Sunshine Holdings PLC (Sunshine Holdings) is the holding company of four subsidiaries, namely, Sunshine Healthcare Lanka Limited, Estate Management Services (Pvt) Limited, Sunshine Packaging Lanka Limited and Sunshine Energy (Pvt) Limited. The businesses of the Group companies are given on pages 6 to 7 of this Report.
Sunshine Holdings believes that an important aspect of communication with stakeholders and other interested parties, is the extent of compliance with best practice on corporate governance as promulgated in the Code of Best Practice on Corporate Governance 2017 issued by The Institute of Chartered Accountants of Sri Lanka (ICASL), the rules set out in Section 07 of the Listing Rules of the Colombo Stock Exchange (CSE) and the Country’s Legislative and Regulatory requirements relevant to the Group.
The Group’s corporate governance framework provides the Directors and the Corporate Management guidance on their responsibilities and duties. It defines the matters which require Board approval, can be delegated to Management and require review by Board subcommittees.
The Company’s business and operations are managed under the supervision of the Board, which consists of members with expertise and experience and strong financial and business acumen in activities that the Company is engaged in. They have a strong understanding of their roles and responsibilities.
The Board has the following powers for discharging its responsibilities:
The Board provides vision, strategic direction and stewardship to the institution whilst maintaining integrity, transparency, and accountability. The Board also reviews and monitors the Company’s activities.
The Board reviews business results on a regular basis and guides the Management by giving appropriate direction in achieving its goals.
In consultation with the Audit Committee, a risk management system was developed and periodically reviewed. The Risk Management report is given on page 75 of this Report. Further, the Audit Committee Report is also given on page 83.
The Company has a code of conduct and ethics which is communicated to all levels of the employees including its Board of Directors.
The Board meets at a minimum, once in three months to review the financial performance of the Company. The Quarterly Financial Statements are reviewed by the Audit Committee before recommending to the Board of Directors for adoption and release to the public. Interim and final dividends are considered and recommended by the Board of Directors.
The Company communicates periodically with its shareholders through the quarterly reports. The Annual Report provides a comprehensive assessment of the Company’s performance during the year and its future potential.
An independent statutory audit is carried out annually and the appointment of Auditors for the ensuing year is recommended to the shareholders at the Annual General Meeting (AGM).
The Board is responsible for approval of annual budgets, capital budgets and new projects.
Board monitors and periodically reviews the Company’s Corporate Governance practices in accordance with the mandatory requirements arising from the Listing Rules of the CSE and the Code of Best Practice on Corporate Governance issued by The Institute of Chartered Accountants of Sri Lanka.
The Company maintains a Board balance of Executive, Non-Executive and Independent Directors as required under Listing Rules of the CSE. Together, the Directors with their wide experience in both the public and the private sectors and diverse academic backgrounds provide a collective range of skills, expertise and experience, which is vital for the successful direction of the Group.
The Board consists of ten (10) members. Eight (8) members are Non-Executive Directors (including the Chairman) and two (2) are Executive Directors. Five (5) Non-Executive Directors are independent as defined under the Listing Rules of the Colombo Stock Exchange.
The Non-Executive Independent Directors are;
There is a distinct and clear division of responsibility between the Chairman and the Group Managing Director (GMD) to ensure that there is a balance of power and authority. The roles of the Chairman and the GMD are separated and clearly defined. The Chairman is responsible for ensuing Board effectiveness and conduct whilst the GMD has overall responsibilities over the operating units, organisational effectiveness and implementation of Board policies and decisions.
The Board met quarterly to discharge its duties effectively. In addition, special Board meetings are also held whenever necessary. A total of seven (7) meetings including the AGM and two (2) Extraordinary General Meetings (EGM) were held in the financial year ended 31 March 2019. The attendances of Directors at these meetings were as follows:
|Name of Director||Attendance at meetings||%|
|Mr Munir Shaikh||7/7||100|
|Mr G Sathasivam*||3/4||75|
|Mr V Govindasamy||7/7||100|
|Mr S G Sathasivam||5/7||71|
|Mr N B Weerasekera**||1/1||100|
|Mr A D B Talwatte||7/7||100|
|Mr B A Hulangamuwa****||6/7||86|
|Mr H Abeywickrama||5/7||71|
|Mr A Cabraal||7/7||100|
|Mr S Shishoo||6/7||86|
|Mr Y Kitao***||0/2||0|
* Mr G Sathasivam ceased to be a Director on 28 June 2018 and was reappointed to the Board on 9 August 2018.
