7.10.1 Non-Executive Directors

1. The Board of Directors of a Listed Entity shall include at least
   - Two Non-Executive Directors; or
   - Such number of Non-Executive Directors equivalent to one-third of the total number of Directors whichever is higher.
2. The total number of Directors is to be calculated based on the number as at the conclusion of the immediately preceding Annual General Meeting.
3. Any change occurring to this ratio shall be rectified within ninety (90) days from the date of the change.

The Board compromises of ten (10) Directors of which five (05) are Executive Directors and five (05) are Non-Executive Directors.

Complied

7.10.2 Independent Directors

1. Where the constitution of the Board of Directors includes only two Non-Executive Directors in terms of Rule 7.10.1 above, both such Non-Executive Directors shall be independent. In all other instances two or 1/3 of Non-Executive Directors appointed to the Board of Directors, whichever is higher shall be ‘independent’.
2. The Board shall require each Non-Executive Director to submit a signed and dated declaration annually of his/her independence or non-independence against the specified criteria. A specimen of the said declaration is given in Appendix 7A of this Section.

The Board compromises of five (05) Non-Executive Directors out of which three (03) are independent.

Each NED signs and submits an annual declaration to the Board of his independence against the criteria specified in Appendix 7A of the Listing Rules.

Complied

7.10.3 Disclosure Relating to Directors

1. The Board shall make a determination annually as to the Independence or Non-Independence of each Non-Executive Director based on such declaration and other information available to the Board and shall set out in the Annual Report the names of Directors determined to be independent.
2. In the event a Director does not qualify as ‘independent’ against any of the criteria set-out below but if the Board, taking account all the circumstances, is of the opinion that the Director is nevertheless ‘independent’, the Board shall specify the criteria not met and the basis for its determination in the Annual Report.
3. In addition to disclosures relating to the independence of a Director set out above, the Board shall publish in its Annual Report a brief resume of each Director on its Board which includes information on the nature of his/her expertise in relevant functional areas.
4. Upon appointment of a new Director to its Board, the Entity shall forthwith provide to the exchange a brief résumé of such Director for dissemination to the public. Such résumé shall include information on the matters itemized in paragraphs (a), (b) and (c) above.

The Company annually reviews the independence or non-independence of each of the Non-Executive Directors and the names of Directors determined to be independent are disclosed in Annual Report of the Board of Directors on the Affairs of the Company.

Brief résumés of all Directors are found in Board of Directors.

Upon Mr. S D Perera being appointed to the Board, a brief résumé was forwarded to the exchange for public dissemination.

Complied

7.10.4 Criteria for defining ‘Independence’

Subject to Rule 7.10.3 (a) and (b), a Non-Executive Director shall not be considered independent if he/she -

• Has been employed by the Listed Entity during the period of two years immediately preceding appointment as Director.
• Currently has/had during the period of two (02) years immediately preceding appointment as a Director, a Material Business Relationship with the Listed Entity, whether directly or indirectly.
• Has a close family member who is a Director, Chief Executive Officer (and/or equivalent position) in the listed Entity.
• Has a significant shareholding in the Entity.
• Has served on the Board of the listed entity continuously for a period exceeding nine (09) years from the date of the first appointment; provided however, if such Director is reappointed after a period of two (02) years from the date of completion of the proceeding nine (09) year period, he will be considered as ‘independent’ for the purpose of this section.
• Is employed in another company or business -
  • In which a majority of the other Directors of the listed entity are employed or are Directors; or
  • In which a majority of the other Directors of the listed entity have a significant shareholding or material business relationships; or
  • That has significant shareholding in the listed entity or with which the listed entity has a business connection.
• Is a Director of another company -
  • In which a majority of the other Directors of the listed entity are employed or are Directors,
  • That has a business connection in the listed entity or a significant shareholding.
• Has a material business relationship or a significant shareholding in another company or business -
  • In which a majority of the other Directors of the listed entity are employed or are Directors; and or
  • Which has a business connection with the listed entity or significant shareholding in the same.

In determining the Independence/Non-Independence of the NEDs the Company takes into account criteria specified in Section 7.10.4.

Complied

7.10.5 Remuneration Committee

A listed entity shall have a Remuneration Committee in conformity with the following:

(a) Composition

The Remuneration Committee shall comprise; of a minimum of two Independent Non-Executive Directors (in instances where an entity has only two Directors on its Board); or of Non-Executive Directors a majority of whom shall be independent, whichever shall be higher.

The Remuneration Committee of the Company consists of three (03) Non-Executive Directors out of which two (02) are independent.

Complied

(b) Functions

The Remuneration Committee shall recommend the remuneration payable to the Executive Directors and Chief Executive Officer of the listed entity and/or equivalent position thereof, to the Board of the listed entity which will make the final determination upon consideration of such recommendations.

The Remuneration Committee operates with the primary objective of ensuring that the remuneration policy of the Company is effective enough to attract and retain the best human capital. The Committee holds the responsibility of recommending the remuneration payable to the Executive Directors of the Company.

The recommendation is made to the Board, which is responsible for the final determination upon consideration of such recommendations.

Complied

(c) Disclosure in the Annual Report

The Annual Report should set out the names of Directors (or persons in the Parent Company’s Committee in the case of a Group Company) comprising the Remuneration Committee, contain a statement of the remuneration policy and set out the aggregate remuneration paid to Executive and
Non-Executive Directors.

Details with regard to the Remuneration Committee and the remuneration policy of the Company are disclosed in Board Committees.

Refer Note 36.4 of ‘Notes to the Financial Statements’ for a disclosure of the aggregate remuneration paid to Executive and Non-Executive Directors.

Complied

7.10.6 Audit Committee

A Listed entity shall have an Audit Committee in conformity with the following:

(a) Composition

The Audit Committee shall compromise:

- Of a minimum of two Independent Non-Executive Directors (in instances where a entity has only two Directors on its Board);

or

- Of Non-Executive Directors a majority of whom shall be independent, whichever shall be higher.

