14th July 2000

THE SUPREME COURT HOLDS WITH THE SEC

In 1997 the Securities and Exchange Commission of Sri Lanka (SEC) prosecuted Kotagala Plantations Limited and its seven Directors for having failed to immediately notify its shareholders of the loss of control of a profitable subsidiary namely Agrapathana Plantations Limited, held through Lankem Plantation Holdings Limited. Kotagala Plantations Limited raised an objection that in terms of the applicable SEC rules, neither the Company nor its Directors can be prosecuted for the failure to make such disclosure considering the loss of control. The Court of Appeal upheld the order of the Magistrate in favour of Kotagala Plantations Limited. On an appeal filed by the SEC, the Supreme Court in its order delivered today, overruled the judgement of the Court of Appeal and directed the Magistrate to proceed forthwith with the trial. Pending the outcome of this case, the SEC had withheld action against a number of Companies and the Directors for the failure to immediately disclose material information to concerned shareholders. In view of the above decision, SEC will initiate relevant action.

Dr Dayanath C Jayasuriya

DIRECTOR GENERAL