| Sections referred to in the Code |
Compliance status |
| A | Directors of the Board |
| A.1 | Appointments to the Board are made by the shareholder, the Government of Sri Lanka through the Minister under whose purview the Bank comes in terms of the provisions of Bank of Ceylon Ordinance No. 53 of 1938 and its amendments.
A policy on Appointment of Directors is in place identifying the skill set that is required on the Board. Accordingly, the Directors who have skills and experience direct and lead the Bank with effective controls. As per the said Ordinance, the number of Directors permitted on the Board is only six members. As at year end of 2022 the Board consisted of four members due to the resignation of a Director in January 2022. The composition of the Board in 2022 The skills and experience of the Directors are indicated in the details about them. |
| A.1.1 | Board meetings |
| The Board meetings are held on a fortnightly basis and special meetings are scheduled as and when the need arises. The schedule of meetings is in place by the beginning of the year and the structure of submitting information to the Board has been agreed upon. Necessary information is submitted as agreed to enable decision-making. During the year under review the Board met 24 times and attendance at meetings is summarised in the section on Corporate Governance. | |
| A.1.2 | Role and responsibilities of the Board |
| The role and responsibilities of the Board are incorporated in the Board Charter which was last reviewed in the year 2022 with the review of the Corporate Governance Policy of the Bank. | |
| A.1.3 | To act in accordance with the laws of the country |
| The Bank is regulated as per the Bank of Ceylon Ordinance No. 53 of 1938 and its amendments and the Banking Act No. 30 of 1988 and its amendments. Additionally, directions issued by the Regulators viz., the Central Bank of Sri Lanka, any other regulator where the Bank has its overseas Branches, Securities and Exchange Commission of Sri Lanka and the Colombo Stock Exchange apply to Bank of Ceylon. The Board acts in accordance with the applicable laws. Access to Independent Professional Advice A Policy on Directors’ Access to Independent Professional Advice is in place whereby Directors are able to seek independent professional advice on a needs basis at the Bank’s expense. This Policy was reviewed during the year 2022. |
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| A.1.4 | Advice and services of the Company Secretary |
| The members of the Board have access to the advice and services of the Secretary to the Board/Secretary, Bank of Ceylon who is an Attorney-at-Law. The Secretary to the Board is held responsible for ensuring that Board procedures are followed and compliance with applicable rules and regulations, directions and statutes and keeping and maintaining minutes and relevant records. Any question of the removal of the Secretary to the Board/Secretary, Bank of Ceylon is a matter for the full Board. |
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| A.1.5 | Independent judgement |
| The Board of Bank of Ceylon bring independent judgement to bear in discharging their duties and responsibilities on matters relating to the Board including strategy, performance, resource allocation, risk management, compliance and standards of business conduct. | |
| A.1.6 | Dedicating adequate time and effort to matters of the Board and the Bank |
| The agenda and Board memoranda are circulated among the Board members seven days prior to the meeting through a secure
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| A.1.7 | Calling of resolution |
| The Board members can individually submit proposals to the Board when they feel that they are in the best interests of the Bank and a resolution can be presented to the Board. | |
| A.1.8 | Training for Directors |
| When first appointed to the Board, the Directors undergo an induction programme covering the applicable regulatory requirements, Bank’s history, organisational structure, details of subsidiaries and associates, products and services, Directors’ responsibilities and are provided with a Board Manual incorporating all the above given in e-form through the Bank’s electronic support system. Directors are encouraged to attend relevant training programmes and are apprised of the latest developments in the Bank and external environment by members of the Corporate Management or through external resource personnel. Directors did not attend any specific training programmes during the year. |
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| A.2 | Division of responsibilities between the Chairman and Chief Executive Officer (CEO) |
| The positions of the Chairman and the Chief Executive Officer (referred to as the “General Manager” in the Bank) are held by two separate individuals. The Chairman is a Non-Executive Director. There is a clear division of responsibilities between the Chairman and the General Manager and the Board Charter adopted by the Bank clearly defines these responsibilities. | |
| A.3 | Chairman’s Role |
| The Chairman of Bank of Ceylon provides leadership to the Board, preserves order and facilitates the effective discharge of the Board’s functions. The agenda for Board meetings was prepared by the Secretary, Bank of Ceylon/Secretary to the Board, which is approved by the Chairman, based primarily on the memoranda submitted through the General Manager and any other relevant matters proposed by a Director/s. The agenda covers matters relating to strategy, performance, resource allocation, risk management and compliance. Sufficiently detailed information on matters included in the agenda is circulated to Directors well ahead of the meetings through a secure
All Directors are informed of their duties and responsibilities (which are enshrined in the Board Charter) and the Board subcommittee structure of the Bank which assists the Board in discharging its responsibilities. The Board of Bank of Ceylon consists entirely of Non-Executive Directors and they effectively contribute within their respective capabilities, for the benefit of the Bank. Directors are encouraged to seek information considered necessary to discuss matters on the agenda of meetings and to request inclusion of matters of corporate concern on the agenda. The views of Directors on issues under consideration are ascertained and a record of such deliberations are reflected in the minutes in detail. |
