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Stewardship

Corporate Governance

The policy making body of Ceylinco Life Insurance Limited (CLIL) is its Board of Directors. They are responsible to its shareholder, regulatory and statutory bodies and all other stakeholders of the Company, to ensure that the Company is growing sustainably while establishing a strong Corporate Governance Framework, in order to ensure transparency and confidence.

Corporate Governance Model

The following governance model has been established by CLIL to discharge the responsibilities of the Board effectively.

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Composition of the Board

The CLIL’s Board of Directors comprises 15 members of whom 5 are Executive Directors and 10 are Non-Executive Directors. Brief profiles of the members of the Board of Directors are given on this section.

Holding of Regular Board Meetings

The Company received its license to operate as a long term Life Insurer on 1 June 2015 from IBSL and subsequent to receiving the license, it was the target of the Board to meet once in every 2 months to discharge their duties, responsibilities towards the Company and make decisions.

Role of the Board

The Board of Directors contributes to the Company by providing strategic direction to the management to develop short, medium and long term corporate business strategies besides reviewing and providing necessary guidance on corporate governance, statutory compliance, assisting internal audit and integrated risk management and also approving and reviewing major and substantial investments, which ensures the sustainable development of the Company.

CLIL has taken into consideration, the necessity of having and maintaining a mix of skills and professional experience, as appropriate in the Board of Directors. The Board of Directors recognises and acknowledges its responsibility for the Company’s system of internal control and for reviewing its effectiveness on a continuous basis.

The Board discharged its advisory and supervisory duties through the Board Sub-committees such as the Audit Committee, Remuneration Committee and Risk Committee.

The internal control systems manage the risk of the Company’s business activities/operations and other affairs and ensures that the financial information based on which business decisions are made and published, is reliable.

Further, the Board is fully satisfied with the integrity and accuracy of financial information published and effectiveness of the financial controls and systems of risk management of the Company. The Audit Committee reviews the legal and regulatory compliance on a quarterly basis with the compliance report, prepared and submitted by the Senior Manager-Internal Audit.

Compliance with Laws of the Country as Applicable to the Business and Procedure to Obtain Independent Professional Advice

Members of the Board collectively and the Directors individually, act in accordance with the laws of the country, as applicable and the Board obtains professional advice from external independent parties at the expense of the Company. During the year under review, the Company sought advice on various matters regarding actuarial valuation, marketing, legal, tax and accounting aspects etc.

Company Secretary

Every member of the Board has the access to advice and services of the Company Secretary for matters relating to Board procedures and any clarification on applicable rules and regulations. The Board was provided with all necessary and timely information by way of Board Papers and Reports, in order to exercise decision-making responsibilities in a more efficient and effective manner.

Independent Judgment of Directors

The Board of Directors promotes an environment, whereby challenging contributions and Non-Executive and Independent Non-Executive Directors are encouraged and welcomed with their independent analysis and opinion based on professional knowledge and experience.

Dedication of Adequate Time and Effort by the Directors

Board met once in every two months to discharge its duties, subsequent to the receipt of the License from IBSL and in addition to attending the Board meetings, Directors contribute by attending Audit Committee, Remuneration Committee and Risk Committee meetings.

The Board has appointed the said Sub-committees to assist in the discharge of their collective duties and the delegation of authority to provide effective operation. Details of the members of the said Committees Board meetings, Sub-committee meetings and attendance are given below:

Names of the Directors Attendance at Board Meetings Attendance at Audit Committee Meetings Attendance at Remuneration Committee Meetings Attendance at Risk Committee Meetings
R Renganathan 3/3 Not a member Not a member Not a member
E T L Ranasinghe 3/3 Not a member Not a member Not a member
P D M Cooray 2/3 Not a member Not a member Not a member
P A Jayawardena 3/3 Not a member Not a member Not a member
Ranga Abeynayake 1/3 Not a member Not a member Not a member
J Godwin P Perera 3/3 Not a member Not a member Not a member
D H J Gunawardena 3/3 2/2 1/1 Not a member
Gen. C S Weerasooriya 3/3 Not a member Not a member Not a member
R S W Senanayake 3/3 Not a member 1/1 3/3
J A Setukavalar 3/3 1/2 Not a member Not a member
Prof. Mohan De Silva 2/3 Not a member 1/1 Not a member
Dr. B G S De Silva 2/3 Not a member Not a member Not a member
J Wickramasinghe 3/3 2/2 Not a member 3/3
Sugath Caldera 2/3 Not a member Not a member Not a member
Ms. A K Seneviratne 2/3 Not a member Not a member 3/3

Chairman and Managing Director/CEO

The Chairman of the Board is a Non-Executive, Director who is responsible for providing leadership to the Board. He ensures that proper order and effective discharge of Board functions are carried out at all times by the Board members.

The Managing Director/CEO is responsible for the operations of the Company’s business, including implementation of strategies approved by the Board, developing and recommending to the Board, the business plans and budget proposals. Managing Director/CEO is accountable to the Board of Directors. It could be said that the Company maintains a clear division of responsibilities and authority in running the Board and executive responsibilities of the Company’s business.

