Integrated Annual Report 2022/23

SUPPLEMENTARY INFORMATION

Corporate Governance

Chairman’s Statement on Corporate Governance Report

Expolanka’s Board of Directors, together with the corporate management, uphold the highest standards of corporate governance to ensure the Group’s ability to create sustainable value for all stakeholders. The Board functions as the apex body responsible for the Group’s corporate governance structure and processes. Risk Management is a key component of the Group’s governance procedures and is incorporated across every stage of the business and across all business units.

Our corporate governance practices are in compliance with the Code of Best Practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka (ICASL), Securities and Exchange Commission of Sri Lanka (SEC), Companies Act No.7 of 2007, Listing Rules of the Colombo Stock Exchange (CSE) and Code of Business Conduct and Ethics.

During the year under review, the Board of Directors, Board Committees, Corporate Management, and Heads of Business Units coordinated closely to navigate a challenging economic environment and adequately respond to developments in the global business landscape.

Governance Framework

Expolanka Group’s governance framework is based on the principles of accountability, transparency, and ethical management. As a responsible corporate citizen with over 40 years in business, our governance framework has evolved over time to incorporate global and local best practices, align with regulations, and uphold the trust of our valued stakeholders.

The Board-approved governance framework provides a vision for responsible governance and delineates processes for decision-making and adoption of responsible behaviour across operations. The Group’s corporate governance charter outlines the mandate, roles, and responsibilities with regard to corporate governance practices and procedures.

As a business entity with a rapidly growing network and footprint, we continuously review the framework to ensure it is best suited to the evolving needs of our stakeholders and the pace of our growth trajectory. Considering developments on the global stage, we have also given priority to the Group's sustainability strategy and integration of Environmental, Social, and Governance (ESG) considerations into our decision-making, governance, and risk management functions.

The Corporate Governance Report, details the Group’s corporate governance framework, adoption of governance principles, and status of compliance.

Purpose, Values and Culture

The Board recognises its pivotal role in providing vision and guidance for adoption and propagation of good governance practices across the Group. Our commitment to responsible corporate governance includes inculcating an ethics-based corporate culture within the Expolanka Group. As such, our Core Values and Code of Conduct serve as guiding principles for management and employees alike, supported by a comprehensive suite of current and up-to-date corporate policies.

Declaration

My fellow Directors and I are committed to the highest standards of corporate governance, in ensuring the Company functions in an ethical, efficient, and effective manner whilst nurturing an entrepreneurial culture. The Board plays a critical role in shaping the culture of the Group, underpinned by the Group’s Code of Ethics and Business Conduct, and Directors are conscious of their duty to comply with all pertinent laws, regulations, internal controls, and approved policies.

As required by the Code of Best Practice on Corporate Governance 2017 issued by the Institute of Chartered Accountants of Sri Lanka, I hereby confirm that I am not aware of any material violations to the Code of Ethics and Business Conduct within the Expolanka Group, having been appointed as the Chairman of the Board on 1 of July 2020.

BOKUTO YAMAUCHI
Non Executive Chairman

30 June 2023

 

GRI: 2-9/2-13/2-24

Governance Structure

The Board of Directors of Expolanka identifies and accepts that good governance, accomplished through an ethical culture, effective control, competitive performance and legitimacy is able to enhance long term equity performance and to build sustainable value. In order to achieve the same, Expolanka has designed its governance structure based on principles of accountability, transparency, ethical management and fairness; and has been evolving throughout the years, to keep in line with the changes in the business, regulatory developments and best practices.

Accordingly, the Board of Directors, including the Chairman, is the apex body responsible for the stewardship function of the Company and is the top most unit which assumes responsibility and accountability for the continuance and development of premier standards of corporate governance.

Expolanka Holdings PLC Board provides direction and leadership to the Group and assumes collective responsibility for the overall governance, performance, strategy and affairs of the Group. The Board has delegated functions warranting greater attention, to three Board Subcommittees in line with its mandate as set out in the Corporate Governance Charter. However, the Board retain the right of concluding a final decision of matters under the purview of Subcommittees, which is in line with the business strategy and objectives.

Further details of Board Subcommittees are provided in respective Subcommittee reports.

 

Board Meeting and Attendance

Name of the Director 27 April 2022 26 July 2022 27 October 2022 26 January 2023 Attendance eligibility Attended
1. Mr Hitoshi Kanahori* 4 4
2. Mr Hanif Yusoof 4 4
3. Mr Harsha Amarasekera 4 4
4. Mr Sanjay Kulatunga 4 4
5. Mr Ha Yo* 4 4
6. Mr Akira Oyama* – – – 1 1
7. Mr Bokuto Yamauchi* – 3 3

Present – Excused

* Mr Hitoshi Kanahori resigned with effect 31 March 2023 and was replaced by Mr Junji Shimasaki. Mr Bokuto Yamauchi was appointed to the Board on 7 June 2022 and was appointed as the Chairman and Mr Ha Yo was appointed as an Executive Director. Mr Akira Oyama resigned with effect 7 June 2022.

 

Board Composition

Governance Framework

A robust framework of structures, policies, procedures and processes ensure that the standards and values are upheld throughout the group thereby supporting good governance practices, leading to greater transparency within the Group.

The corporate governance framework of the Company comprise of the following:

  • Articles of Association
  • Terms of Reference of Board and Board Subcommittees
  • Code of Business Conduct and Ethics
  • Policies and Procedures
  • Organisation Structure
  • Risk Management Framework

The Board takes into account, Code of Best Practice in Corporate Governance jointly issued by the Institute of Charted Accountants of Sri Lanka, Securities and
Exchange Commission and Listing Rules of Colombo Stock Exchange in setting the Governance Framework. The disclosures below indicate the level of conformance pertaining to the same.