The Audit Committee of the Company compromises of three (03) Independent Non-Executive Directors and one (01) Non-Executive Director of the Board. Two (02) members of the Committee are members of professional accounting bodies.

Complied

(b) Functions

Shall include -

1. Overseeing of the preparation, presentation and adequacy of disclosures in the Financial Statements of a listed entity, in accordance with Sri Lanka Accounting Standards.
2. Overseeing of the entity’s compliance with financial reporting requirements, information requirements of the Companies Act and other relevant financial reporting related regulations and requirements.
3. Overseeing the processes to ensure that the entity’s internal controls and risk management are adequate, to meet the requirements of the Sri Lanka Auditing Standards.
4. Assessment of the independence and performance of the Entity’s External Auditors.
5. To make recommendations to the Board pertaining to appointment, reappointment and removal of External Auditors and to approve the remuneration and terms of engagement of the External Auditors.

The Charter of the Audit Committee of the Company includes the following:

• Overseeing the preparation, presentation and adequacy of disclosures in the Financial Statements of the Company, in accordance with the Sri Lanka Accounting Standards.
• Ensuring compliance with financial reporting requirements of the Companies Act and other relevant financial-related regulations and requirements;
• Ascertaining that the Company’s internal controls and risk management processes are adequate and meet the Sri Lanka Auditing Standards requirements;
• Assessing the independence and performance of the Company’s External Auditors;
• Making recommendations to the Board pertaining to appointment, reappointment and removal of External Auditors and to approve remuneration and terms of engagement of the External Auditors.

Complied

(c) Disclosure in the Annual Report

The names of the Directors (or persons in the Parent Company’s Committee in the case of a Group Company) comprising the Audit Committee should be disclosed in the Annual Report.

The Committee shall make a determination of the independence of the Auditors and shall disclose the basis for such determination in the Annual Report.

The Annual Report shall contain a report by the Audit Committee, setting out the manner of compliance by the entity in relation to the above, during the period to which the Annual Report relates.

Composition of the Audit Committee is disclosed in the Report of the Audit Committee.

Independence of the Auditors is disclosed in the Annual Report of the Board of Directors on the Affairs of the Company.

Audit Committee Report is found in Stewardship.

Complied

A. Directors

A.1 The Board

A.1

Every public company should be headed by an Effective Board, which should direct, lead and control the Company.

The Company is headed by a Board comprising of ten (10) members. Primary objective of the Board is to provide necessary stewardship in achieving the vision of the Company. Composition of the Board is as follows:

• Five (05) Executive Directors
• Two (02) Non-Executive Directors
• Three (03) Independent Non-Executive Directors

Complied

A.1.1

The Board should meet regularly. Board meetings should be held at least once in every quarter of a financial year, in order to effectively execute Board’s responsibilities, while providing information to the Board on a structured and regular basis.

During the year five (05) Board meetings were conducted the attendance of which was as follows:

Note -

• Mr. T A G Fernando ceased to be a Director with effect from 30th September 2013
• Mr. S D Perera was appointed to the Board with effect from 3rd December 2013

Complied

A.1.2

The Board’s role is to provide entrepreneurial leadership of the Company within a framework of prudent and effective controls which enables risk to be assessed and managed.

The Board of Directors provides the entrepreneurial leadership through effective formulation and execution of strategies. The system of internal controls which is based on a ‘Risk Assessment Approach’ ensures safety, reliability, profitability and integrity of the organization within a broader framework of enterprise risk management.
The Board is responsible for the efficient functioning of the system.

Complied

A.1.3

The Board collectively, and Directors individually,
must act in accordance with the laws of the country,
as applicable to the business enterprise. There should be a procedure agreed to by the Board of Directors, to obtain independent professional advice where necessary,
at the Company’s expense.

The Board complies with the sound framework of business practices in place which ensures compliance with existing laws and regulations as well as best practices. In matters of strategic importance to the Company, the Board obtains independent professional advice if it deems necessary.

Complied

A.1.4

All Directors should have access to the advice and services of the Company Secretary, who is responsible to the Board in ensuring that Board procedures are followed and that applicable rules and regulations are complied with. Any questions of the removal of the Company Secretary should be a matter for the Board as a whole.

All Directors had access to the services of a professional secretarial company which ensured that the Board received information on a timely manner for the effective conduct of meetings. The firm also provided the Board with advice on matters relating to compliance with rules and regulations.

Complied

A.1.5

All Directors should bring independent judgment to bear on issues of strategy, performance, resources (including key appointments) and standards of business conduct.

All Directors are encouraged to bring independent judgment on matter relating to strategic direction of the Company, effective utilization of resources and performance. Transparency of the judgments is further enhanced with the existence of three (03) Independent Non-Executive Directors who
continue to critically evaluate the decisions of the Executive Directors.

Complied

A.1.6

Every Director should dedicate adequate time and effort to matters of the Board and the Company, to ensure that the duties and responsibilities owed to the Company are satisfactorily discharged. It must be recognized that Directors have to dedicate sufficient time before a meeting to review Board papers and call for additional information and clarification, and after a meeting to follow up on issues consequent to the meeting. This should be supplemented by a time allocation for familiarization with business changes, operations, risks and controls.

All Directors dedicated an adequate amount of time on matters relating to the Company and the Board. Their contribution to the Company was evident in the participation at Board meetings, Board Subcommittee meetings and in the decisions passed via circular resolution.

Complied

A.1.7

Every Director should receive appropriate training when first appointed to the Board of a company, and subsequently as necessary. Training curricula should encompass both general aspects of directorship and matters specific to the particular industry/company concerned. A Director must recognize that there is a need for continuous training and an expansion of the knowledge and skills required to effectively perform his duties as a Director. The Board should regularly review and agree the training and development needs of the Directors.