** Mr N B Weerasekera retired from the Board w.e.f. 28 May 2018.
*** Mr Y Kitao appointed to the Board w.e.f. 9 August 2018.
**** Mr B A Hulangamuwa retired from the Board w.e.f. 30 May 2019.
The provisions of the Company’s Articles require a Director appointed by the Board to hold office until the next AGM and seek reappointment by the shareholders at that meeting. The Articles call for one-third of the Directors in office to retire at each AGM. The Directors who retire are those who have served for the longest period after their appointment/reappointment. Retiring Directors are generally eligible for re-election. In addition, a newly-appointed Director is required to submit himself for retirement and re-election at the AGM immediately following his appointment. The GMD does not retire by rotation.
The objectives of the Company’s policy on Directors remuneration it to attract and retain Directors of the calibre needed to direct the Group successfully. In the case of the Executive Director, the component parts of the remuneration are structured so as to link rewards to corporate and individual performance. Performance is measured against profits and other targets set from the Company’s annual budget and plans, and from returns provided to shareholders. In the case of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the Non-Executive Director concerned.
The Remuneration Committee recommends to the Board the frameworks of the Executive Director’s remuneration and the remuneration package for the Executive Director. It is, nevertheless, the ultimate responsibility of the entire Board to approve the remuneration of the Executive Director. The Directors’ remuneration is disclosed in Note 42.1 of the Financial Statements.
The Board in discharging its duties, establishes various Board committees. The functions and terms of reference of the Board committees are clearly defined and where applicable, comply with the recommendations of the Code of Best Practice on Corporate Governance. The Group has four (4) Board committees,
However, the Board of Directors is collectively responsible for the decisions taken on the recommendation by Board committees.
The Audit Committee provides an oversight on the Financial Statements and other related information prepared for presentation for external financial reporting, review the work of the internal audit function and ensures that the external auditor carries out their statutory duties in an independent and objective manner. It also assists the Board in ensuring that a sound system of internal control is in place. The Committee has full access to the Auditors both internal and external who, in turn, have access at all times to the Chairman of the Committee. The Committee meets with the External Auditors without any executives being present except for the Group Secretaries, at least once a year. The report of the Audit Committee is presented on page 83 and the duties of the Audit Committee are included therein.
The Nomination and Remuneration Committee reviews the Board composition to ensure Board balance and adequacy of skills and experiences among the members of the Board. It recommends any new appointments to the Board.
It also makes recommendations to the Board on the remuneration policy and the remuneration to be paid to each Executive Director. It also reviews the Group’s remuneration policy and the remuneration packages of executive employees of the Group.
The role of the Investment Committee is to review capital expenditure budgets and new projects and make recommendations to the Board of Directors.
The Committee exercises oversight on behalf of the Board, that all Related Party Transactions (RPTs, other than those exempted by the CSE listing rules on the RPTs) are carried out and disclosed in a manner consistent with the CSE Listing Rules.
|Appointment to the Board||Board Nomination and Remuneration Committee||Board Audit Committee||Board Investment Committee||Board Related Party Transactions Review Committee|
|Mr V Govindasamy||08.02.2000|
|Mr S G Sathasivam||13.06.2006|
|Mr G Sathasivam||08.02.2000||x|
|Mr B A Hulangamuwa***||01.02.2002||x||x|
|Mr Munir Shaikh||16.07.2010||x|
|Mr N B Weerasekara*||21.11.2008||x||x||x||x|
|Mr S Shishoo||18.12.2017||x||x|
|Mr A D B Talwatte||30.05.2016||x||x||x||x|
|Mr Y Kitao**||09.08.2018|
|Mr A Cabraal||30.05.2017||x||x||x||x|
|Mr H Abeywickrama||30.06.2014||x||x|
*Resigned w.e.f. 28 May 2018.
** Appointed w.e.f. 9 August 2018.
***Resigned w.e.f. 30 May 2019.
The Board comprises two Senior Chartered Accountants and both of them serve as members of the Audit Committee and Related Party Transactions Review Committee.