Governance Checklist

This section of the Annual Report outlines the system of governance at Expolanka and its adherence to the requirements of the Code of Best Practice on Corporate Governance jointly issued by the Institute of Chartered Accountants of Sri Lanka and the Securities and Exchange Commission which comprises of eight fundamental
aspects namely:

  • Directors
  • Directors’ Remuneration
  • Relationship with Shareholders
  • Accountability and Audit
  • Institutional investors
  • Other investors
  • Internet of things and Cyber Security
  • Environment, Society and Governance (ESG)

GRI: 2-12/2-23

Section 1 – The Company
SEC and ICASL code reference Corporate governance principles Compliance status Extent of adoption
A. Directors
A.1. The Board The Code prescribes the Board to effectively direct, lead and control the affairs of the Company. Expolanka is led by a professional , multi-disciplined and experienced Board of Management comprising of the Chairman, Chief Executive Officer (CEO) and Executive and Non-Executive Directors including two Independent Non-Executive Directors as at the 31 March 2023. The profiles of the Board of Directors are set under the Directors Profiles in this Annual Report.
A.1.1 Board meetings Compliant The Board meetings are held periodically to decide on the strategic direction and review the performance of the Group aligned to the aspired corporate goals. The meetings are structured with an agenda and minutes of previous meeting along with other related board papers which are circulated to all Board members, well in advance to facilitate informed and effective decision making. Additional meetings are also convened to deliberate on issues that demand immediate decisions. The attendance of the Board of Directors is given in the Corporate Governance Report of this Annual Report.
A.1.2 Responsibilities of the Board Compliant The Board is responsible to lead the strategic and business direction of the Group as described below:
  • Formulates and implements a sound business strategy with a structured monitoring process to ensure sustainability of the Group.
  • Evaluates and takes responsible decisions in relation to new business ventures or restructuring of existing companies, if necessary.
  • Ensures the CEO and the Management Team possess the right skills, experience and knowledge to implement the formulated strategy effectively with proper succession planning.
  • Appoints suitable members to the Board Subcommittees.
  • Ensures effective systems to secure integrity of information, internal controls and risk management through delegation to the Audit Committee. (Compliance checklist is provided to all Board members to ensure compliance with applicable laws and regulations.)
  • Ensures all stakeholder interests are considered in corporate decisions making.
  • Accounting policies are reviewed annually to ensure compliance to evolving accounting standards including convergence towards the new Sri Lanka Financial Reporting Standards (SLFRS).
A.1.3 Compliance with laws and seek independent professional advice Compliant Board is collectively and individually committed to ensure compliance with all applicable laws and regulations and adheres to best governance practices. The Directors obtain independent professional advice if required for decision making.
A.1.4 Company Secretary Compliant SSP Corporate Services (Pvt) Ltd. is appointed as the Group’s Company Secretary to ensure that matters concerning the Companies Act, Board procedures and other applicable rules and regulations are followed. All Directors have access to the advice and services of the Company Secretary. The Company has obtained appropriate insurance cover for the Board, Directors and Key Management Personnel.
A.1.5 Independent judgement of the Directors Compliant All Directors exercise independent judgement and opinions on issues that are discussed and considered at the Board.
A.1.6 Dedicate adequate time and effort by the Directors Compliant Board Meetings are held on a periodic basis. The Chairman and the Board Directors dedicate adequate time for the affairs of the Group by attending Board and Subcommittee meetings assiduously. In addition, the Board Directors meet and discuss with the Senior Management on operational and strategic issues as and when required.

