Corporate governance
Sri Lanka Telecom and its Board of Directors whilst driving its service excellence, product superiority, and network access to thousands of customers is committed to the highest standards of governance designed to protect the interests of all stakeholders while promoting integrity, transparency and accountability.
SLT ensures that the company is in compliance with applicable legal and regulatory requirements including:
- meeting the requirements of the listing rules of the Colombo Stock Exchange (CSE)
- the Companies Act of 2007
- the Code of best practice on Corporate Governance issued jointly by the Institute of Chartered Accountants of Sri Lanka (ICASL) and the Securities and Exchange Commission (SEC) of Sri Lanka
- all other applicable laws.
The Board of Directors
As at the last Annual General Meeting (AGM) of SLT, held on 24th April 2013, the Board consisted of 9 Directors comprising of all non-executive Directors (NED) of which 7 were Independent Directors.
We are committed to operating in accordance with best practices in business integrity and ethics and maintaining the highest standards of financial reporting and corporate governance. We continue to refine our governance framework, and ensure that our Board remains a diverse body with the right skills to provide strong and effective leadership for Sri Lanka Telecom.
As at 31 December 2013, the Board consists of 8 directors due to the resignation of Mr. Sandip Das as at 24 April 2013. No new appointments have been made to the Board during the financial year ending 31 December 2013.
Duties of the Board and Delegation of Authority
In addition to the duties mentioned above, the Board also annually reviews the company’s forecasted budget, actual performance against budgets on a regular basis and discusses and recommends action as necessary.
Meeting Attendance
As indicated in the table above, all Board members and subcommittee members allocate adequate time to their duties, where the Board met a total of 7 times in 2013. Board meetings were held every other month with one additional meeting held in between during the year. In order for the Board members to have sufficient time to prepare for Board meetings and request for any clarifications or any additional material, Board papers are generally prepared and delivered to each Board member at least 7 days in advance.
The Committee members too spent adequate time discharging their duties in their respective sub committees with the Audit Committee meeting 7 times, the Remuneration committee meeting once, the TSC and STB meeting 7 times each during 2013.
Board members are kept informed of competitor and market challenges locally when appropriate. The Board is also encouraged to seek independent professional advice when necessary, at the Company’s expense and also have access to the Company Secretary to obtain advice and services when needed.
Independence of Directors
The independence of the Board of Directors has been determined in accordance with the requirements of the CSE Listing Rules. Accordingly, the 7 independent non-executive members have submitted signed confirmations of their independence.
Role of the Chairman
In keeping with recommended best practices, the Chairman of SLT is non-executive and is responsible for leading the Board. He ensures that Board procedures are followed, all Board members effectively participate during meetings and that strategies and policies of the board are duly executed.
The Chairman also ensures that the Board, SLT and the subsidiaries all preserve the corporate governance requirements and that constructive working relations are maintained between members of the Board and the senior management team.
Delegation of Authority
Delegation to Board Members
The Board has delegated certain functions and duties to sub committees that comprise of Board Members and others as necessary.
Audit Committee (AC)
The Audit Committee comprises of 4 NEDs of which 2 are Independent with one member being a fellow of the Institute of Chartered Accountants of England and Wales. The CEO, Chief Internal Auditor (CIA) and the Chief Financial Officer (CFO) attend meetings of the AC regularly. The report of the AC is given separately in this Annual Report detailing the functions and duties of the Committee and the specific objectives met during the current financial year.
Internal Controls
The Board through delegation to the Audit Committee ensures that the Company maintains a sound system of internal controls to safeguard investments and Company assets. Therefore, the Audit Committee conducts a review of the effectiveness of the Company’s system of internal controls.
Remuneration Committee (RC)
The Remuneration Committee of SLT comprises of 2 NEDs who are also Independent Directors with the Chairman of the Board in attendance during RC meetings. The RC is responsible for ensuring that the Company’s remuneration policies are adequate to attract and retain top talent. The RC is also responsible for recommending the remuneration of the Group CEO. The aggregated remuneration of Board of Directors and the Senior Management team are disclosed in the Notes to the Financial Statements.