The Board of Directors attend training programmes which are required for the effective execution of their duties as and when necessary. Engineering professionals on the Board attended workshops and professional events that were organized by National Engineering Institutions.

Complied

A.2 Chairman and Chief Executive Officer (CEO)

A.2

There are two key tasks at the top of every public company - conducting of the business of the Board, and facilitating executive responsibility for management of the Company’s business. There should be a clear division of responsibilities at the head of the Company, which will ensure a balance of power and authority, such that no one individual has unfettered powers of decision.

Decision-making at the highest level happens by adopting the rule of simple majority. No one individual is vested with unfettered powers of decision-making.

Complied

A.2.1

A decision to combine the posts of Chairman and CEO in one person should be justified and highlighted in the Annual Report.

The Chairman is mainly responsible for directing the affairs of the Board while maintaining effective external relationships. Day-to-day affairs of the Company are headed by the Managing Director who is supported by the Director/Chief Operating Officer (COO).

Complied

A.3 Chairman’s Role

A.3

The Chairman’s role in preserving good corporate governance is crucial. As the person responsible for running the Board, the Chairman should preserve order and facilitate the effective discharge of Board functions.

As the highest member of the organization, the Chairman is committed to the practice of good corporate governance. As the head at the Board meetings, the Chairman ensures that the objectives of the meeting are achieved and adequately discussed among the members.

Complied

A.3.1

The Chairman should conduct Board proceedings in a proper manner.

The Chairman is responsible for making sure that the agenda, minutes of prior meetings, Board papers are circulated among the members in advance giving sufficient time for preparation. He encourages active and effective participation of all Board members facilitating productive discussions. The Chairman is also responsible for making the Board members aware of the importance of creating value to all stakeholders of the Company.

Complied

A.4 Financial Acumen

A.4

The Board should ensure the availability within it of those with sufficient financial acumen and knowledge to offer guidance on matters of finance.

The Board comprises of four (04) members with extensive knowledge and experience in financial matters and who are professionally qualified in finance. This is further strengthened since three (03) of these members operate in a non-executive capacity. In addition, rest of the Board members sufficiently possess knowledge on financial
matters based on experience gathered in their respective fields.

Complied

A.5 Board Balance

A.5

It is preferable for the Board to have a balance of Executive and Non-Executive Directors such that no individual or small group of individuals can dominate the Board’s decision-taking.

The Board comprises of ten (10) Directors of
which five (05) are Executive Directors and five (05) are Non-Executive Directors. Thus no individual or small group of individuals can dominate the Board’s decision-taking.

Complied

A.5.1

The Board should include Non-Executive Directors of sufficient calibre and number for their views to carry significant weight in the Board’s decisions. The Board should include at least two Non-Executive Directors or such number of Non-Executive Directors equivalent to one-third of total number of Directors, whichever is higher. In the event the Chairman and CEO is the same person, Non-Executive Directors should comprise a majority of the Board.

50% of the Board of Directors of the Company operates in a non-executive capacity. Every NED on the Board has excelled in either engineering or finance disciplines. Thus their contribution to the decision-making of the Board was noteworthy during the year.

Complied

A.5.2

Where the constitution of the Board of Directors includes only two Non-Executive Directors, both such Non-Executive Directors should be ‘independent’. In all other instances two or one-third of Non-Executive Directors appointed to the Board of Directors whichever is higher should be ‘independent’.

The Board of Directors of the Company comprises of five (05) Non-Executive Directors out of which three (03) are Independent.

Complied

A.5.3

For a Director to be deemed ‘independent’ such Director should be independent of management and free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgment.

Three (03) Non-Executive Directors on the Board are not involved in day-to-day affairs of the Company and they do not have any business or other relationship that could materially interfere with the exercise of their unfettered and independent judgment. Additionally each Independent NED submits a written declaration of his independence to the Board on an annual basis.

Complied

A.5.4

Each Non-Executive Director should submit a signed and dated declaration annually of his/her independence or non-independence against the specified criteria set out in the specimen in Schedule H of the Code.

During the year each Non-Executive Director submitted a dated and signed declaration regarding their independence against the specified criteria set out in Schedule H of the Code.

Complied

A.5.5

The Board should make a determination annually as to the independence or non-independence of each Non-Executive Director based on such a declaration made of decided criteria and other information available to the Board. The Board should determine whether the Director is independent in character and judgment and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the Director’s judgment. The Board should specify the criteria not met and the basis for its determination in the Annual Report, if it determines that a Director is independent notwithstanding the existence of relationships or circumstances which indicate the contrary and should set-out in the Annual Report the names of Directors determined to be ‘independent’.

Based on the declarations submitted to the Board and other information available, the following NEDs’ of the Board were decided to be independent:

• Mr. A I Lovell
• Prof. K A M K Ranasinghe
• Mr. N D Gunarathne

Complied

A.5.6

If an alternate Director is appointed by a Non-Executive Director such alternate Director should not be an executive of the Company. If an alternate Director is appointed by an independent Director, the person who is appointed also should meet the criteria of independence and the provision on minimum number of Independent Directors also should be satisfied.

This is not applicable as there are no alternate Directors in the Company.

Not Applicable

A.5.7

In the event the Chairman and CEO is the same person, the Board should appoint one of the Independent
Non-Executive Directors to be the ‘Senior Independent Director’ (SID) and disclose this appointment in the
Annual Report.

This is not applicable as the Chairman of the Company is not the CEO.

Not Applicable

A.5.8

The Senior Independent Director should make himself available for confidential discussions with other Directors who may have concerns which they believe have not been properly considered by the Board as a whole and which pertain to significant issues that are detrimental to the Company.