GRI: 2-17

A.1.7 		Decision on calling for a resolution Compliant Where necessary, in the best interest of the Company, one-third of the Directors call for a resolution to be presented to the Board. Depending on the business demand, specific resolutions are approved through circulation and detailed Board papers will be forwarded to support the same.
A.1.8 Training for new and existing Directors Compliant The Board recognises the need for continuous training. Adequate knowledge sharing opportunities are provided to acquire requisite skills and exposure to effectively discharge their duties.
A. 2. Chairman and CEO The Code prescribes to clearly differentiate the roles between the Chairman and the CEO to ensure balance of authority and good governance. The Chairman of the Group is responsible to effectively lead and guide the Board whilst the CEO is responsible to lead the Senior Management to ensure effective functioning of day-to-day operations of the Group, in consultation and guidance of the Chairman and the Board.
A.2.1 Segregated roles and responsibilities of the Chairman and CEO Complaint The position of the Chairman and CEO are separated in order to prevent unfettered powers of decision making to a sole individual.
A.3. Chairman As prescribed by the Code, the Chairman of the Group with his integrity and experience in corporate governance is responsible to lead the strategic direction of the Board. The Chairman guides the Board in all decisions and presides and maintains order at Board meetings.
A.3.1 Role of the Chairman Compliant The Chairman is responsible for the efficient conduct of Board meetings and to ensure, inter alia:
  • The agenda for Board meetings is developed in consultation with the CEO, Directors and the Company Secretary taking into consideration matters relating to strategy, performance, resource allocation, risk management and compliance.
  • Sufficiently detailed information of matters included in the agenda should be provided to Directors in a timely manner.
  • All Directors are made aware of their duties and responsibilities and the Board and Committee structures through which it will operate in discharging its responsibilities.
  • The effective participation of both Executive and Non-Executive Directors is secured; All Directors are encouraged to make an effective contribution, within their respective capabilities, for the benefit of the Company.
  • All Directors are encouraged to seek information considered necessary to discuss matters on the agenda of meetings and to request inclusion of matters of corporate concern on the agenda.
  • The views of Directors of issues under consideration are ascertained and a record of such deliberations reflected in the minutes.
  • The Board is in complete control of the Company’s affairs and alert to its obligations to all shareholders and other stakeholders.
A.4. Financial Acumen As per the Code, the Board is to be represented by some members with financial acumen and knowledge to advice on matters related to finance.
A.4 Availability of sufficient financial acumen and knowledge Compliant The Board is made up of knowledgeable and experienced individuals for guidance on matters of finance and management. One of the Directors is an Associate member of Chartered Institute of Management Accounting as well as a Chartered Financial Analyst and chairs the Audit Committee.
A.5. Board Balance The Code stipulates that the Board has to be fairly represented with a balance between Executive and Non-Executive Directors.
A.5.1 Presence of Non-Executive Directors Compliant Out of a total of six Directors in the Board, four are Non-Executive Directors. Names of the Directors category-wise are set out in the Annual Report under Board of Directors profiles.
A.5.2 Independent Non-Executive Directors Compliant Out of the Non-Executive Directors, two are Independent Non-Executive Directors complying with the requirement to have the higher of two, or two third of Non-Executive Directors, as Independent Non- Executive Directors.
A.5.3 Independence of Non-Executive Directors Compliant There are two Independent Non-Executive Directors and they are construed to be independent of management and free of any business or other relationship that could materially impair their independent judgement.
A.5.4 Declaration of Independence Compliant Each Independent Non-Executive Director submits a declaration of independence in a prescribed format.
A.5.5 Determination of independence of the Directors Compliant The Board has determined the independence of Directors based on the declarations submitted by the Independent Non-Executive Directors as to their independence, as a fair representation and the Board will continue to evaluate their independence on this basis annually.
A.5.6 Appointment of an Alternate Director Not Applicable An Alternate Director has not been appointed by a Non-Executive or an Independent Director.
A.5.7 Appointment of a Senior Independent Director Not Applicable The roles of the Chairman and the CEO are separated negating the applicability of this requirement.
A.5.8 Confidential discussions with Senior Independent Director Not Applicable Independent Directors participate in all meetings where confidential matters which the other Directors believe have not been properly considered, are discussed. However, no such matters have been brought up to conduct separate discussions.
A.5.9 Chairman’s meetings with Non-Executive Directors Compliant The Chairman meets with Independent Non-Executive Directors as deemed necessary.
A.5.10 Recording of concerns in the Board minutes Compliant All concerns that are not unanimously resolved will be recorded in the Board minutes as per Company Policy. However, all decisions of the Board were taken unanimously and there were no concerns raised by the Directors which needed to be recorded in the Board minutes during the reporting period.
A.6. Supply of Information The Code stipulates the Management to supply all relevant and timely information to the Board in order to make effective decisions for the Company.
A.6.1 Management’s obligation to provide appropriate and timely information to the Board Compliant The Management ensures that a set of timely, accurate, relevant and comprehensive information is provided to the Directors by way of a Board paper prior to the Board Meeting, with adequate time for review and prepare for discussions.
A.6.2 Timely distribution of documents for Board meetings Compliant All papers related to the Board and Subcommittee meetings are circulated at least seven days prior to the meetings.
A.8 Re-election All Directors should be required to submit themselves for re-election at regular intervals
A.8.1 Re-election of Non-Executive Directors Compliant Non-Executive Directors are subjected to a re-election process as specified by the Companies Act and the re-appointment is not automatic.
A.8.2 Re-election of Chairman and Board Directors Compliant All Directors including the Chairman are subjected for election after their first appointment and have been re-elected at intervals of no more than three years.
A.8.3 Resignation Compliant In the event of a resignation of a Director prior to completion of his appointed term, the Director should provide a written communication to the Board of his reasons for resignation.
A.10 Disclosure of information in respect of Directors The Code specifies Disclosure of relevant details regarding Directors to all shareholders through the Annual Report.
A.10.1 Details of Directors Compliant This Annual Report discloses the relevant details of the Board in the Board of Directors profiles and Corporate Governance sections.
A.11 Appraisal of CEO The Board is required to carry out an appraisal on the CEO’s performance in relation to the Company’s performance and set annual targets.
A.11.1 and A.11.2 Setting annual targets and appraisal of the performance of the CEO by the Board Compliant The Board appraises the performance of the CEO against a prior set of agreed financial and non-financial, short to medium and long-term objectives and targets. The Board carried out the CEO evaluation at the end of the financial year.
B. Directors’ Remuneration
B.1 Procedure The Code specifies that a Remuneration Committee to be established formerly and transparently to independently determine the Remuneration Policy and the Remuneration of the Directors.
B.1.1 Establishment of a Remuneration Committee Compliant A Remuneration Committee is appointed to assist the Board in establishing remuneration policy and guidelines for the remuneration of Directors. As per the policy, no Director or employee are involved in deciding his/her own remuneration.
B.1.2 Composition of the Remuneration Committee Compliant Both members of the Remuneration Committee are Independent Non-Executive Directors.