The Remuneration Committee meets formerly once a year. The Chairman and the Chief Executive Officer of the Group participates at meetings of the Remuneration Committee by invitation.
The Committee will continue in the future to ensure that a competitive and well-balanced package is maintained in line with the competitive pressure in the information and communication technology industry
Nomination Committee (NC)
The Nomination Committee of SLT comprises of 2 NEDs that are also Independent Directors with the Chairman of the Board in attendance during NC meetings. The NC is to assist the Board in fulfilling its corporate governance responsibilities in regards to succession of the senior manager level and the Chief Executive Officers for SLT and its subsidiaries.
Technology Sub Committee (TSC)
The TSC comprising of 3 NEDs with technical expertise are assigned with the task of studying available technology and providing a platform for engaging in intense technical discussions and looking at roadmaps with a long term perspective.
Therefore the TSC primarily focuses on: best strategies to increase organisational efficiencies; support the advancement of professional staff capabilities; and develop a flexible delivery system to effectively respond to new technological advances and information. It is also the responsibility of the Committee to review the existence and appropriateness of plans, existence and appropriateness of processes, planned and achieved Network performance and methods of assessment and the Company’s technology, people and skill plans and their implementation.
Senior management team members, Key management personnel, CEO and senior management team members of Mobitel attend meetings of the TSC as permanent members in order to maintain group synergies when major decisions are made. If required, the CEOs of other subsidiary companies too are invited to attend meetings.
Senior Tender Board (STB)
The Senior Tender Board (STB), comprises of 7 members including 4 NED that are also independent directors. The other three members: the CEO, the CFO and the Chief Corporate Officer (CCO) are appointed by the Board to review the Group procurement needs.
The procurement function involves a standard procurement process approved by the Board where, all common procurement processes are consolidated at the Group level for SLT and its subsidiaries. Therefore in order to increase efficiencies and reduce risk, the Senior Tender Board has delegated the approval limits of procurement as follows:
Note: Junior Tender Board comprises of the Chief Transformation and Development Officer, General Manager-Legal, General Manager-Financial Planning & Investor Relations, General Manager-Revenue Assurance.
In addition, a technical evaluation team and commercial evaluation team carry out technical and commercial evaluations of projects respectively.
Delegation to the Group Chief Executive Officer (GCEO)
At SLT, the roles of the Chairman and CEO are separated and the Board has delegated authority to the Group CEO over the day to day management of the Company and their respective operations by the Articles of Association of the Company. The CEO is responsible for delivering services according to the strategic plan, within the policies and budgets approved by the Board.
The GCEO is also responsible for guiding the senior management team and other key management personnel of the company to discharge their duties and for ensuring that all staff members are given adequate training in order to have a successful succession plan in place.
The GCEO is also responsible for overseeing the affairs and management of all subsidiary Companies with the exception of Mobitel and all CEOs are required to liaise with the GCEO in order to maintain synergy within the SLT group.
Delegation to Management Committee Teams
The Management Committee Teams comprising of senior management, key management personnel and others as required provide strategic planning and guidance for day to day operations of the company.
Strategic Governance Board (SGB)
Strategic Governance Board comprising of the CEO and the Chief Officers of each functional area are given the responsibility of studying the requirements of cross functional areas and introducing solutions in a transparent manner.
The introduction of six cross functional governance boards have increased efficiencies when introducing processes, projects or investments by eliminating common bottlenecks associated with introducing and implementing new programmes. The creation of SGB has also reduced the investment risk for the company due to the introduction of a structured and controlled project delivery mechanism such as methodical evaluation of new projects or programmes and post evaluations of them in order to allocate resources only to those projects that meet the strategic objectives of the company.
Governance Boards process as shown below involves a Stage-Gate process, consisting of six stages during which a project is progressively taken from conception through to review and close. There are eight gates of review where the first seven presents an opportunity for the Governance Board to assess whether or not to allocate further resources to the project and the last gate to allow review of the success of the project
The six cross functional governance boards are:
Appraisal of Board Performance
Though there is no formal process to appraise the performance of the SLT Board, the Board members under the guidance of the Chairman ensure that their responsibilities and duties are carried out as required. Therefore, the Board members individually and the Board as a whole, contribute adequate time to discharge their duties satisfactorily.
