Personal Liability

Oct 28, 2010 (LBO) – The Sri Lankan government’s top legal officer has suggested making directors of banks personally liable if their firms get into trouble and giving more power to the regulator to act against them. Attorney general Mohan Peiris said laws similar to those in the companies act were needed to cover bank directors’ liability.

Directors who cannot do their job properly and accept their responsibilities should quit, he told a forum on financial crimes and social justice organised by the central bank.

Directors have, both collectively and individually, a continuing duty to know enough of company business to enable them properly to discharge their duties as directors, Peiris said, quoting court rulings in the United Kingdom.

“I can echo these words a million times over to every director and my simple message is, if you cannot appreciate your responsibilities, the best thing you can do is to get out.”

Peiris said the collapse of banks overseas led to tighter regulation and tougher laws were needed to deal with bank failures in the island as well.

In Sri Lanka, the authorities have tried to use available mechanisms in finding ways and means to achieve social justice for victims o