B.1.3 Chairman and the members of the Remuneration Committee Compliant The Remuneration Committee composition is listed out in the Remuneration Committee report in this Annual Report.
B.1.4 Determination of remuneration of Non-Executive Directors Compliant The Board determines the remuneration of the Non-Executive Directors to ensure that it is aligned to the current market practices.
B.1.5 Consultation with the Chairman, CEO and access to professional advice Compliant The Remuneration Committee consults the Chairman and the Group CEO and has access to professional advice from within and outside the Company.
B.2 The level and make up of Remuneration The Code stipulates that the level of Remuneration for Directors to be sufficient to attract and retain the best in the industry and a portion of Remuneration of Executive Directors to be linked to performance.
B.2.1 and 2.2 Executive Directors’ remuneration package Compliant The Remuneration Committee reviews industry and market practices and norms when setting the remuneration of Executive Directors.
B.2.2 Executive Directors’ remuneration package Compliant The Company has a competitive directors’ remuneration package which promotes long-term success.
B.2.3 Comparison of remuneration with other companies Compliant The Remuneration Committee compares the remuneration levels of the Company with comparable industry norms.
B.2.4 Comparisons of remuneration with other companies in the Group Compliant The Remuneration Committee reviews and compares executive remuneration across the Group companies.
B.2.5 Performance related elements of remuneration of Executive Directors Compliant The Remuneration Committee reviews CEO’s performance aligned to the pre-agreed targets and goals in the best interest of the Company and the stakeholders. There are no performance related elements of remuneration for the Non-Executive Directors.
B.2.6 Executive share options Not Applicable Presently the Group does not have executive share option schemes.
B.2.7 and 2.8 Executive Directors’ remuneration Compliant The Company does not have any long-term incentive share option schemes. Non-Executive Directors are not eligible for performance-based remuneration. A report from the Remuneration Committee is given in this Annual Report.
B.2.9 Early termination of Executive Directors Compliant There are no terminal compensation commitments other than gratuity in the Company’s contracts of service.
B.2.10 Remuneration for Non-Executive Directors Compliant Non-Executive Directors are remunerated in line with market practices and norms.
B.3 Disclosure of Remuneration As per the Code, the Company has to contain a statement of the Remunerations Policy and details of Remuneration of the Directors as a whole in the Annual Report.
B.3.1 Disclosure of remuneration Compliant A statement on Company’s remuneration policy is set out in the Remuneration Committee Report in this Annual Report. The details of aggregate remuneration of the Executive and Non-Executive Directors are disclosed in this Annual Report.
C. Relations with Shareholder
C.1. Constructive use of the Annual General Meeting (AGM) and conduct of General Meetings The Code stipulates that the Board shall convene an Annual General Meeting (AGM) to have a dialogue on company matters with the shareholders.
C.1.1 Adequate notice of the AGM Compliant The notice of AGM is circulated together with the Annual Report and Accounts which includes information relating to any other resolutions that will be set before the shareholders at the AGM 15 working days in advance as per Section 135 of the Companies Act No. 07 of 2007.
C.1.2 Separate resolution for all separate issues at the AGM Compliant Each substantial issue is proposed as a separate resolution. The adoption of the Annual Report of the Board of Directors, along with the Financial Statements, is also proposed as a separate resolution.
C.1.3 Use of proxy votes Compliant A Form of Proxy accompanies the Annual Report, when they are dispatched to the shareholders. The Company has a mechanism to record all proxy votes and proxy votes lodged on each resolution.
C1.4 Board Subcommittee Chairman to be present at the AGM Compliant The Chairman of the Board ensures that the Chairmen of Board Subcommittees are present at the AGM to respond to any queries posed by the shareholders.
C.1.5 Procedures of voting at the AGM Compliant The proxy form including a summary of the procedures governing voting at the AGM is circulated to all shareholders.
C.2 Communication with shareholders The Code stipulates that the Board should implement effective communication with shareholders
C.2.1 Dissemination of timely information Compliant All information pertaining to the Annual Report and Quarterly Financial Statements will be disseminated through Corporate Communications of Expolanka Holdings PLC and the Company Secretary, SSP Corporate Services (Pvt) Ltd. will circulate any other information.
C.2.2 Disclosure of method of communication with shareholders Compliant Expolanka Holdings PLC maintains an “Open Door” Policy with regard to communication with shareholders and shareholders are welcome to direct their suggestions/inquiries to the Group
CEO and Board Secretary.
C.2.3 Implementation of policy and method of communication Compliant Multiple channels of communication are available. The Feedback form in the Annual Report/the Group websites’ contact us link, and the contact person details in the Annual Report are the main methods of communication. However, interaction through investor meetings also serve as engaging forms of interaction.
C.2.4 Disclosure of contact person Compliant The contact person for shareholder engagement is disclosed in the Annual Report whilst a contact link on the website also serves as a conduit for interaction.
C.2.5 Process and disclosure of Director’s awareness of concerns of shareholders Compliant Concerns are raised to the Group CEO for discussion with the Board, as and where the issues raised are deemed critical or noteworthy.
C.2.6 Requirements for the contact person Compliant Contact person details are clearly communicated in the section on Corporate Information of this Annual Report. The contact person is well versed with the requirements of the role.
C.2.7 Process of responding to shareholder’s matters Compliant Shareholder matters are at the first line of interaction by the key contact person, if issues/ suggestions/inquiries are raised to the Group CEO or the Board, resolutions or clarifications are made by the office of the Group CEO.
C.3 Major transactions All major transactions that will materially impact on the net asset base of the Company or the Group are to be disclosed to the shareholders.
C.3.1 Disclosure on major transactions Compliant Procedures are in place to disclose major transactions that will materially alter the net asset base. During the year, there were no major transactions as defined by Section 185 of the Companies Act No. 07 of 2007 which had a material impact on the net asset base of the Company and the Consolidated Group.
C.3.2 Public listed companies disclosures Compliant Procedures are in place to comply with the disclosure requirements and shareholder approval by special resolution as required by the rules and regulation of the Securities Exchange Commission and by the Colombo Stock Exchange.
D. Accountability and Audit
D.1 Financial Reporting The Code requires a fair and a balance report on the Organisation’s financial position, performance, and prospect.
D.1.1 Present a balanced and understandable assessment of the Company’s financial position compiling to relevant laws and regulations Compliant All efforts are taken to ensure that the Annual Report presents a balanced assessment of the Company’s financial position. Care has been exercised to ensure that all statutory requirements are complied.
D.1.2 Board’s responsibility for statutory and regulatory reporting Compliant The Company’s Interim and Annual Financial Statements are prepared in accordance with the Sri Lanka Accounting Standards and the Company’s Act No. 7 of 2007 and duly audited. The Interim and Annual Financial Statements were published on time during the reporting period. All regulatory reports were filed by the due dates. Price sensitive information were disclosed to the Colombo Stock Exchange (CSE) on a timely basis during the financial year 2022/23.
D.1.3 Declaration by the Chief Executive and Chief Financial Officer on the Financial Statements Compliant The declaration is available under the Statement of Directors’ Responsibility and Statement of Financial Position.
D.1.4 Directors’ Report in the Annual Report Compliant The Annual Report of the Board of Directors on the Affairs of the Company containing the subject declarations.
D.1.5 Statement of Directors’ and Auditor’s Responsibility for the Financial Statements Compliant A Report on the Statement of Directors’ Responsibilities. The Auditor’s Report on the Financial Statements for the year ended 2022/23.
