SEC files motion to Touchwood case

The regulator is believed to have launched the investigation upon the findings of a preliminary investigation conducted into the company on receiving several allegations against the Chairman, CEO and the board of directors of Touchwood Investments.

The SEC also imposed a 6-day trading ban on the company’s shares which lapsed last Wednesday. However, an SEC official who talked to Mirror Business on the grounds of anonymity said neither the freeze of the non-current assets nor the ongoing investigation had not prohibited the company to carry out its day-to-day operational activities.

Meanwhile, touchwood also has an ongoing legal battle with the SEC and Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) in the Supreme Court with regard to its accounting methods.

In the financial years 2004/2005 and 2005/2006 Touchwood Investments PLC adopted the fair value method as explained in International Accounting Standard 41 for the preparation of its accounts. However, a decision was made by SLAASMB that the fair value method adopted by the Company was “unreliable”.

The company challenged this decision of the SLAASMB in a writ application (case No.CA (Writ) 323/2007) in the Appeal Court and on January 25, 2010.

The Appeal Court quashed the decision of the SLAASMB along with the SEC directive issued to the company dated 9 March 2007 through which the company was directed to prepare financial statements for the years ended 31 March 2005 and 2006 on a cost basis in terms of IAS 41. The SLAASMB has appealed to the Supreme Court against the Court of Appeal judgment and the matter is pending before the Supreme Court.

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