Directors are provided with quarterly reports on performance, minutes of quarterly meetings and such other reports and documents as necessary. The Chairman ensures all Directors are adequately briefed on issues arising at meetings.
The services and advice of the Company Secretaries are made available to Directors as necessary. The Company Secretaries keep the Board informed of new laws, regulations and requirements coming into effect which are relevant to them as individual Directors and collectively to the Board.
Corporate Services (Private) Limited having their registered office at No. 216, De Saram Place, Colombo 10 are the Company Secretaries since 1 April 2016.
The Directors after making necessary inquiries and reviews including reviews of the Group’s budget for the ensuring year, capital expenditure requirements, future prospects and risks, cash flows and borrowings facilities, have a reasonable expectation of the Company’s existence in the foreseeable future. Therefore, the going concern basis is adopted in the preparation of the Financial Statements.
The Board is responsible for the Company’s internal controls and for reviewing their effectiveness. Internal control is established with emphasis placed on safeguarding assets, making available accurate and timely information and imposing greater discipline on decision-making. It covers all controls, including financial, operational and compliance control and risk management. It is important to state, however that any system can ensure only reasonable and not absolute, assurance that errors and irregularities are prevented or detected within a reasonable time.
Shareholders are provided with quarterly Financial Statements and the Annual Report which the Group considers as its principal communication with them and other stakeholders. These reports are provided to the CSE and also published in print media. Shareholders may bring up concerns they have, either with the Chairman or the GMD as appropriate. Sunshine Holdings PLC’s website www.sunshineholdings.lk and websites of listed companies within the Group serve to provide a wide range of information about the Group. The Company has reported a fair assessment of its position via the published audited Financial Statements and quarterly accounts. In preparation of these documents, the Company has complied with the requirements of the Companies Act No. 07 of 2007 and in accordance with the Sri Lanka Accounting Standards.
The Company has published Quarterly Financial Statements with the necessary explanatory notes as required by the Rules of the CSE and the Securities and Exchange Commission of Sri Lanka to all stakeholders. Any other financial and non-financial information, which is price sensitive or warrants the shareholders and stakeholders’ attention and consideration is promptly disclosed to the public.
|Subject||Rule/Code number||Compliance requirement||Compliance status||Section||Page number|
|The Board of Directors||A 1||Company to be headed by an effective Board to direct and control the Company.||Complied||Profiles of the Board||20|
|A 1.1||Regular Board meetings||Complied||Composition and attendance||209|
|A 1.2||Responsibilities||Complied||Board responsibility||86|
|A 1.3||Act in accordance with the laws of the country and obtain professional advice as and when required||Complied||Annual Report of the Board of Directors||4|
|A 1.4||Access to Company Secretary||Complied||Communication with stakeholders||212|
|A 1.5||Bring Independent judgement on various business issues and standards of business conduct||Complied||The Directors are permitted to get professional advice when necessary and the Directors of Sunshine Holdings Group has obtained professional advice for certain matters during the year and coordinated through Company secretaries||211|
|Chairman and Group Managing Director (GMD)||A 2||Chairman and GMD’s division of responsibilities to ensure a balance of power and authority||Complied||The Chairman does not involve himself in day-to-day operations of the Group and acts as an Independent Non-Executive Director. The GMD executes powers given by the Chairman and the Board to run the operation||209|
|Chairman’s Role||A 3||Facilitate the effective discharge of Board functions||Complied||The Chairman is responsible for conducting meetings effectively and he preserves order and implements Board decisions taken||209|
|A 3.1||Ensure Board proceedings are conducted in a proper manner||Complied||The Chairman is responsible for the effective participation of both Executive and Non-Executive Directors, their contribution for the benefit of the Group, balance of power between Executive and
Non-Executive Directors and control of Group’s affairs and communicate to stakeholders
|Financial Acumen||A 4||Availability of financial acumen within the Board||Complied||Profiles of the Board||20|