D.1.6 Management Discussion and Analysis Compliant Management Discussion and Analysis is presented on the Company together with the subsidiaries as separate sections in this Annual Report.
D.1.7 Summon an Extra Ordinary General Meeting (EGM) to notify serious loss of capital Compliant EGMs are held for companies complying with the requirements.
D.1.8 Disclosure of Related party transactions in the Annual Report Compliant Related party transactions have been disclosed in Note 28 Related Party Disclosures under Notes to the Financial Statements.
D.2 Internal Control The Board is required to maintain a comprehensive system of internal controls and risk management to safeguard the shareholder’s wealth and Company’s sustainability.
D.2.1 Review the effectiveness of internal controls Compliant The Board has the overall responsibility for the system of internal controls covering financial, operational, compliance and risk management. The Board has delegated these responsibilities to the Audit Committee. Systems have been designed to provide the Directors with the reasonable assurance that assets are safeguarded; transactions are authorised and recorded properly whilst material errors and irregularities are prevented, detected and rectified effectively.
D.2.2 Review and confirm on the assessment of the principal risk faced by the Company and how they are being mitigated Compliant Please refer the Risk Management Report for contents pertaining to Principal Risk.
D.2.3 Internal audit function Compliant Internal audit function is available in the Organisation.
D.2.4 Review the process of Internal Control and Risk Management Compliant Internal audit function has been outsourced to Messrs PricewaterhouseCoopers Advisory Services (Pvt) Ltd. and other renowned firms. Independent internal teams work closely with the Auditors to ensure that the audits are conducted and completed efficiently. Group’s Risk and Control Department coordinates and ensures that recommendations are implemented conscientiously apart from carrying out various other audits and special assignments across the Group. The effectiveness and the scope of the Internal audit function is assessed periodically.
D.2.5 Director’s responsibility on maintaining a system of internal control and contents of the Statement of Internal Control Compliant Audit Committee Statement on Internal Controls and contents of the Statement of Internal Control have been highlighted in the Annual Report under the Annual Report of the Board of Directors on the Affairs of the Company.
D.3 Audit Committee The Board is responsible to appoint an Audit Committee to establish a formal and transparent process to select accounting policies, financial reporting and internal controls and to maintain a good relationship with the Auditors.
D.3.1 Composition of the Audit Committee Compliant The Audit Committee comprises of two Independent Non-Executive Directors. Please refer the Audit Committee Report in this Annual Report.
D.3.2 Terms of reference of the Audit Committee Compliant The Audit Committee operates on a clearly defined terms of reference which focuses on the purpose of the Committee, its duties and responsibilities including the scope and functions
of the Committee.
D.3.3 Duties of the Audit Committee and disclosures of the Audit Committee Compliant Please refer the Audit Committee Report The Audit Committee Report highlights the names of the members, determination of independence of Auditors and other relevant information.
D.4. Related Party Transactions Review Committee The Code requires the Company to not engage in transaction with related parties in a manner that would grant such parties more favorable treatment.
D.4.1 Related party and Related party transactions Compliant The Company’s related party and related party transactions is defined as per LKAS 24.
D.4.2 Composition of the Related Party Transactions Review Committee Compliant The Related Party Transactions (RPT) Review Committee comprises of two Independent Non-Executive Directors and the Chairman is an Independent Non-Executive Directors
appointed by the Board. Please refer the RPT Review Committee report.
D.4.3 Disclosure of RPT Review Committee Compliant
  • Related Parties documentation is done as per the definition of LKAS 24 and the CSE Listing Rules and to comply with the requirement under section D.4.2 of the code.
  • A procedure to obtain a statement of related party interest from each such related party at least once in each quarter, when there’s a change in the status and in any event prior to entering into any transaction between such related parties and the Company, its parent or any of subsidiaries, sub-subsidiaries, fellow subsidiaries, associates, joint ventures and any other entries which are considered related parties as defined as LKAS 24 unless they are exempted related party transactions as defined in CSE Listing Rules.
  • Key management personnel of the Company responsible for contracting, procurement, payments, and any other channel through which have an inflow or outflow of resources can result, should have a list of all related parties and have a process in place to capture and report any related party transaction within their area of responsibility.
  • A procedure to inform all related parties of what constitutes exempted related party transactions.
  • A procedure to identify and for Directors to report recurrent and non-recurrent related party transactions and to obtain Board or shareholder approval by special or ordinary resolution as required by the CSE Listing Rules.
  • A procedure and guideline to delegate to Key Management Personnel to deal with recurrent related party transactions as defined in the CSE Listing Rules.
  • A procedure for the RPT Review Committee to review and recommend to the Board matters relating to such transactions.
  • Any interested Director should not participate at the meeting at which the transaction relating to him/her is discussed unless invited to seek clarification/information.
  • A procedure and definition of disclosures required to be made by the Company on an annual basis, those requiring immediate disclosure and those requiring shareholder approval.
  • A procedure to identify related party transactions which require immediate disclosures as per the CSE Listing Rules and to ensure that required disclosures are made by the Company to the Colombo Stock Exchange in accordance with the CSE Listing rules.
  • A procedure to identify related party transactions which require shareholder approval by special resolution at an extra-ordinary general meeting.
  • The Company secretary should maintain a permanent record in manual or electronic form of such statements, submissions, approvals and minutes.
  • Review and recommend to the Board the related party disclosures to be made in the Annual Report of the Company.
D.5. Code of Business Conduct and Ethics The Code stipulates the Company may adopt a Code of Business Conduct and Ethics Directors and key Management Personnel and to declare any material violations.
D.5.1 Disclosure of Code of Business Conduct and Ethics Compliant The Company has adopted and is in compliance to the Code of Business Conduct and Ethics applicable to Directors and all employees across the Group. Any violation of the Code is taken for consideration.
D.5.2 Process to ensure the material and price sensitive information is promptly identified and reported Compliant The Company has a process in place to ensure material and price sensitive information is promptly identified and reported in accordance with relevant regulations.
D.5.3 Disclosure on key management/ any other employees involved in financial reporting personnel shares Compliant All the Directors, Key Management Personnel and employees of the Company are required to declare details of their dealings in shares of the Company in a prescribed format to the Company Secretary. Shares pertaining to the Key Management Personnel information are duly disclosed.
D.5.4 Affirmation of the Code of Business Conduct and Ethics Compliant Please refer the Chairman’s Statement on Corporate Governance and the Annual Report of the Board of Directors which affirm that there are no material violations of the Company’s Code of Business Conduct and Ethics during the reporting period.
D.6 Corporate Governance Disclosures The Code requires the Company to disclose the extent to which the Company adheres to established practices and principles good Corporate Governance.
D.6.1 Disclosure of Corporate Governance Compliant The Corporate Governance Report herein sets out the manner in and the extent to which the Company has complied with the Code of Best Practice on Corporate Governance jointly issued by the ICASL and SEC.

