SLT's processes of corporate governance are on par with international best practices and are designed to ensure transparency, accountability and efficiency in the Company's operations.

Board of Directors
The main decision-making power in the Company belongs to the Board of Directors. The Board is responsible for the strategic direction of the Company. Many of the operational decisionmaking responsibilities have been delegated to the executive management headed by the CEO. The Board monitors the performance of the executive management.

The executive management prepares the Annual Business Plan with financial projections. The Business Plan receives careful review and scrutiny by the Board. The implementation of the approved Business Plan is the responsibility of the management and periodic review of the Business Plan is undertaken by the Board to ensure that it is consistent with the strategic direction of the Company. The Board is also responsible for ensuring that adequate internal controls are in place.

The Board comprises nine Directors. Each investor holding more than 10% of the share capital is entitled to one seat on the Board. Accordingly, the Government of Sri Lanka, which holds 49.5% of the issued capital, has 5 seats on the Board and NTT Communications Corporation, which holds 35.2%, has 4 seats. Apart from the Chief Executive Officer who is nominated by NTT Com all other Directors hold office in a non-executive capacity. None of the Non-Executive Directors have held executive positions in the Company. The profile of the current Directors is provided on pages 6 and 7 of this Report.

The functions of the Chairman and the CEO are kept separate in accordance with best practices in corporate governance. Discussions at Board meetings are free and fair, helping to achieve balance and objectivity in decision-making.

All appointments to and resignations from the Board are included in the Directors' Report and with the exception of the Chairman and the CEO, all Directors are subject to retirement by rotation in terms of the Articles of Association and are subject to re-election by the shareholders at the Annual General Meeting.

The Company Secretary who possesses the necessary qualifications as required by the Company's Act records all decisions reached at Board Meetings.

The Company has been divided into key divisions headed by Chief Officers who possess expertise in the relevant fields. The management team functions under the leadership of the CEO, who is responsible for all operational functions and human resource management. The management structure has been designed to allow for individual career advancement within the executive management.

All statutory and regulatory requirements are complied with to the letter. Transparency is a key value in our systems of governance. SLT has at all times promoted full, fair, accurate, timely and understandable disclosures of all reports and documents that the Company has filed with the Colombo Stock Exchange or otherwise made public.

Board Processes
The Board of Directors meets at least once a month. During the past year 16 Board meetings were held. At the monthly meetings, financial performance and the progress of the Company, as well as that of the Group are evaluated. The NTT nominee Directors participate at Board meeting by teleconference. The CEO, who is also a Director, is present at all Board meetings.

The CEO meets the Chief Officers every week to discuss operational strategy and meets with Heads of Division and Regional Heads once a month to monitor progress of operations.

Audit Committee
SLT's Audit Committee is part of the corporate reporting process, operating within defined terms of reference. The Committee oversees all aspects of 'financial reporting' on behalf of the Board.

The Audit Committee comprises of 3 Non-Executive Directors: Mr. Lalith de Mel (Chairman), Mr. Kiyoshi Maeda and Mr. S.B. Divaratne. The Audit Committee met four times during the past year. The Chief Financial Officer, the Chief Internal Auditor, Chief Operations Officer and other senior executives attend these meetings on invitation.

The Audit Committee also reviews the standards of internal control and takes measures to put in place controls which would reduce the incidence and impact of risks on the business. The Audit Committee also approves the terms of engagement of external auditors.

The Audit Committee Chairman keeps in touch on a continuing basis with the key people involved in the Company's governance, including the Board Chairman, the CEO, the CFO and the external audit lead partner.

Other Aspects of Governance
The Company has a share dealing code put in place to ensure that the senior executives, Directors, relevant employees and 'connected persons' do not abuse price-sensitive information, especially in periods leading up to the announcement of results by the Company.

The CEO maintains an ongoing dialogue with institutional shareholders through an investor-relations programme.

All statutory payments have been made in a timely manner.