Annual Report 2010-2011 - Colombo Stock Exchange

Corporate Governance
The Board of Directors of Richard Pieris and Company PLC
is committed and takes responsibility to maintain the highest
standards of Corporate Governance.
Richard Pieris’ has designed its Corporate Governance policies
and practices to ensure that the Company is focused on its
responsibilities to its stakeholders and on creating long term
shareholder value. The Company recognizes the interests of all
its stakeholders including shareholders, employees, customers,
suppliers, consumers and the other communities in which it
operates. The Group complies with the rules on Corporate
Governance, included in the Listing Rules of the Colombo
Stock Exchange, and is guided by the principles included in
the Code of Best Practice on Corporate Governance issued
jointly by the Securities and Exchange Commission of Sri
Lanka and the Institute of Chartered Accountants of Sri Lanka.
This statement sets out the Corporate Governance policies,
practices and processes adopted by the Board.
The Board and its Operations
The Company is governed by its Board of Directors, who
directs and supervises the business and affairs of the Company
on behalf of the shareholders.
The Board comprises six Directors, of which two are Executive
Directors whilst four are Non-Executive Directors of which three
are Independent, ensuring an independent outlook to temper
the expediency of the experts. Brief profiles of the Directors
are set out on pages 12 and 13. The Board has assessed the
independence of the Non-Executive Directors.
During the year the Board met on 7 occasions. Prior to
each meeting, the Directors are provided with all relevant
management information and background material relevant to
the agenda to enable informed decisions. Board Papers are
submitted in advance on group performance, new investments,
capital projects and other issues which require specific Board
approval. A separate information memorandum is provided on
statutory payments at each Board Meeting.
The Chairman, who is also the Chief Executive Officer, is
responsible for matters relating to policy, maintaining regular
contact with the other Directors, shareholders and external
stakeholders of the Company. He is responsible for all aspects
of the Group’s overall commercial, operational and strategic
development and assisted by the Chief Operating Officer and
an Executive Management Committee comprising Executive
Directors and Heads of Companies of the Strategic Business
Units (SBU). The Finance function devolves on the Group Chief
Financial Officer, who is present by invitation at board meetings
when financial matters are discussed. The Board of Directors
has access to independent professional advice as and when
deemed necessary for decision making.
The main functions of the board are to:
• Direct the business and affairs of the company.
• Formulate short and long term strategies, as a basis
for the operational plans of the company and monitor
implementation.
• Report on their stewardship to shareholders.
• Identify the principal risks of the business and ensure
adequate risk management systems in place.
• Ensure internal controls are adequate and effective.
• Approve the annual capital and operating budgets and
review performance against budgets.
• Approve the interim and final financial statements of the
group.
• Determine and recommend interim and final dividends for
the approval of shareholders.
• Ensure compliance with laws and regulations.
• Sanction all material contracts, acquisitions or disposal of
assets and approve capital projects.
All Non-Executive Directors are independent with no direct
or indirect material relationship with the Company. Their wide
range of expertise and significant experience in commercial,
corporate and financial activities bring an independent view
and judgment to the Board.
Sub Committees of the Board
The Board is responsible for the establishment and functioning
of all Board Committees, the appointment of members to these
committees and their compensation. The Board has delegated
responsibilities to two Board Sub Committees which operate
within clearly defined terms of reference.
Audit Committee
The Audit Committee is composed of two Independent Non-
Executive Directors namely Prof. Lakshman R. Watawala,
Chairman and Prof. Susantha Pathirana. The Chief Executive
Officer, Chief Operating Officer, Group Chief Financial Officer,
Internal Audit Manager and functional heads of subsidiaries
attend meetings by invitation.
The Audit Committee Report on page 59 describes the
activities carried out by the Committee during the financial year.
Remuneration Committee
The Remuneration Committee is composed of two Independent
Non-Executive Directors - its Chairman, Prof. Lakshman R.
Watawala and Prof. Susantha Pathirana.
The Report of the Remuneration Committee on page 58
highlights its main activities.
Appointment of Directors
The Company does not have a Nomination Committee
to recommend additions to the Board. The Board as a
whole decides on the appointments of new members. Mr.
Richard Pieris and Company PLC | Annual Report 2010/2011 56