|Board Balance||A 5.1||Non-Executive Directors||Complied||Eight (8) out of Ten (10) are
|Complied||Five (5) out of Eight (8)
Non-Executive Directors are Independent
|A 5.3||Independent Non-Executive Directors||Complied||All Independent Non-Executive Directors are in fact free of any business with the Group and are not involved in any activity that would affect to their independence||209|
|A 5.4||Annual Declaration||Complied||Submitted the declarations as prescribed||209|
|A 5.5||Determination of independence of the Directors||Complied||The independence of Directors is determined based on declarations submitted by the Non-Executive Directors||211|
|Supply of Information||A 6.1||Provide appropriate and timely information to the Board||Complied||Directors are provided quarterly performance reports, minutes of review meetings and other relevant documents in advance to the Board meeting||211|
|A 6.2||Adequate time for effective conduct of Board meeting||Complied||The minutes, agenda and reports for the Board meeting are provided well before the meeting date.||211|
|Appointments to the Board||A 7||Formal and transparent procedure for Board appointments||Complied||Nomination Committee makes recommendations to the Board on new Board appointments||210|
|A 7.1||Nomination Committee to make recommendations on new Board appointments||Complied||Nomination Committee makes recommendations to the Board on new Board appointments||210|
|A 7.2||Assessment of the capability of the Board to meet strategic demands of the Company||Complied||Profiles of the Board||20|
|A 7.3||Disclosure of new Board member profile and interests||Complied||Profiles of the Board||20|
|Re-election||A 8 – 8.2||Board members should be subject to election, and
re-election by shareholders
|Complied||Re-election of Directors||210|
|Appraisal of Board performance||A 9 – 9.3||Existence of Board evaluation methods and execution||Complied||The Chairman and Remuneration Committee evaluates the performance of the Executive Directors||210|
|Disclosure of information in respect of Directors||A 10 – 10.1||Profiles of Directors, Directors’ interests, Board meeting attendance, Board Committee memberships||Complied||Profiles of the Board||20|
|Appraisal of GMD||A 11 – 11.2||Appraisal of the GMD against the set strategic targets||Complied||Evaluation is done by the Chairman and Remuneration Committee based on the financial and non-financial targets set with the discussion of the Committee||210|
|Directors’ Remuneration||B 1||Establishment of the Remuneration Committee||Complied||Remuneration Committee Report||82|
|B 1 – 1.3||Membership of the Remuneration Committee to be disclosed and should only comprise Non-Executive Directors||Complied||Discussed under subcommittees||82|
|Disclosure of Remuneration||B 3.1||Disclose the remuneration policy and aggregate remuneration||Complied||Discussed under subcommittees||82|
|Relations with Shareholders||C 1.1||Counting of proxy votes||Complied||A Form of Proxy accompanies the Annual Report, when they are dispatched to the shareholders.
The Chairman makes and announcement of the proxies received at the commencement of the General meeting
|C 1.2||Separate resolution to be proposed for each item||Complied||The Company propose a separate resolution at the AGM on each significant issue||230|
|C 1.3||Heads of Board subcommittees to be available to answer queries||Complied||Subcommittee Chairmen are present at the AGM||230|
|C 1.4||Notice of Annual General Meeting to be sent to shareholders with other papers as per statute||Complied||A copy of Annual Report including financials, Notice of Meeting and the Form of Proxy are sent to shareholders, 15 working days prior to the date of the AGM||230|
|C 1.5||Summary of procedures governing voting at General Meetings to be informed||Complied||Circulated through Notice of the Annual General Meeting||230|
|Major Transactions||C 2 – 2.1||Disclosure of all material facts involving any proposed acquisition, sale or disposal of assets||Complied||Major transactions of the Group were disclosed to all stakeholders through the CSE, print media, and the Company website||83|
|Accountability and Audit||D 1.1||Disclosure of interim and other price-sensitive and statutorily mandated reports to Regulators||Complied||Annual Report of the Board of Directors||4|
|D 1.2 – 1.5||Declaration by the Directors that the Company has not engaged in any activities, which contravene laws and regulations, declaration of all material interests in contracts, equitable treatment of shareholders and going concern with supporting assumptions or qualifications as necessary||Complied||Annual Report of the Board of Directors||4|
|D 1.3||Statement of Directors’ Responsibility||Complied||Directors’ Responsibility Report||86|
|D 1.4||Management Review and Preview||Complied||Segment analysis||14|