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| A.4 | Financial acumen |
| The Directors have sufficient financial acumen and knowledge to guide the Bank which they have acquired through the businesses/professions in which they are involved and from qualifications held. | |
| A.5 | Board Balance |
| The Board of Bank of Ceylon is always comprised of Non-Executive Directors. When Alternate Directors are appointed, it is also ensured that they are Non-Executive. | |
| A.6 | Provision of timely information |
| The agenda and Board/Subcommittee memoranda required for a Board/subcommittee meeting are provided to Directors through the available
The members of the Corporate Management are available if the Directors wish to obtain further information or for any clarification. Board meeting minutes are made available to the Directors within 10 days from the meeting. |
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| A.7 | Appointments to the Board |
| Appointments to the Board are made by the Government of Sri Lanka, through the Minister under whose purview the Bank falls. The requisite regulatory requirements relating to appointment of new Directors are complied with. There is an internal policy in place with regard to the appointment of Directors which has been shared with the relevant Ministry. | |
| A.8 | Reappointment |
| Every Director appointed shall hold office for a period of three years, unless he is removed from office earlier or he vacates his office in terms of the Bank of Ceylon Ordinance No. 53 of 1938 and its amendments. In either case, he is eligible to be reappointed. Resignation An appointed Director may resign from his directorship by a letter addressed to the Minister under whose purview the Bank falls and any Director who vacates office by ending the term is eligible for Re-appointment. If it is due to a special reason, it is expected to be indicated in their resignation letter. Mr Jayampathy Molligoda, Director resigned on 31 January 2022 on personal grounds. |
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| A.9 | Appraisal of Board and its subcommittees |
| An annual self-evaluation of its own performance is undertaken by the Board and Board subcommittees to ensure that Board’s and that of its subcommittees’ responsibilities are satisfactorily discharged. The collective outcome is reviewed and addressed by the Board. During the year under review self evaluation of the Board was carried out facilitated through the Nomination and Corporate Governance Committee of the Board. Also the members of the Board subcommittees collectively evaluated the performance of the subcommittees for effectiveness and efficiency. | |
| A.10 | Disclosure of information in respect of Directors in the Annual Report |
| The following information pertaining to Directors are included in the Annual Report: Profiles of the Directors covering name, qualifications, nature of expertise and whether Executive/Non-Executive are indicated in the section on Board of Directors. Related party information indicated on Note 61 Directorships in other companies indicated in the section on Board of Directors Membership of subcommittees and the number of Board and subcommittee meetings attended during the year are indicated in the section on Corporate Governance. |
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| A.11 | Appraisal of the Chief Executive Officer/General Manager |
| The performance evaluation of the General Manager is carried out annually based on the targets set at the commencement of the fiscal year in line with Corporate Plan by the Human Resources and Remuneration Committee and the final report is submitted to the Board. | |
| B | Directors’ remuneration |
| B .1 | There is a formal Remuneration Policy in place for the Chairman and Board of Directors (all Non-Executive). The above policy is formulated based on the circulars issued by the Government, the shareholder, from time to time and other applicable legislation. |
| B.2 | The Bank’s Human Resources and Remuneration Committee accordingly has no role in deciding the remuneration of Directors. (It however recommends the remuneration of Senior Executives.) |
| B.3 | Disclosure of remuneration |
| The Statement of Remuneration Policy for the Chairman and the Directors is contained in in the section on Corporate Governance of this Annual Report. Details of remuneration paid to the Board as a whole is indicated on Note 17. The composition of the Human Resources and Remuneration Committee appears in the section of Human Resources and Remuneration Committee Report. |
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| C | Relations with shareholders |
| C.1 | The Government of Sri Lanka being the sole shareholder of the Bank, the Bank’s communication with the shareholder happens in various forms. A Government representative (an officer from the Ministry of Finance) is on the Board, directly representing the shareholder and the Annual Report is placed before the Parliament of Sri Lanka and is open to question by the Parliament. |
| C.2 | A Board approved Communication Policy is in place. |
| Major issues and concerns of the shareholder viz. Government of Sri Lanka are discussed during the Board meetings with the participation of the direct Government representative on the Board and is elevated to the Ministry or higher levels as may be necessary. A Communication Policy is in place guiding the Bank on effective communication with internal and external stakeholders and was reviewed during the year under review. | |
| C.3 | Further in order to comply with requirements of the Bank of Ceylon Ordinance No. 53 of 1938, Banking Act No. 30 of 1988, Securities and Exchange Commission of Sri Lanka Act No. 19 of 2021 and their amendments and Listing Rules of the Colombo Stock Exchange; as applicable, disclose to the relevant Ministry all proposed major and material transactions the Bank wishes to enter into. There were no transactions which would materially affect the Bank’s performance, its net asset base or related party transactions during the year other than what is disclosed under Notes to the Financial Statements. |
| D | Accountability and audit |
| D.1 | Financial and Business Reporting (The Annual Report) |
