Transferring CEB debenture liability to new entity raises questions

Friday, 13 March 2026 00:00 - - {{hitsCtrl.values.hits}}

The announcement that the Ceylon Electricity Board’s debenture liabilities have been “assigned” to a newly created private company raises serious legal and financial questions that deserve public scrutiny.

Under basic principles of contract law, a debtor cannot simply transfer its obligations to another party without the consent of the creditor. Debenture holders lent money to the CEB, a statutory state entity, not to a newly formed private company.

Unless the governing statute explicitly provides for the automatic vesting of liabilities, and unless the debenture trustee or holders consent, such a reassignment may conflict with the terms of the debenture trust deed and the expectations under which investors subscribed. I will not consent as this seems like a rushed job following the CIABOC case brought against the Minister.

Even if the restructuring legislation permits the transfer of assets and liabilities, investors and the public are entitled to clarity on several key points: whether the Government continues to stand behind the debt, whether the original issuer (CEB) remains liable, and whether debenture holders’ contractual protections have been respected.

These questions are not merely technical. They go to the heart of investor confidence in Sri Lanka’s capital markets. When state entities raise funds from the public through listed securities, the obligations attached to those instruments cannot be altered by administrative restructuring without clear legal authority and transparent communication.

Before this restructuring proceeds further, the authorities should clarify the legal basis for transferring the debenture liability and the protections available to existing investors.

D. Perera (Concerned debenture holder)