Section 2 – Shareholders
SEC and ICASL code reference Corporate governance principles Compliance status Extent of adoption
E. Institutional Investors
E.1 Shareholder voting The Code specifies the Company to engage the institutional shareholders and encourage them to exercise their voting rights in key decision making.
E.1.1 Communication with shareholders Compliant The AGM provides an ideal forum for shareholders to express their views and vote for key decisions. The Chairman ensures that any view expressed by investors at the AGM is discussed at the Board level. Shareholders are provided with Quarterly Financial Statements and the Annual Report including the operational and financial performance of the reporting year. These reports are also made available on the Group’s official website and are provided to the Colombo Stock Exchange.
E.2 Evaluation of Governance Disclosures The Code specifies obtaining feedback from institutional investors on the governance structure, composition and practices.
E.2.1 Due weight by institutional Investors Compliant The Corporate Governance Report contains the Company’s governance arrangements and Institutional investors are encouraged to give feedback on the governance arrangements.
F. Other Investors
F.1 Individual shareholders Compliant The Annual Report contains sufficient information in order to carry out adequate analysis or seek independent advice regarding investing/divesting decisions. Following are the main reports included in this Annual Report which provide an overall assessment of the Company’s affairs during the financial year 2022/23 and the way forward:
  • Chairman’s Message
  • Group CEO’s Review
  • Management Discussion and Analysis
  • Annual Financial Statements
F.2 Shareholder voting Compliant All shareholders are encouraged to participate at the AGM and cast their votes or exercise their proxy for decision making.
H. Environment Society and Governance
H.1 ESG Reporting
H.1.1 ESG reporting
  • A holistic framework covering environmental capital, social capital and governance is discussed in the Report.
  • Further content is provided in the Message from the Chairman and Group CEO's Review.
H.1.2 The Environment Compliant Environment has been discussed under Sustainable Operations
H.1.3 Social Governance Compliant Engagement with the society and labour practices have been discussed under the Our Group chapter of this Annual Report.
H.1.4 Governance Compliant Please refer the Corporate Governance section in this Annual Report for the governance structure.
H.1.5 Board’s role on ESG factors Compliant
  • The independent Directors chair the Audit Committee, Related Party Transactions Committee and the Remuneration Committee.
  • The investment Committee reports to the Board. The CEO who is a Board member oversees areas of sustainability and governance in the organisation.
  • The Board periodically reviews various subject matters pertaining to governance and compliance.