| All measures are taken to ensure that the Annual Report presents a balanced assessment of the Bank’s financial position, performance, business model, governance structure, risk management, internal controls and challenges, opportunities and prospects in an easily comprehensible manner. The Bank’s Financial Statements presented in the Annual Report are balanced, understandable and prepared in accordance with the relevant laws and regulations with any deviation being clearly explained and portrays a true and fair view. It also ensures that 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 to meet statutory requirements. The Chief Financial Officer and the General Manager of the Bank give a statement indicating that the financial statements provide a true and fair view of the state of affairs of the Bank of Ceylon and its Group. The Financial Statements are reviewed and deliberated by the Board Audit Committee before recommending to the Board for its approval for publication. For the purpose of fulfilling the disclosure requirements, the following statements are included in the Annual Report - Annual Report of the Directors on the State of Affairs of the Bank. Directors’ Statement on Internal Control over Financial Reporting. Management Discussion and Analysis under Our Performance and Delivering Values in the section on Transformational Strategy. Report on Related Party Transactions of the Key Management Personnel and their Close Family Members appearing in the section on Notes to the Financial Statements. Statement of Directors’ Responsibility for Financial Reporting. Report of the Auditor General. |
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| D.2 | Bank’s existing process on risk management and internal controls |
| The Board is responsible for determining the nature and extent of the principal risks that it is willing to take in achieving its strategic objectives and the Board Integrated Risk Management Committee is there to facilitate the Board in fulfilling its oversight responsibilities in regard to the existence, operation and effectiveness of the risk management programmes, policies and practices employed by the Bank to manage various types of risks, including compliance programmes. The Board Audit Committee assists the Board in achieving the objective of the Bank’s system of internal controls including operational, financial and compliance among other responsibilities of the Committee. The Board monitors the Bank’s risk management and internal control systems through the Integrated Risk Management Committee and Audit Committee respectively and carries out a review of the said Committees’ effectiveness annually. Bank of Ceylon has a well-equipped Internal Audit Department to carry out the internal audit function of the Bank. The Auditor General is the External Auditor of the Bank. |
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| D.3 | Audit Committee |
| The Board Audit Committee comprised exclusively of Non-Executive Directors during the year under review. The Chairman of the Committee during the year under review was an Independent Non- Executive Director. The Chairman and the members of the Audit Committee had relevant experience in financial reporting and control. The Board Audit Committee assists the Bank’s Board in fulfilling its oversight responsibilities. The Board Audit Committee ensures the carrying out of the reviews of the processes and effectiveness of risk management and internal controls and audit reports are submitted to the Committee. The role and responsibilities of the Audit Committee are disclosed in the Audit Committee Report of this Annual Report. The Audit Committee has a written Terms of Reference which clearly defines its role and responsibilities and it was reviewed during the year. The activities performed by the Committee during the year under review appear in the section on Audit Committee Report of this Annual Report. |
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| D.4 | Related party transactions |
| The Bank has a Board approved policy on related party transactions in place covering related parties, their transactions and restrictions on offering more favourable treatment to related parties in order for the Board members to avoid any conflict of interest in this regard. The Report on the Related Party Transactions of the Key Management Personnel and their Close Family Members appear in the section on Notes to the Financial Statements of this Annual Report. |
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| D.5 | Code of Business Conduct and Ethics |
| The Bank maintains a Code of Ethics for the employees of the Bank and a separate Code of Business Conduct and Ethics for the Directors and an acknowledgement is obtained for affirmation of compliance with the Codes. A whistleblower policy is in place which enables prompt reporting of illegal and fraudulent reporting. | |
| D.6 | Corporate governance disclosures |
| The Corporate Governance Report discloses the extent of compliance with the provisions of the Code of Best Practice on Corporate Governance. | |
| F | Shareholder |
| F.1 and F.2 | The Government of Sri Lanka is the sole shareholder of the Bank. |
| G | Internet of things and cybersecurity |
| The Bank has a process in place to identify as to how the Bank’s business model, IT devices within and outside the Bank
can connect to the Bank’s network to send and receive information and the consequent Cybersecurity risks that may affect the business. A Board approved Information Security Policy is in place which provides the management with direction and support to ensure protection of the Bank’s information assets. In addition, the Integrated Risk Management Committee assists the Board in ensuring that the Bank is protected from Cybersecurity threats by recommending and following up on vulnerability assessments and reporting to the Board. Processes to identify and manage Cybersecurity risks are included in the Risk Management Report of this Annual Report. The Bank has appointed a Chief Information Security Officer, in order to implement the Cybersecurity Risk Management Policy. The Board Information and Communication Technology Committee assists the Board of Directors in fulfilling its oversight responsibilities related to information and communication technology and provides appropriate advice and recommendations to facilitate decision-making by the Board in regard to Cybersecurity measures amongst others. |
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| H | Environment, Society and Governance (ESG) |
| ESG related disclosures appears in the section on Embedding Sustainability of this Annual Report. |
2022