|Internal Control||D 2.1||Annual review of effectiveness of the system of internal control||Complied||Internal Auditors carry out an independent review, and report directly to the Audit Committee||83|
|Audit Committee||D 3.1||Audit Committee composition||Complied||Composition of Audit Committee||83|
|D 3.2||Terms of reference, duties and responsibilities||Complied||Clearly documented to Audit Committee charter||83|
|Communication with Shareholders||E 1 – 1.1||Regular dialogue to be maintained with shareholders||Complied||Shareholders are provided Quarterly Financial Statements and the Annual Report. These reports are also available in the Group website and provided to the CSE||212|
Levels of Compliance with the CSE’s Listing Rules Section 07 – Rules on Corporate Governance are given in the following table:
|Subject||Rule number||Applicable requirement||Compliance status||Details||Page number|
|Non-Executive Directors||7.10.1||At least one-third of the total number of Directors should be Non-Executive Directors||Complied||Eight (8) out of Ten (10) Directors are
|Independent Directors||7.10.2 (a)||Two or one-third of
Non-Executive Directors, whichever is higher should be Independent
|Complied||Five (5) out of Eight (8) Non-Executive Directors are Independent||209|
|Independent Directors||7.10.2 (b)||Each Non-Executive Director should submit a declaration of independence/ non-independence in the prescribed format||Complied||Non-Executive Directors have submitted these declarations||209|
|Disclosure relating to Directors||7.10.3 (a)||Name of independent Directors should be disclosed in the Annual Report||Complied||Please refer page 211||211|
|Disclosure relating to Directors||7.10.3 (b)||The basis for the Board to determine a Director is independent, if criteria specified for independence is not met||Complied||Given on page 209 under the heading of Board balance||209|
|Disclosure relating to Directors||7.10.3 (c)||A brief résumé of each director should be included in the Annual Report and should include the Director's areas of expertise||Complied||Profiles of the Directors||20|
|Disclosure relating to Directors||7.10.3 (d)||Forthwith provide a brief résumé of new Directors appointed to the Board with details specified in 7.10.3 (d) to the CSE||Complied||Brief résumés have been provided to the CSE||20|
|Remuneration Committee||7.10.5||A listed company shall have a Remuneration Committee||Complied||Remuneration Committee comprises – M Munir Shaikh Mr A Cabraal Mr G Sathasivam Mr A D B Talwatte||82|
|Composition of Remuneration Committee||7.10.5 (a)||Shall comprise
Non-Executive Directors a majority of whom will be independent
|Complied||All members are Non-Executive and
three (3) out of four (4) are Independent
|Remuneration Committee functions||7.10.5 (b)||Shall recommend the remuneration of the GMD and the Executive Directors||Complied||As above||82|
|Disclosure in the Annual Report relating to Remuneration Committee||7.10.5 (c)||The Annual Report should set out Names of Directors comprising the Remuneration Committee||Complied||Please refer page 211||211|
|Statement of Remuneration Policy||Complied||Please refer page 82||82|
|Aggregated remuneration paid to Executive and
|Complied||Note 42.1 of Financial Statement||199|
|Audit Committee||7.10.6||The Company shall have an Audit Committee||Complied||Please refer Report of the Audit Committee on page 83||83|
|Composition of Audit Committee||7.10.6 (a)||Shall comprise Non-Executive Directors, majority of whom will be Independent||Complied||Four (4) out of Five (5) Directors are Independent Non-Executive Directors||211|
|Non-Executive Directors shall be appointed as the Chairman of the Committee||Complied||Chairman of the Committee is an Independent Non-Executive Director||83|
|GMD and Group Chief Financial Officer (GCFO) should attend Audit Committee meetings||Complied||GMD and GCFO attend meetings by invitation||83|
|The Chairman of the Audit Committee or one member should be a member of a professional Accounting body||Complied||Two (2) members are Qualified Accountants||20|
|Audit Committee functions||7.10.6 (b)||Should be as outlined in the Section 7.10 of the listing rules||Complied||The terms of reference of the Audit Committee have been ratified by the Board||83|
|Disclosure in the Annual Report relating to Audit Committee||7.10.6 (c)||a. Names of the Directors comprising the Audit Committee||Complied||Please refer page 211||211|
|b. The Audit Committee shall make a determination of the independence of the Auditors and disclose the basis for such determination||Complied||Please refer Audit Committee Report on page 83||83|
|c. The Annual Report shall contain a Report of the Audit Committee setting out of the manner of compliance with their functions||Complied||Please refer Audit Committee Report on page 83||83|