companies at a seminar.
It was organised by the central bank to make directors of registered finance companies aware of regulations and their governance and legal responsibilities.