Not Applicable

Not Applicable

A.5.9

The Chairman should hold meetings with the
Non-Executive Directors only, without the Executive Directors being present, as necessary and at least once in each year.

The Chairman holds meetings with the NEDs’ without the presence of Executive Directors as and when necessary. During the year three (03) such meetings were held.

Complied

A.5.10

Where Directors have concerns about the matters of the Company which cannot be unanimously resolved,
they should ensure their concerns are recorded in the Board minutes.

Matters of the Company that the BOD was unable to resolve unanimously were recorded by the Company Secretary in detail in the Board minutes. These minutes were circulated among the Board members prior to the next meeting.

Complied

A.6 Supply of Information

A.6

The Board should be provided with timely information in a form and of a quality appropriate to enable it to discharge its duties.

The Board was provided with timely information by way of Management Reports and Board Papers during the year.

Complied

A.6.1

Management has an obligation to provide the Board with appropriate and timely information, but information volunteered by management may not be enough in all circumstances and Directors should make further inquiries where necessary. The Chairman should ensure
all Directors are properly briefed on issues arising at
Board meetings.

Members of the Board (mainly executive) are provided with Management Reports and Project Performance Reports on a monthly basis.
In instances where additional information is required the same is requested from the corporate management or the responsible individuals.

Complied

A.6.2

The minutes, agenda and papers required for a Board meeting should ordinarily be provided to Directors at least seven (07) days before the meeting, to facilitate its effective conduct.

Effective conduct of the Board meetings was facilitated through the proper circulation of agenda, Board minutes and other papers among the Directors by the Company Secretary seven (07) days before the meeting.

Complied

A.7 Appointments to the Board

A.7

There should be a formal and transparent procedure for the appointment of new Directors to the Board.

All Board appointments are based on the capacity of the individual concerned to pass the ‘fit & proper’ test which in turn is based on the qualifications, experience and the value that can be added by the individual to the Board as well as to the Company. Existing Directors are vested with the autonomy to critically evaluate the potential candidate in the above test and a final decision is taken by the
Board collectively.

Complied

A.7.1

Nomination Committee should be established to make recommendations to the Board on all new Board appointments. Terms of Reference for Nomination Committees are set out in Schedule A. The Chairman and members of the Nomination Committee should be identified in the Annual Report.

The Company does not have a Nomination Committee in place. However the existing Board members function in a manner that is similar to a formally appointed Nomination Committee in matters concerning new appointments to the Board.

Complied

A.7.2

The Nomination Committee or in the absence of a Nomination Committee, the Board as a whole should annually assess Board-composition to ascertain whether the combined knowledge and experience of the Board matches the strategic demands facing the Company. The findings of such assessment should be taken into account when new Board appointments are considered and when incumbent Directors come up for re-election.

During the year the Board critically evaluated the ‘quality’ of the Board in terms of their qualifications, experience and the value that can be added to the Company to effectively meet the demands of the Company. The results of this assessment were utilized by the Board in appointing Mr. S D Perera as a NED.

Complied

A.7.3

Upon the appointment of a new Director to the Board, the Company should forthwith disclose to shareholders -

• A brief résumé of the Director;
• The nature of his expertise in relevant functional areas;
• The names of companies in which the Director holds directorships or memberships in Board Committees; and
• Whether such Director can be considered independent.

Upon Mr. S D Perera being appointed to the Board during the year, a brief résumé containing all information requirements were submitted to the CSE for public dissemination.

Complied

A.8 Re-Election

A.8

All Directors should be required to submit themselves for re-election at regular intervals and at least once in every three years.

Directors are Re-elected with the sanction of the shareholders at the Annual General Meeting of the Company. 2013 saw the re-election of Prof. K A M K Ranasinghe who retired by rotation in terms of the Articles of Association of the Company.

Complied

A.8.1

Non-Executive Directors should be appointed for specified terms subject to re-election and to the provisions in the Companies Act relating to the removal of a Director, and their reappointment should not be automatic.

In terms of the Articles of Association of the Company one NED is required to retire by rotation every year. The re-election of NEDs’ is sanctioned by the shareholders at the AGM of the Company.

Complied

A.8.2

All Directors including the Chairman of the Board, should be subject to election by shareholders at the first opportunity after their appointment, and to re-election thereafter at intervals of no more than three years. The names of Directors submitted for election or re-election should be accompanied by a résumé minimally as set out in paragraph A.7.3 above, to enable shareholders to make an informed decision on their election.

Mr. S D Perera who was appointed to the Board during the year will stand for election at the AGM. A brief résumé of him is found in Board of Directors.

Complied

A.9 Appraisal of Board Performance

A.9

Boards should periodically appraise their own performance in order to ensure that Board responsibilities are satisfactorily discharged.

Performance of the Board is evaluated from time to time with at least once a year to ensure that responsibilities are satisfactorily discharged.

Complied

A.9.1

The Board should annually appraise itself on its performance in the discharge of its key responsibilities.

Performance of the Board for the FY 2013/14 was assessed at the first Board meeting conducted for the FY 2014/15. The evaluation was done against the targets and goals set at the beginning of the
FY 2013/14.

Complied

A.9.2

The Board should also undertake an annual self-evaluation of its own performance and that of its committees.

Members of the Board and Board Committees carried out self-assessments of their performance for the FY 2013/14 against targets set at the beginning. Minutes of the results of these assessments were recorded by the Company Secretary.

Complied

A.9.3

The Board should state how such performance evaluations have been conducted in the Annual Report.

Refer A.9.2 above

Complied

A.10 Disclosure of Information in Respect of Directors

A.10

Shareholders should be kept advised of relevant details in respect of Directors.

Shareholders are informed as and when necessary about changes to the Board, interest in the shares of the Company and other relevant details via disclosures and financial results released to the CSE for public dissemination.

Complied

A.10.1

The Annual Report of the Company should set out the relevant information in relation to each Director.