Section b

This section covers the extent of Group’s commitment and compliance to the Continuing Listing Requirements Section 7.10 of the Rules on Corporate Governance for Listed Companies issued by the Colombo Stock Exchange under the following headings:

A. Non-Executive Directors
B. Independent Directors
C. Disclosures relating to Directors
D. Remuneration Committee
E. Audit Committee

CSE Rule No. Subject Requirement Compliance Details
7.6 (i) Contents of Annual Report Names of persons who during the financial year were Directors of the Entity. Compliant List of Directors with their profiles are available in the section on Board of Directors of this Annual Report.
7.6 (ii) Contents of Annual Report Principal activities of the Entity and its subsidiaries during the year and any changes therein. Compliant Principal activities of the Company are explained in the chapter on Our Businesses
7.6 (iii) Contents of Annual Report The names and the number of shares held by the 20 largest holders of voting and non-voting shares and the percentage of such shares held. Compliant As of the end of the financial year 202/23, Expolanka Holdings PLC has only issued voting shares and the top 20 shareholders are available on Share Information Note.
7.6 (iv) Contents of Annual Report The float adjusted market capitalisation, public holding percentage (%), number of public shareholders and under which option the Listed Entity complies with the Minimum Public Holding requirement. Compliant Information on float adjusted market capitalisation and related information are available under the Share Information Note.
7.6 (v) Contents of Annual Report A statement of each Director’s holding and Chief Executive Officer’s holding in shares of the Entity at the beginning and end of each financial year. Compliant Opening and closing balances of shares held by the Directors and the CEO are available in the section on Share Information.
7.6 (vi) Contents of Annual Report Information pertaining to material foreseeable risk factors of the Entity. Compliant Information on material risk factors is discussed under the Risk Management Report.
7.6 (vii) Contents of Annual Report Details of material issues pertaining to employees and industrial relations of the Entity. Compliant Information on human resources of the Company are discussed under the Human Capital section.
7.6 (viii) Contents of Annual Report Extents, locations, valuations and the number of buildings of the Entity’s land holdings and investment properties. Compliant Information on lands and buildings held by the Company are available in the section on Group Real Estate Portfolio.
7.6 (ix) Contents of Annual Report Number of shares representing the Entity’s stated capital. Compliant Available under Share Information.
7.6 (x) Contents of Annual Report A distribution schedule of the number of holders in each class of equity securities, and the percentage of their total holdings in the prescribed manner. Compliant Information is available under Share Information.
7.6 (xi) Contents of Annual Report Prescribed equity and debt ratios with market price information. Compliant Equity and debt ratios are available in the chapter on Our Group and share price related information are available in the section on Share Information.
7.6 (xii) Contents of Annual Report Significant changes in the Entity’s or its subsidiaries’ fixed assets and the market value of land, if the value differs substantially from the book value; Compliant Significant changes have not occurred to the Company’s fixed assets and market value of lands.
7.6 (xiii) Contents of Annual Report If during the year the Entity has raised funds either through a public issue, Rights Issue, and private placement;

(a) a statement as to the manner in which the proceeds of such issue has been utilised.

(b) if any shares or debentures have been issued, the number, class and consideration received and the reason for the issue; and,

(c) any material changes in the use of funds raised through an issue of securities.

 Compliant During the financial year 2022/23, the Company has not raised funds through a Public Issue, Rights Issue or through a Private Placement.
7.6 (xiv) (a) Employee Share Option Schemes The following information shall be disclosed in the Annual Report of the Listed Entity in respect of each ESOS:

(a) The number of options granted to each category of Employees during the financial year.

(b) Total number of options vested but not exercised by each category of Employees during the financial year.

(c) Total number of options exercised by each category of Employees and the total number of shares arising therefrom during the financial year.

(d) Options cancelled during the financial year and the reasons for such cancellation.

(e) The exercise price.

(f) A declaration by the Directors of the Entity confirming that the Entity or any of its subsidiaries has not, directly or indirectly, provided funds for the ESOS.

 Not Applicable No Employee Share Option Schemes are available.
7.6 (xiv) (b) Employee Share Purchase Scheme The following information shall be disclosed in the Annual Report of the Listed Entity in respect of each ESPS:

(a) The total number of shares issued under the ESPS during the financial year.

(b) The number of shares issued to each category of Employees during the financial year.

(c) The price at which the shares were issued to the Employees.

(d) A declaration by the Directors of the Entity confirming that the Entity or any of its subsidiaries has not, directly or indirectly, provided funds for the ESPS.

