Composition

The Nomination and Governance Committee of the Board of Directors presently consists of four Non-Executive Directors. W R H Fernando an Independent Director is the Chairman with J Durairatnam, Ms V J Senaratne, and N Vasantha Kumar as members.

The Chief Executive attends the meetings by invitation, while the Secretary to the Board functions as the Secretary of the Committee.

The composition of the Committee met the requirements of Rule 3.6 (iv) (f) of the Banking Act Direction No. 11 of 2007 of the Central Bank and Section 9.11.4 of the Listing Rules of the Colombo Stock Exchange (CSE). In line with the revised CSE Listing Rules, W R H Fernando took over as the Chairman of the Committee from J Durairatnam in October 2023.

Mandate

During the year under review, the Committee carried out the tasks as set out in the Terms of Reference approved by the Board. The Terms of Reference approved by the Board encompasses the tasks set out in Section 3 (6) (iv) of Direction No. 11 of 2007 of the Central Bank of Sri Lanka on Corporate Governance in Licensed Commercial Banks and Section 9.11 of the CSE Listing Rules on Corporate Governance.

Procedure

The Committee meets as necessary and, in any case, at least once a year and acts within its mandate approved by the Board of Directors and makes recommendations to the Board for consideration.

The role of the Committee in terms of the mandate is to review governance policies and procedures, evaluate the performance of the Board and identify, and evaluate persons with the required skills, knowledge, standing, fitness, and propriety to join the Board of the Bank and to evaluate the suitability of Directors who are seeking re-election.

Documented policy and processes are in place to ensure Board diversity in terms of skills, experience, age, gender etc.

The Committee is also responsible for the task of implementing a procedure for the appointment of the CEO and Key Management Personnel.

Processes are in place to conduct an orientation upon the appointment of a new Director. Existing Directors are provided with updates on revisions to rules on Corporate Governance and other relevant regulations.

Further, periodic reports are submitted to the Board, on top and emerging risks for the Bank, overall risk limits, internal drivers, stress testing, liquidity ratio, etc. in order to ensure that the Non-Executive Directors are informed of the critical issues.

During the year no new Directors were appointed to the Board.

Meetings

Four meetings were held during the year. The Committee periodically reviews the composition of the Board including the balance between Independent and Non-Independent Directors and considers succession planning for both Directors and the Bank’s Senior Management. In making appointments to the Board, the Committee considers the skills, experience and knowledge of the existing Directors and assesses the potential candidates in terms of who would benefit the Bank most. During the year, the Committee identified persons to fill key management positions after reviewing many candidates from time to time to ascertain the best fit for the Bank in terms of qualifications, ability and character, reviewed succession planning and assessed the fitness and propriety of Directors, and Key Management Personnel, in terms of the requirements of the Banking Act and CSE Listing Rules.

A declaration was obtained based on the revised format adopted by the Committee from Non-Executive Directors, confirming their status of independence. Further, a new declaration was obtained from the Directors in terms of Section 9.7.3 of the CSE Listing Rules confirming their fit and propriety to hold office as a Director.

In addition to the annual evaluation of the Board carried out by the individual members, this year too an evaluation of the Board was carried out by the Nomination and Governance Committee members based on a separate checklist approved by the Committee and the results were shared with the other members of the Board.

Individual Committee members do not participate in discussions in matters relating to them. The attendance by Directors at meetings, dates of appointment to Committees and the nature of Directorships are given on Corporate Governance of the Annual Report.

In terms of the Articles, one-third of the Non-Executive Directors shall retire from office at each Annual General Meeting and are eligible for re-election. The Committee reviewed the contributions made by the respective Directors towards Board Committees, their other commitments and the overall performance and has recommended the re-election of the Directors offering themselves for re-election at the forthcoming Annual General Meeting. Particulars of Directors seeking re-election are given on Annual Report of the Board of Directors on the State of Affairs of the Bank of the Annual Report.

The Corporate Governance requirements stipulated under the CSE Listing Rules have been met. Further the Independent Directors have met the criteria for determining independence in terms of Section 9.8.3 of the CSE Listing Rules.

W R H Fernando
Chairman
Nomination and Governance Committee

19 February 2024