Re-Election of Board Members
Except for the Chairman or the CEO if appointed a director, one third of the other directors are required to stand for retirement by rotation at least once in three years in conforming to the Company’s Articles of Association. Retiring Directors are subject to re-election by shareholders at the Annual General Meeting (AGM). All newly appointed Directors including the Chairman of the Board are subject to election by shareholders at the very next AGM after their appointment.
All members that are up for re-election at the next AGM are listed on the Notice of Meeting given separately in this Annual Report.
Appraisal of the Chief Executive Officer
The Board has periodic discussions with the CEO on the performance of the short, medium and long-term objectives of the Company including financial and non financial indicators.
Investor Relations and Communications to Shareholders
The SLT Board uses the AGM, press releases and releases to the CSE to communicate with its shareholders. SLT ensures that the notice of the AGM along with the Annual Report containing the performance of the Company are delivered to the shareholders at least 15 working days prior to the scheduled meeting. The Chairman of the Board ensures that the Chairs of each subcommittee especially that of the Audit Committee and the Remuneration Committee are present at the AGM to provide necessary information if requested by shareholders. The Investor Relations Division of SLT and the Company Secretary are designated as contact points for shareholders, statutory bodies, media and others.
Company Secretary
The Company Secretary ensures that Board procedures are followed and that applicable rules and regulations are complied with. The Company Secretary also liaises with the CSE on all of the Company’s communications. The Company Secretary also is responsible for announcing the AGM and any EGMs to the Shareholders and for accurate recording of proxy voting and is available to answer any queries on statutory requirements. Any decisions on the removal of the Company Secretary is within the Board.
Major Transactions
The Board of Directors, as required by the Companies Act, has been disclosing to shareholders all proposed corporate transactions detailing all facts associated with such transactions that are of material value to the SLT. There were no major transactions entered into by SLT for the year 2013.
Related Party Transactions
All related parties defined as a person or a close member of that person’s family related to SLT that has control or joint control over SLT; has significant influence over SLT; or is a member of the key management personnel of SLT have submitted signed and dated declarations quarterly.
Similarly, an entity that is related to SLT by virtue of being in the same Group as SLT, or an associate or joint venture of the entity or an associate or joint venture of a member of a group of which the other entity is a member, or both entities are joint ventures of the same third party, or one entity is a joint venture of a third entity and the other entity is an associate of the third entity or the entity has a post-employment benefit plan for the benefit of employees of either SLT or an entity related to SLT or the entity is controlled or jointly controlled by a person identified in the above paragraph have submitted signed and dated declarations quarterly.
All related party transactions whether it is a transfer of resources, services or obligations between SLT and a related party, regardless of whether a price is charged are disclosed in the notes to the financial statements. A copy of the related party transactions are kept with the Company Secretary and have been disclosed as required and the Audit Committee on a regular basis has presented to the Board all identified related parties and their transactions.
Whistleblowing Policy
Whistle blowing policy was introduced to SLT in 2012 with the objective of providing employees an avenue to raise concerns and define ways to handle these concerns; enabling management to be informed about acts of misconduct at an early stage; reassuring employees that they will be protected from punishment or unfair treatment for disclosing concerns in good faith in accordance with this policy and helping to develop a culture of openness, accountability and integrity throughout SLT.
This policy therefore, encourages employees to come forward about any concerns related to any suspected misconduct or any breach or suspected breach of law or regulation that may adversely affect SLT.
Outlook
As a giant ICT provider that keeps ahead of industry standards and uses global best practices, SLT and its Board will review the revised 2013 Code of best practice on Corporate Governance issued jointly by the ICASL and the SEC to ensure that we meet the standards expected of us. We will constantly explore ways to enhance our transparency in all decisions made. We will intelligently evolve by capturing the concerns and complaints of our stakeholders and incorporating them in to the governance process at SLT.
