SEC stops future related party deals at Swarnamahal Financial Services

Thursday, 19 January 2017 00:00 - - {{hitsCtrl.values.hits}}

The Securities and Exchange Commission (SEC) has prohibited future related party transactions at Swarnamahal Financial Services Plc (SFS) until the latter complies with the Corporate Governance

Requirements of the Listing Rules of the Colombo Stock Exchange.

The SEC Commissioners took this decision at their meeting on 10 January after deliberating several matters concerning SFS.

They included the repeated non-compliance with mandatory Corporate Governance Requirements in terms of rules 7.10.2(a), 7.10.5(a) and 7.10.6(a) of the Listing Rules of the Colombo Stock Exchange (CSE); extensive related party transactions without required checks and balances; the negative impact on the interests of investors due to the above mentioned non-compliance; a Negative Net Asset Value of over Rs. 1 billion, indicating a dire financial status; and significant issues relating to the going concern status and the company’s inability to infuse capital as of the present date despite the regulatory requirements of the Central Bank.

SEC said its action came in the light of these “significant issues” and in the interest of investors.

SFS has been issued with a directive prohibiting the company from entering into any “Related Party Transactions including any write-off of outstanding or making adjustments which will reduce the outstanding balances (except by way of recovering outstanding debt from Related Party Transactions)”.