Profiles of Directors of the Board, attendance at Board meetings and Board Committee meetings are given in Stewardship sction.

Complied

A.11 Appraisal of Chief Executive Officer

A.11

The Board should be required at least annually to assess the performance of the CEO.

Not applicable as the Company doesn’t have a CEO.

Not Applicable

A.11.1

At the commencement of every fiscal year, the Board in consultation with the CEO, should set, in line with the short, medium and long term objectives of the Company, reasonable financial and non-financial targets that should be met by the CEO during the year.

Not applicable as the Company doesn’t have a CEO.

Not Applicable

A.11.2

The performance of the CEO should be evaluated by the Board at the end of each fiscal year to ascertain whether the targets set by the Board have been achieved and if not, whether the failure to meet such targets was reasonable in the circumstances.

Not applicable as the Company doesn’t have a CEO.

Not Applicable

B. Directors’ Remuneration

B.1 Remuneration Procedure

B.1

Companies should establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual Directors. No Director should be involved in deciding his/her own remuneration.

Remuneration payable to the Executive Directors of the Company is recommended by the Remuneration Committee. Remuneration payable to the Non-Executive Directors of the Company is recommended by the Board as a whole. No Director is involved in deciding his own remuneration.

Complied

B.1.1

To avoid potential conflicts of interest, the Board of Directors should set up a Remuneration Committee to make recommendations to the Board, within agreed Terms of Reference, on the Company’s framework of remunerating Executive Directors. (These also include Post-Employment Benefits as well as Terminal Benefits.)

The Remuneration Committee is responsible for recommending the remuneration payable to the Executive Directors. The Committee makes recommendations to the Board which is responsible for the final determination.

Complied

B.1.2

Remuneration Committees should consist exclusively of Non-Executive Directors, and should have a Chairman, who should be appointed by the Board.

The Remuneration Committee appointed by the Board consisted of three (03) Non-Executive Directors.

Complied

B.1.3

The Chairman and the members of the Remuneration Committee should be listed in the Annual Report
each year.

Details of the Remuneration Committee are given in Board Committees.

Complied

B.1.4

The Board as a whole, or where required by the Articles of Association the shareholders, should determine the remuneration of Non-Executive Directors, including members of the Remuneration Committee, within the limits set in the Articles of Association. Where permitted by the Articles, the Board may delegate this responsibility to a sub-committee of the Board, which might include the CEO.

Remuneration payable to the Non-Executive Directors is decided by the Board as a whole.

Complied

B.1.5

The Remuneration Committee should consult the Chairman and/or CEO about its proposals relating to the remuneration of other Executive Directors and have access to professional advice from within and outside the Company, in discharging their responsibilities.

The Remuneration Committee consulted the Chairman and the Managing Director in providing recommendations regarding the remuneration of other Executive Directors. The Chairman or the MD is not remunerated by the Company.

Complied

B.2 The Level and Make Up of Remuneration

B.2

Levels of remuneration of both Executive and Non-Executive Directors should be sufficient to attract and retain the Directors needed to run the Company successfully. A proportion of Executive Directors’ remuneration should be structured to link rewards to corporate and individual performance.

The remuneration package of both Executive and Non-Executive Directors is based on a variety of factors including their contribution to the Company, market rates of remuneration and their expectation. Portion of the remuneration of the Executive Directors’ is linked to their performance.

Complied

B.2.1

The Remuneration Committee should provide packages needed to attract, retain and motivate Executive Directors of the quality requires but should avoid paying more than is necessary for this purpose.

The Remuneration Committee considers the value addition of Executive Directors in structuring their remuneration packages so as to ensure that nothing is paid more than necessary.

Complied

B.2.2

The Remuneration Committee should judge where to position levels of remuneration of the Company, relative to other companies. It should be aware what comparable companies are paying and should take account of relative performance, but should use such comparisons with caution, mindful of the risk that they can result in an increase of remuneration levels with no corresponding improvement in performance.

The Committee conducts an analysis of
competitors in deciding the levels of remuneration
of the Company.

Complied

B.2.3

The Remuneration Committee should be sensitive to remuneration and employment conditions elsewhere in the Company or Group of which it is a part, especially when determining the annual salary increases.

Companies within the Group operate in different industry and market sectors where the remuneration and employment conditions are substantially different to those of the Company.

Not Applicable

B.2.4

The performance related elements of remuneration of Executive Directors should be designed and tailored to align their interest with those of the Company and main stakeholders and to give these Directors appropriate incentives to perform at the highest level.

The extent of contribution and value addition towards achieving the set targets and objectives of a particular year is the key determinant in deciding the performance related element of the remuneration of the Executive Directors.

Complied

B.2.5

Executive share options should not be offered at a discount (i.e less than market price prevailing at the time the exercise price is determined), save as permitted by the Listing Rules of the Colombo Stock Exchange.

Not applicable as there are no Executive share options in the Company.

Not Applicable

B.2.6

In designing schemes of performance related remuneration, Remuneration Committee should follow the provisions set out in Schedule E.

Provisions of Schedule E of the Code were
followed in designing schemes of performance related remuneration.

Complied

B.2.7

Remuneration Committee should consider what compensation commitments (including pension contributions) their Directors contracts of service, if any, entail in the event of early termination. Remuneration Committees should in particular, consider the advantages of providing explicitly for such compensation commitments to apply other than in the case of removal for misconduct, in initial contracts.

There are no compensation commitments
(including pension contributions) in Directors contracts of service.

Not Applicable

B.2.8

Where the initial contract does not explicitly provide for compensation commitments, Remuneration Committees should, within legal constraints tailor their approach in early termination cases to the relevant circumstances. The Board’s aim should be, to avoid rewarding poor performance while dealing fairly with case where departure is not due to poor performance.

