Tuesday Jul 28, 2026
Tuesday Jul 28, 2026
Tuesday, 28 July 2026 05:25 - - {{hitsCtrl.values.hits}}
By Devan Daniel
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| LYNEAR Wealth Management Co-Founder and Managing Director Dr. Naveen Gunawardane – Pic by Shehan Gunasekara |
By questioning whether directors holding multiple board appointments can devote sufficient time to each company and whether so-called independent directors are genuinely independent, LYNEAR Wealth Management Co-Founder and Managing Director Dr. Naveen Gunawardane delivered a pointed message to Sri Lanka’s boardrooms, warning that both issues have become decisive considerations for institutional investors.
Addressing the Sri Lanka Corporate Director Summit 2026: ‘Future-Ready Sri Lankan Directors,’ he said investors increasingly assess who sits on a board, how they perform their role, and whether they protect minority shareholders before considering valuation.
“I have a sneaky feeling that some of the comments I may end up stepping on a few toes this morning,” Dr. Gunawardane told directors before outlining what institutional investors expect from corporate boards.
LYNEAR Wealth Management is a respected firm with a solid reputation serving institutional and private clients, including sovereign wealth funds, pension funds, insurance funds, corporates, high-net-worth individuals, and even retail investors with its unit trust funds.
Dr. Gunawardane questioned the growing practice of directors serving on numerous boards.
“One interesting thing that we see, and this appears to be true particularly in the Sri Lankan context, is that people end up serving on multiple boards and sometimes I wonder how they actually find the time,” he said.
Although multiple appointments may expose directors to different sectors and broader economic developments, he said institutional investors view excessive board commitments as a warning sign.
“When we see people serving on multiple boards, for us that is a negative, because that calls into question the time commitment that the individual can make to that particular board, particularly to the board of the company that we are investing in,” he said. “It calls into question the effectiveness of the director and the contribution of the director to that company.”
Dr. Gunawardane said directors should ask themselves whether they are making a meaningful contribution to every board on which they serve.
“‘Am I in far too many boards? Am I contributing enough to the boards on which I am on? Particularly to the boards of companies which are operating in a sector that I may not be that familiar with?’ If the answer to that latter question is a no, or maybe perhaps you may want to reconsider the number of board positions,” he said.
He identified board independence as another area attracting close investor scrutiny, arguing that institutional investors look beyond regulatory definitions.
“Are independent directors truly independent or are they just friends and family?” he asked. “Now this is a huge point for us institutional investors.”
Dr. Gunawardane said independence carries particular significance in companies dominated by controlling shareholders, where independent directors have a responsibility to challenge decisions and safeguard minority investors.
“The board of a company should be able to balance competing demands of the company and independent directors therefore have a huge responsibility in ensuring and safeguarding the interests of minority shareholders,” Dr. Gunawardane said. “They have an obligation to scrutinise closely the decisions that are made, and in particular, decisions related to third-party transactions.”
He said investors examine not only the number of independent directors but also who they are and whether they are prepared to exercise independent judgement.
“Are you truly independent or are you just an independent director by name who happens to be on the board simply because your friend owns or runs a company?” he asked. “If you’re not doing that, then I would argue that you’re not truly an independent director. Certainly not from the perspective of an institutional investor and certainly not from the perspective of minority investors.”
Dr. Gunawardane also urged Boards to place greater emphasis on expertise, saying investors look beyond compliance when assessing board composition.
“If you don’t have insight, what are you really bringing to the board?” he asked. “If you’re on the board of a company operating in an industry where you have no expertise in, what are you doing about it? Should you really be on that board?”
On board diversity, he said some investors incorporate diversity requirements into their investment mandates but cautioned against treating it as a box-ticking exercise.
“While diversity is important, unfortunately, what we see is that it has become more of a buzzword. We see companies trying to make boards diverse just to meet metrics,” he said.
He said qualified directors with industry expertise, sufficient time commitment, and genuine independence remain the attributes investors value most.
“What matters more is that the company has a very qualified board with members who have the time commitment, who can make the time commitment, and with the right level of independence. And if you can satisfy those conditions and at the same time make your board diverse, then all the better,” he said.
Defining institutional investors as professional fund managers, sovereign wealth funds, insurance funds, and pension funds, Dr. Gunawardane said their investment process differs fundamentally from that of retail investors.
“Most retail investors may look at valuations, may look at momentum and that may drive the type of investments that they make. Institutional investors, on the other hand, are a slightly different type of animal,” he said.
He said long-term investors first assess whether a company fits their investment philosophy and governance standards, with valuation only determining when to invest.
“For most institutional investors, and indeed it’s very true for us at LYNEAR, valuation is the last thing that we look at. My personal view is that valuation should really define when you invest and not what you invest in,” he said.
Dr. Gunawardane said investors focus first on governance because boards are responsible for setting strategic direction, overseeing management, and remaining accountable to shareholders.
“The Board of Directors of a company are responsible for guiding the overall strategic direction of the firm, monitoring the management, and providing accountability to shareholders. Sadly, a lot of board members overlook that last point, that of providing accountability to shareholders, particularly to minority shareholders,” he said.
As institutional investors are typically minority shareholders, he said confidence depends on whether boards are willing to safeguard minority interests.
Concluding his address, Dr. Gunawardane said listed companies, as well as private firms seeking capital or planning a public listing, should examine whether their boards meet the standards institutional investors expect.
“As institutional investors who, for the most part, tend to be minority investors in companies, it is imperative that the companies that we invest in are well-governed, and we strongly believe that a core part of a well-governed company is a qualified board with expertise and true independent directors who will ensure the protection of minority rights,” he said.
He left directors with a series of questions: If you sit on several boards, are you committing enough time to each? If you are an independent director, are you truly independent? Do you have the expertise to guide the business? And are you prepared to challenge decisions in the interests of all shareholders?