Financial Acumen of the Board

The Board comprises 4 (four) senior Chartered Accountants including the Managing Director/CEO himself and 2 (two)Chartered Management Accountants, who provide guidance on financial matters.

Board Balance

The Board comprises 5 Executive and 10 Non-Executive Directors and out of the Non-Executive Directors, 6 are Independent Non-Executive Directors. All Independent Non-Executive Directors are independent of management and free of any business or other interest that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgment. Each Non-Executive Director submits a signed declaration of independence/non-independence, against specified criteria.

Appointment of Alternate Director

An Alternate Director has been appointed by an Independent Non-Executive Director and the person so appointed satisfies the criteria of independence and the appointment of Alternative Director does not violate the provision on minimum number of Independent Directors.

Senior Independent Director

As the positions of Chairman and CEO are separated, the need to appoint a Senior Independent Director has not arisen. However, if the need arises, the Company will make provisions.

Also if a need arises, Non-Executive Directors meet without the presence of the Executive Directors. Also, the Company has made provisions to record in the minute book, any issue that could not be unanimously resolved.

Supply of Information

Board Papers, Minutes, Reports and other documents to be tabled at Board meetings are sent to members of the Board well in advance, giving adequate time for Directors to study the said documents and prepare for a meaningful discussion at respective Board meetings. Also, when the Board finds that the information provided is insufficient or not clear, they call for additional information.

Re-election of Directors

In terms of Section 210 of the Companies Act No. 07 of 2007, Directors reaching the age of 70 years are recommended for re-election by way of an ordinary resolution by the Shareholder. The details of the said Directors who are subject to re-election at the forthcoming AGM, are given in the Notice sent to the Shareholder.

Appraisal of Board Performance

The Board ensures the contributions of all Directors are made to achieve the corporate objectives.

Disclosure of Information in Respect of Directors

Following information in relation to Directors is disclosed in this Annual Report:

Remuneration Policy

The Remuneration Committee comprises 3 (three) Non-Executive Directors, out of which the Chairman of the Committee is an Independent Non-Executive Director. This Committee makes recommendations to the Board on the remuneration payable to the Directors. They compile and review the guidelines and recommendations for the remuneration of the senior management of the Company. The Board makes the final determination, having considered the recommendations of this Committee and also its performance. Directors‘ remuneration, in respect of the Company for the year 2015, is given in Note 43. More details on the Remuneration Committee are given on this report.

Relationship with the Shareholder

The Company is a 100% owned subsidiary of Ceylinco Insurance PLC. The Company, solicits the holding Company’s views, promoting a healthy dialogue. The Company held its first AGM by way of a resolution under section 144 of the Companies Act No. 07 of 2007 and the next AGM will be held on 30 March 2016.

Each substantially different issue is proposed as a separate resolution at the AGM. The adoption of the Annual Report of the Board of Directors, on the Affairs of the Company and Financial Statements with Independent Auditors’ Report thereon, is also proposed as a separate resolution. The Company has given 15 working days notice as per the Companies Act No. 07 of 2007 and the Articles of Association of the Company. A summary of the procedures governing voting at the AGM is given on the Proxy Form.

Internal Control

The Board of Directors, through the involvement of the Board Risk Committee and Departmental Risk Committees, has taken all necessary measures and steps to ensure that the systems designed to safeguard the Company’s assets, maintain proper and accurate accounting records, as per prevailing Accounting Standards and provide management information, are in place and are functioning transparently, in accordance with the required standards.

The internal audit function of the Company is monitored by the Internal Audit Department of the Company, subject to the direct supervision of the Audit Committee. The Audit Committee also assesses the efficiency and effectiveness of the risk review process and systems of internal control on a regular basis. Further, the Audit Committee reviews the compliance system of the Company on a quarterly basis.

Audit Committee

The broad purposes of the Committee are to oversee the preparation, presentation and adequacy of the disclosure of information in Financial Statements, in accordance with prevailing Accounting Standards and all other statutory requirements. Audit Committee comprises 3 Non-Executive Directors, 2 of whom are Independent Directors.

The Audit Committee also ensures the Company’s internal control system is up to the industrial/international standards. The Committee monitors the compliance of statutory requirements by the management. The Committee also assesses the independence and performance of the Company’s Auditors.

Full detailed Report on the Audit Committee, Names of the members of the Committee and the External Auditors is disclosed under 'The Report of the Audit Committee'

Code of Business Conduct and Ethics

The Company practices a Code of Best Business Conduct and Ethics requiring all employees to exercise honesty, objectivity and due diligence in performing their duties, maintain confidentiality of commercial and price sensitive information, work within applicable laws and regulation, safeguard the Company’s assets and avoid conduct which will badly reflect on them or the Company’s image. The said Code of Conduct and Ethics, addresses issues relating to conflict of interest situations, bribery and corruption, entertainment and gifts, accurate accounting and record keeping, corporate opportunities, confidentiality, fair dealing, protection and proper use of Company assets, compliance with laws and regulations and encouraging the reporting of any illegal or unethical behaviour.