Not applicable as the Company’s objective is to avoid early termination by all means.

Not Applicable

B.2.9

Levels of remuneration for Non-Executive Directors should reflect the time commitment and responsibilities of their role taking in to consideration market practices. Remuneration for Non-Executive Directors should not normally include share options. If exceptionally options are granted, shareholder approval should be sought in advance and any shares acquired by exercise of the options should be held until at least one year after the Non-Executive Director leaves the Board. Holding share options could be relevant to the determination of a Non-Executive Directors independence.

The remuneration of Non-Executive Directors reflects the degree of responsibilities and the level of time commitment extended by them in contributing to the Company’s decision-making.
The NEDs’ do not have any share options in
the Company.

Complied

B.3 Disclosure of Remuneration

B.3

The Company Annual Report should contain a Statement of Remuneration Policy and details of the Board as a whole.

Compensation paid to Key Management Personnel is given in Note 36.4 in Notes to the Financial Statements.

Partly Complied

B.3.1

The Annual Report should set out the names of Directors (or persons in the Parent Company’s committee in the case of a Group Company) comprising the Remuneration Committee, contain a statement of remuneration policy and set-out the aggregate remuneration paid to Executive and Non-Executive Directors.

Names of the members of the Remuneration Committee and the remuneration policy of the Company are found in Board Committees. The compensation paid to Key Management Personnel is given in Note 36.4.

Partly Complied

C. Relations with Shareholders

C.1 Constructive use of the Annual General Meeting (AGM) and Conduct of General Meetings

C.1

Boards should use the AGM to communicate with shareholders and should encourage their participation.

The Company considers the AGM as the key tool of communication with shareholders. The Notice of Meeting inviting all shareholders is given on page 196 of the printed Annual Report.

Complied

C.1.1

Companies should count all proxy votes and should indicate the level of proxies lodged on each resolution and the balance for and against the resolution and withheld after it has been dealt with on a show of hands, except where poll is called.

Secretaries of the Company records and counts all Proxy Forms lodged on each resolution.

Complied

C.1.2

Companies should propose a separate resolution at the AGM on each substantially separate issue and should in particular propose a resolution at the AGM relating to the adoption of the report and accounts.

To receive and consider the Annual Report and Accounts is the first resolution adopted at every AGM. Further, the Company proposes separate resolutions on each substantially separate issue.

Complied

C.1.3

The Chairman of the Board should arrange for the Chairmen of the Audit, Remuneration and Nomination Committees to be available to answer questions at the AGM relating to the adoption of the report and accounts.

The Chairmen of Audit and Remuneration Committees attended the 2nd AGM of the Company and answered questions as directed.

Complied

C.1.4

Companies should arrange for the Notice of the AGM and related papers to be sent to shareholders as determined by statue, before the meeting.

All related papers and the Notice of Meeting are sent to the shareholders 15 days before the AGM.

Complied

C.1.5

Companies should circulate with every Notice of General Meeting a summary of the procedures governing voting at General Meetings.

Summary of procedures governing voting at
the General Meeting is distributed with the Notice
of Meeting.

Complied

C.2 Communication with Shareholders

C.2

The Board should implement effective communication with shareholders.

The AGM and the Annual Report are the primary means of communication with shareholders. Additionally, the Company makes disclosures on material and price sensitive matters from time to time to the CSE for dissemination among the public.

Complied

C.2.1

There should be a channel to reach all shareholders of the Company in order to disseminate timely information.

The AGM and the Annual Report are the primary means of reaching all shareholders. Additionally, the Company makes disclosures on material and price sensitive matters from time to time to the CSE for timely dissemination of information.

Complied

C.2.2

The Company should disclose the policy and methodology for communication with shareholders.

Same as above

Complied

C.2.3

The Company should disclose how they implement the above policy and methodology.

The Company held its 2nd AGM on 12th September 2012 and disseminated the circular to shareholders, Proxy Form, the Notice of Meeting and the CD containing the Annual Report fifteen (15) days before.

Complied

C.2.4

The Company should disclose the contact person for such communication.

The point of contact is rohana@accessengsl.com

Complied

C.2.5

There should be a process to make all Directors aware of major issues and concerns of shareholders, and this process has to be disclosed by the Company.

The shareholders are free to correspond with the Board either directly or through the Company Secretary as they wish. The Directors can also be met by the shareholders on appointment.

Complied

C.2.6

The Company should decide the person to contact in relation to shareholder matters. The relevant person with statutory responsibilities to contact in relation to shareholder matters is the Company Secretary or his/her absence should be a member of the Board of Directors.

Both the Company Secretary as well as Members of the Board act as contact points in relation to shareholder matters.

Complied

C.2.7

The process for responding to shareholder matters should be formulated by the Board and disclosed.

Responses for shareholder queries directly sent to individual members of the Board are sent by the respective members. Queries directed to the Company Secretary are responded by the Directors via the Company Secretary.

Complied

C.3 Major and Material Transactions

C.3

Further to complying with the requirements under the Companies Act, Securities and Exchange Commission Law and Colombo Stock Exchange regulations; as applicable, Directors should disclose to shareholders all proposed material transactions, which if entered in to, would materially alter/vary the Company’s net assets base or in the case of a Company with subsidiaries, the consolidated group net asset base.

No material transactions were entered into by the Company during the financial year.

Not Applicable

C.3.1

Prior to a Company engaging in or committing to a ‘Major related party involving the acquisition, sale or disposition of greater than one-third of the value of the Company’s assets or that of a subsidiary which has a material bearing on the Company and/or consolidated net assets of the Company, or a transaction which has or is likely to have the effect of the Company acquiring obligations and liabilities, of greater than one-third of the value of the Company’s assets, Directors should disclose to shareholders the purpose and material facts of such transactions and obtain shareholders’ approval by ordinary resolution at an Extraordinary General Meeting. It also applies to transactions which have the purpose or effect of substantially altering the nature of the business carried on by the Company.