 Not Applicable No Employee Share Purchase Schemes are available.
7.6 (xv) Corporate Governance Practices Disclosures pertaining to Corporate Governance practices. Compliant Disclosures relating to Corporate Governance practices are in the section on Corporate Governance.
7.6 (xvi) Related Party Transactions Related Party transactions exceeding 10% of the equity or 5% of the total assets of the Entity as per Audited Financial Statements, whichever is lower to be disclosed. Compliant Please refer to the commentary of Section 9.3.2 (a).
7.10 (a) Corporate Governance – Compliance A Listed Entity shall publish in the Annual Report relating to the financial year commencing on or after 1 April 2007 a statement confirming that as at the date of the Annual Report they are in compliance with the Corporate Governance Rules and if they are unable to confirm compliance, set out the reasons for its inability to comply. Compliant Statement on Corporate Governance is available in the section on Corporate Governance.
7.10 (c) Corporate Governance – Compliance Listed Entity shall make disclosures of compliance with Corporate Governance Rules applicable to that sector and the Annual Report must contain the relevant affirmative statements. Compliant Compliance status of Corporate Governance Rules are available in the section on Corporate Governance.
7.10.1(a) Non-Executive Directors Two or one third of the total number of Directors, whichever is higher, shall be Non-Executive Directors. Compliant The Board comprises of four Non-Executive Directors out of the total of six Directors.
7.10.2 (a) and (b) Independent Non-Executive Directors Two or one third of Non-Executive Directors, whichever is higher, shall be independent. Declaration of Independence by Non-Executive Directors. Compliant The Board comprises of two independent Non-Executive Directors. Non-Executive Directors have submitted a declaration of Independence.
7.10.3 (a) Disclosure relating to Directors The names of all Independent Directors shall be disclosed in the Annual Report. Compliant Please refer Directors Profiles section in this Annual Report in the section on Board of Directors for Directors’ disclosures.
7.10.3 (b) Disclosure relating to Directors In the event a Director does not qualify as “independent” as per the rules of Corporate Governance but if the Board is of the opinion that the Director is nevertheless independent, it shall specify the basis of the determination in the Annual Report. Compliant Both Independent Directors have been serving the Board for a period exceeding 9 years, disqualifying them as Independent Directors. However, the Board has reviewed their independence status against other criteria set out in the rule and have determined that they are continued to be independent. Accordingly, the Independent Directors have been re-appointed to the Board. Please refer Chairman’s Statement on Corporate Governance.
7.10.3 (c) Disclosure relating to Directors A brief resume of each Director which includes information on the nature of his/her expertise in relevant functional areas is to be published in the Annual Report. Compliant Directors Profiles are disclosed in the section on Board of Directors of this Annual Report.
7.10.3 (d) Disclosure relating to Directors Upon appointment of a new Director to its Board, the Company shall forthwith provide to the CSE a brief resume of such Director. Compliant Information on Directors have been shared with the CSE as per the requirement.
7.10.5 Remuneration Committee A listed company shall have a Remuneration Committee. Compliant Refer Remuneration Committee Report of this Annual Report.
7.10.5 (a) Remuneration Committee – Members The Remuneration Committee shall comprise a minimum of two Independent Non-Executive Directors or a majority of Independent Non-Executive Directors, whichever is higher. Compliant The Remuneration Committee comprises two Independent Non-Executive Directors.
7.10.5 (b) Remuneration Committee Functions The Remuneration Committee shall recommend to the Board remuneration payable to the Executive Directors and to the CEO. Compliant Refer Remuneration Committee Report of this Annual Report.
7.10.5 (c) Disclosure in the Annual Report The Annual Report should set out:
  • Names of the Directors of the Remuneration Committee
  • The statement of Remuneration Policy
  • Aggregate remuneration paid to Executive and Non-Executive Directors
 Compliant All related information has been disclosed under the Remuneration Committee Report of this Annual Report Remuneration paid to Executive and Non-Executive Directors are mentioned under the Annual Report of Board of Directors on the Affairs of the Company.
7.10.6 Audit Committee A listed company shall have an Audit Committee. Compliant Refer Audit Committee Report.
7.10.6 (a) Composition of the Audit Committee
  • The Audit Committee shall comprise a minimum of two Independent Non-Executive Directors or a majority of Independent Non-Executive Directors, whichever is higher.
  • One of the Non-Executive Directors shall be appointed as the Chairman of the Committee by the Board of Directors
  • The CEO and CFO shall attend the Audit Committee meetings.
  • The Chairman or one member of the Audit Committee shall be a member of a recognised professional accounting body.
Compliant
  • The Audit Committee comprises of two Independent Non-Executive Directors.
  • Mr Sanjay Kulatunga (Independent Non-Executive Director) acts as the Chairman of the Committee.
  • The Group CEO and Director – Group Finance attend meetings by invitation.
  • The Chairman is an Associate member of the Chartered Institute of Management Accountants and is a Charter holder from CFA.
7.10.6 (b) Functions of the Audit Committee The Audit Committee shall oversee the following functions.
  • Preparation, presentation, and disclosure of the Financial Statements and ensure they are in line with the Sri Lanka Accounting Standards
  • Compliance with financial reporting, Companies Act and other financial reporting regulations and requirements
  • Processes to ensure that internal controls and risk management are adequate to meet the requirements of Sri Lanka Accounting Standards
  • Assessment of the independence and performance of External Auditors
  • Appointment, re-appointment, and removal of External Auditors and approve the terms of remuneration and terms of engagement.
 Compliant Refer the Audit Committee Report.
7.10.6 (c) Disclosure in the Annual Report The Annual Report shall disclose:
  • Names of the Directors of the Audit Committee
  • The determination of the independence of the Auditors and the basis for such determination
  • A report by the Audit Committee setting out the manner of compliance with the Listing Rule 7.10 on Corporate Governance
 Compliant Refer the Audit Committee Report.
9.3.2 (a) Related Party Transactions – Disclosures in the Annual Report In the case of non-recurrent related party transactions, if aggregate value of the non-recurrent related party transactions exceeds 10% of the Equity or 5% of the total assets, whichever is lower, of the Listed Entity as per the latest Audited Financial Statements information listed out in the rule must be presented in the Annual Report. Compliant There were no non-recurring transactions during the year under review.
9.3.2 (b) Related Party Transactions – Disclosures in the Annual Report In the case of recurrent related party transactions, if the aggregate value of the recurrent related party transactions exceeds 10% of the gross revenue/income (or equivalent term in the Income Statement and in the case of group entity consolidated revenue) as per the latest Audited Financial Statements, the Listed Entity must disclose the aggregate value of recurrent related party transactions entered into during the financial year in its Annual Report. The name of the related party and the corresponding aggregate value of the related party transactions entered into with the same related party must be presented. Compliant Information pertaining to recurrent related party transactions during the financial year 2022/23 have been disclosed under Note 15.6 – Recurrent Related Party Transactions.
9.3.2 (c) Annual Report disclosure Annual Report shall contain a report by the Related Party Transactions Review Committee, setting out the following:

(a) Names of the Directors comprising the Committee

(b) A statement to the effect that the Committee has reviewed the related party transactions during the financial year and has communicated the comments/observations to the Board of Directors.

(c) The policies and procedures adopted by the Committee for reviewing the related party transactions.

(d) The number of times the Committee has met during the financial year

 Compliant Please refer for the Report on Related Party Transactions Review Committee.
9.3.2 (d) Declaration by the Board of Directors A declaration by the Board of Directors in the Annual Report as an affirmative statement of the compliance with these Rules pertaining to related party transactions or a negative statement in the event the entity has not entered into any related party transaction/s. Compliant Please refer The affirmative statement is given in the Report on Board of Directors on the Affairs of the Company.
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