Court rejects all 15 interim orders against Ceylinco Insurance sought by shareholder
26 October 2015 06:30 pm
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In a landmark case, in which, shareholders’ Global Rubber Industries (Pvt.) Ltd, Prabash Subasinghe and Global Sea Foods (Pvt.) Ltd sought 15 interim orders against Ceylinco Insurance Company PLC, were all turned down by the Commercial High Court.
This was one of the series of cases, which involved Ceylinco Insurance PLC, Prabash Subasinghe and his two companies Global Rubber Industries (Pvt.) Ltd (Global Rubber) and Global Sea Foods (Pvt.) Ltd (Global Sea Foods) in various courts.
In this case, Global Rubber acting in concert with its Managing Director Prabash Subasinghe and Global Sea Foods filed the petition in terms of the Companies Act alleging among other, oppression and mismanagement of Ceylinco Insurance PLC and against its entire board of directors and sought 15 interim orders.
Subasinghe and his companies sought an interim order in the manner of a forensic audit to be effected on Ceylinco Insurance.
Appearing on behalf of Ceylinco Insurance PLC, its General Division Managing Director/CEO and Director Finance, President’s Counsel Kuvera de Zoysa made extensive submissions for a period of four days.
President’s Counsel Romesh de Silva appeared for the Chairman and Managing Director of the Life Division.
President’s Counsel M.U.M. Ali Sabry, President’s Counsel Faizer Musthapha, President’s Counsel Nihal Fernando and President’s Counsel Palitha Kumarasinghe appeared for the other directors.
It was submitted to court by the counsel appearing for the company and the respective directors that the Global Sea Food and Prabash Subasinghe have intentionally suppressed material facts.
The counsel also said that the appreciation of the share price is the best evidence that the company is profitable and the immense public confidence placed on it.
At the very outset an issue was raised by the counsel appearing for Ceylinco Insurance as to how a company, which has doubled in its asset value over a period of two years, could in fact be mismanaged, as alleged by the petitioners, Subasinghe and his companies.
It was also brought to the attention of the court that Ceylinco Insurance PLC is the market leader of the insurance industry in Sri Lanka.
Moreover, in the financial year for 2014 it had recorded a consolidated profit of Rs.2.9 billion and the company has been able to pay one of the highest dividends of Rs.20 per share to its shareholders in the financial years ended in 2014 and these factors clearly confirm that the shareholders of the company have profited twofold through the company by way of dividends and capital gains on an average of 36 percent per annum for the past six years in terms of share price appreciation.
The counsel appearing for Ceylinco Insurance elaborating further submitted that there cannot be any oppression in terms of the law when the rights recognized in terms of the Companies Act and its Articles given to the shareholders have not being violated.
Further, the counsel appearing for Ceylinco Insurance submitted that the Insurance Board of Sri Lanka, which is the only body empowered to inquire into such matters in Sri Lanka, could not find anything or any possibility that Ceylinco Insurance PLC has in any event violated such regulations.
After extensive submissions by the complainant, the judge of the respective Commercial High Court, on October 7, 2015 delivering a 58-page comprehensive order had come to the findings that Subasinghe’s allegations to be inconclusive and baseless thus refused granting any of the 15 interim orders.
This case was novel for the simple reason that the inquiry into the interim orders took a period of more than 11 months due to the complexity of the matter, the star-studded galaxy of counsels who appeared for all the concerned parties, the petition filed to court by Global Rubber consisting of more than 54 pages and the mammoth documentation filed to court making it the most spoken about case in the Commercial Court.