No major related party transactions were carried out by the Company during the financial yea

Not Applicable

D. Accountability and Audit

D.1 Financial Reporting

D.1

The Board should present a balanced and understandable assessment of the Company’s financial position, performance and prospects.

Annual Report containing the Audited Financial Statements, performance, prospects and Interim Financial Reports were released to the CSE within the period stipulated by the CSE and other regulatory authorities.

Complied

D.1.1

The Board’s responsibility to present a balanced and understandable assessment extends to interim and other price-sensitive public reports and reports to regulators, as well as to information required to be presented by statutory requirements.

Audited Financial Statements giving a true and fair view of the operations of the Company, Interim Financial Statements and other price-sensitive disclosures are made by the Company periodically and as and when required in accordance with the applicable rules and regulations.

Complied

D.1.2

The Directors’ Report, which forms part of the Annual Report, should contain declarations by the Directors.

The Annual Report of the Board of Directors on the Affairs of the Company making the relevant declarations is given in the Financial Reports

Complied

D.1.3

The Annual Report should contain a statement setting out the responsibilities of the Board for the preparation and presentation of Financial Statements, together with a statement by the Auditors about their reporting responsibilities. Further, the Annual Report should contain a Report/Statement on Internal Control.

‘Directors responsibility for Financial Reporting’ and ‘Statement of Auditors’ are given in Financial Reports.

Complied

D.1.4

The Annual Report should contain a ‘Management Discussion and Analysis’.

‘MD & A’ is given as a separate section of this Annual Report.

Complied

D.1.5

The Directors should report that the business is a going concern, with supporting assumptions or qualifications as necessary.

Refer Note 2.2 ‘Basis of Measurement’ of ‘Notes to the Financial Statements’.

Complied

D.1.6

In the event the net assets of the Company fall below 50% of the value of the Company’s shareholders’ funds, the Directors shall forthwith summon an Extraordinary General Meeting of the Company to notify shareholders of the position and of remedial action being taken.

Not applicable as there was no serious loss of capital during the year.

Not Applicable

D.1.7

The Board should adequately and accurately disclose the related party transactions in its Annual Report.

Refer Note 36 of ‘Notes to the Financial Statements’.

Complied

D.2 Internal Control

D.2

The Board should have a process of risk management and a sound system of internal control to safeguard shareholders’ investments and the Company’s assets. Broadly, risk management and internal control is a process, affected by a company’s Board of Directors and management, designed to provide reasonable assurance regarding the achievement of Company’s objectives.

The Company operates with a sound system of internal control within an integrated risk management framework that is formulated and ratified by the Board. The Board is responsible for effective operation of the system of internal controls to ensure the achievement of objectives.

Complied

D.2.1

The Directors should, at least annually, conduct a review of the risks facing the Company and the effectiveness of the system of internal controls, so as to be able to report to shareholders as required in D.1.3. This could be made the responsibility of the Audit Committee.

Annual review of risks faced by the Company is conducted by the Directors. The Audit Committee Charter of the Company authorizes the Audit Committee to ascertain the adequacy of internal controls and risk management processes.

Complied

D.2.2

Companies should have an internal audit function.

The Company has an Internal Audit Function headed by the ‘Chief Internal Auditor’.

Complied

D.2.3

The Board should require the Audit Committee to carry out reviews of the process and effectiveness of Risk Management and internal controls, and to document to the Board and Board takes the responsibility for the disclosures on internal controls.

Operation and review of internal controls is done by the Internal Audit function as a continuous and on-going process. These reports are forwarded to the Audit Committee which in turn presents it to the Board. The Board is responsible for making disclosures on internal controls.

Complied

D.2.4

The responsibilities of Directors in maintaining a sound system of internal control and the contents of the Statement of Internal Control should be in accordance with the Schedule K.

Refer Statement of Directors’ Responsibility.

Complied

D.3 Audit Committee

D.3

The Board should establish formal and transparent arrangements for considering how they should select and apply accounting policies, financial reporting and internal control principles and maintaining an appropriate relationship with the Company’s Auditors.

Accounting policies and financial reporting principles of the Company are formulated so as to ensure compliance with all applicable standards, rules and other regulations. At times the guidance of the External Auditors is also sought in this process. The Board maintains cordial relationships with the External Auditors.

Complied

D.3.1

The Audit Committee should be comprised of a minimum of two (02) Independent Non-Executive Directors
(in instances where a Company has only two Directors on its Board) or exclusively by Non-Executive Directors,
a majority of whom should be independent, whichever is higher. The Chairman of the Committee should be a
Non-Executive Director appointed by the Board.

The Audit Committee compromises of three (03) Independent Non-Executive Directors and one (01) Non-Executive Director of the Board. The Chairman of the Committee is an Independent Non-Executive Director.

Complied

D.3.2

The duties of the Audit Committee should include keeping under review the scope and results of the audit and its effectiveness, and the independence and objectivity of the Auditors. Where the Auditors also supply a substantial volume of non-audit services to the Company, the Committee should keep the nature and extent of such services under review, seeking to balance objectivity, independence and value for money.

Charter of the Audit Committee specifies
duties of its members one of which is assessing
the independence and performance of
External Auditors.

Complied

D.3.3

The Audit Committee should have a written Terms of Reference, dealing clearly with its authority and duties.

The Audit Committee’s written Terms of Reference must address -

• The Committee's purpose
• The duties and responsibilities of the Audit Committee

The Audit Committee Charter specifies the Committee’s purpose, duties and responsibilities

Complied

D.3.4 Disclosures

D.3.4

The names of Directors (persons in the Parent Company’s Committee in the case of a Group Company) comprising the Audit Committee should be disclosed in the Annual Report. The Committee should also make a determination of the Independence of the Auditors and should disclose the basis of such determination in the Annual Report. The Annual Report should contain a report by the Audit Committee, setting out the manner of compliance by the Company, in relation to the above, during the period to which the Annual Report relates.

The composition of the Audit Committee is given in the Report of the Audit Committee. A statement on the ‘Independence of Auditors’ is given in the ‘Annual Report of the Board of Directors’.

Complied

D.4 Code of Business Conduct and Ethics

D.4

Companies must adopt a Code of Business Conduct and Ethics for Directors and Key Management Personnel and must promptly disclose any waivers of the Code for Directors or others.

Directors and Key Management Personnel are expected to comply with the ‘Code of Ethics’ of the Company which is outlined in this Report. Said individuals have not violated or waived from the said ‘Code of Ethics’ during the year.

Complied

D.4.1

All companies must disclose whether they have a Code of Business Conduct and Ethics for Directors and Key Management Personnel and if they have such a Code, make an affirmative declaration in the Annual Report that all Directors and Key Management Personnel have declared compliance with such Code, and if unable to make that declaration, state why they are unable to do so. Each Company may determine its own policies in the formulation of such a Code.

The ‘Code of Ethics’ of the Company is given in this Report. The affirmative declaration on compliance with this Code is given in Annual Report of the Board of Directors on the Affairs of the Company.

Complied

D.4.2

The Chairman must affirm in the Company’s Annual Report that he is not aware of any violation of any of the provisions of the Code of Business Conduct and Ethics.

Refer Annual Report of the Board of Directors on the Affairs of the Company.

Complied

D.5 Corporate Governance Disclosure

D.5

Directors should be required to disclose the extent to which the Company adheres to established principles and practices of Good Corporate Governance.

This Report on the Company’s compliance with the ICASL/SEC ‘Code of Corporate Governance’ meets this requirement.

Complied

D.5.1

The Directors should include in the Company’s Annual Report a Corporate Governance Report, setting out the manner and extent to which the Company has complied with the principles and provisions of this Code.

Same as D.5

Complied

E. Institutional Investors

E.1 Shareholder Voting

E.1

Institutional shareholders have a responsibility to make considered use of their votes and should be encouraged to ensure their voting intentions are translated into practice.

Board encourages the active participation of institutional shareholders at the AGM. In addition, Executive Directors meet institutional shareholders upon their request to discuss about the Company’s past performance and future strategies.

Complied

E.1.1

Listed company should conduct a regular and structured dialogue with shareholders based on a mutual understanding of objectives. Arising from such dialogue, the Chairman should ensure the views of shareholders are communicated to the Board as a whole.

The most structured and continuous dialogue Company has with the shareholders is the AGM. The Chairman is available to meet shareholders at the end of each AGM and can be met on appointment on other occasions. The Chairman then communicates the views and concerns of shareholders to the Board as a whole.

Complied

E.2 Evaluation of Governance Disclosure

E.2

When evaluating companies’ governance arrangements, particularly those relating to Board structure and composition, institutional investors should be encouraged to give due weight to all relevant factors drawn to
their attention.

Institutional investors are encouraged to give due weight to all relevant factors drawn to their attention in evaluating Company’s governance arrangements.

Complied

F. Other Investors

F.1 Investing/Divesting Decisions

F.1

Individual shareholders, investing directly in shares of companies should be encouraged to carry out adequate analysis or seek independent advice in investing or divesting decisions.

The Company encourages individual shareholders to carry out adequate analysis or seek independent advice in investing or divesting decisions. The Company facilitates this process by providing information necessary for the same on a timely and unbias basis.

Complied

F.2

Individual shareholders should be encouraged to participate in General Meetings of companies and exercise their voting rights.

The Company encourages individual shareholders to participate in General Meetings and exercise their voting rights.

Complied

G. Sustainability Reporting

G.1 Principles of Sustainability Reporting

G.1.1

Economic Sustainability

The principle of economic sustainability governance recognizes how organizations take responsibility for impacts of their strategies, decisions and activities on economic performance and corporate citizenship in their sphere of influence (including geographic) and how this is integrated throughout the organization.

Refer GRI Content Index of this Report for a full list of performance indicators relating to economic sustainability.

Complied

G.1.2

The Environment

Environmental Governance of an organization should adopt an integrated approach that takes into consideration the direct and indirect economic, social, health and environmental implications of their decisions and activities, including pollution prevention, sustainable resource use, climate change, protection of environment, biodiversity and restoration of national resources.

Refer GRI Content Index of this Report for a full list of performance indicators relating to the environment.

Complied

G.1.3

Labour Practices

Labour Practices Governance of an organization encompass all policies and practices relating to work performed by or on behalf of the organization.

Refer GRI Content Index of this Report for a full list of performance indicators relating to labour practices.

Complied

G.1.4

Society

Society Governance encompasses support for and building a relationship with the community and striving for sustainable development including responsible public policy participation, fair competition and responsible community involvement.

Refer GRI Content Index of this Report for a full list of performance indicators relating to the society.

Complied

G.1.5

Product Responsibility

Product Responsibility Governance includes manufacturing quality products and distributing them and ensuring that the products are safe for the consumers and the environment and also communicating clearly with consumers so that they can make an informed choice including factual unbiased information and fair contractual practices and consumer data protection and privacy.

All construction-related activities of the Company are carried out with highest quality in accordance with the best practices adopted. The QMS of the Company is also ISO 9001:2008 certified.

Complied

G.1.6

Stakeholder identification, engagement and effective communication.

Refer stakeholder engagement in About This Report.

Complied

G.1.7

Sustainability reporting is and disclosure should be formalized as a part of the Company’s reporting processes and take place on regular basis.

Prior to 2013/14 the Company produced stand-alone Sustainability Reports. This Report is the Company’s first Integrated Report.

Complied