The Company’s business and operations are managed under the supervision of the Board, which consists of members with experience and knowledge in the areas of business, in which the Company is engaged, with specific acumen in terms of commercial, financial and or technical expertise.

The Board has the following powers to execute its responsibilities.

The Board provides vision, strategic direction and stewardship to the business entities whilst transparency and accountability are maintained. The Board also reviews and monitors the Company’s activities.

Reviews business results on a regular basis and guides the management by giving appropriate direction in achieving its goals.

With the consultation of the Audit Committee and Risk Review Committee, a risk management system was developed and periodically reviewed. Risk review committee report is depicted on page 42 of this Report. Further, the Audit Committee report is also given on page 39.

The Company communicates its code of conduct and ethics to all levels of the employees including its Board of Directors.

The Board meets at a minimum, once in three months to review the financial performance of the Company. The Quarterly Financial Statements are reviewed by the Audit Committee before recommending to the Board of Directors for adoption and release to the public. Final dividends and interim dividends are considered and recommended by the Board of Directors.

The Company communicates periodically with its shareholders through the quarterly reports. The Annual Report provides a comprehensive assessment of the Company’s performance during the year.

An independent statutory audit with interim review is carried out annually and the appointment of auditors for the ensuing year is recommended to the shareholders at the Annual General Meeting.

The Board is responsible for approval of annual budgets, capital budgets and new projects. The performances are monitored and reviewed against budgets quarterly.

Monitoring and reviewing Corporate Governance in accordance with the best practice framework issued by the Institute of Chartered Accountants of Sri Lanka.

The Company maintains a Board balance of Executive, Non-Executive and Independent Directors as required under Listing Rules of the Colombo Stock Exchange. Together, the Directors with their wide experience in both the public and private sectors and diverse academic backgrounds provide a collective range of skills, expertise and experience, which is vital for the successful direction of the Group.

The Board consists of Eleven (11) members. Nine (9) members are Non-Executive Directors (including the Chairman) and Two (2) are Executive Directors. Eight (8) Non-Executive Directors are independent as defined under the Listing Rules of the Colombo Stock Exchange.

The Non-Executive Independent Directors are;

• Mr A Cabraal
• Mr S Shishoo
• Mr H Abeywickrama
• Mr A Talwatte
• Mrs S Ratwatte
• Mr S Jain (Appointed w.e.f. 3 February 2022)
• Ms R Fernando (Appointed w.e.f. 21 February 2022)
• Mr S Renganathan (Appointed w.e.f. 27 May 2022)
• Ms A Goonethilleke (Resigned w.e.f. 11 November 2021)

There is a distinct and clear division of responsibility between the Chairman and the Group Managing Director to ensure that there is a balance of power and authority. The roles of the Chairman and the Group Managing Director are separated and clearly defined. The Chairman is responsible for ensuing Board effectiveness and conduct whilst the Group Managing Director has overall responsibilities over the operating units, organisational effectiveness and implementation of Board policies and decisions.

The Board met quarterly to discharge its duties effectively. In addition, special Board Meetings are also held whenever necessary. A total of eight (8) meetings including the Annual General Meeting was held in the financial year ended 31 March 2022. The attendances of Directors at these Meetings were as follows:

Attendance

Agenda and Board papers are sent seven (7) days before the meeting, allowing members sufficient time to review same. Chairman sets the Board agenda, assisted by the Group Managing Director. Care is taken to ensure that the Board spends sufficient time considering matters critical to the Company’s success, as well as compliance and administrative matters.

Resolutions concerning business matters may be passed by circulation, within regulations. However, if a single Director deems it necessary that such resolution must be decided at a Board meeting not by circulation, the Director shall put the resolution to be decided in a meeting.

All Board minutes are circulated to members, and formally approved at the subsequent Board meeting, Directors’ concerns regarding matters which are not resolved unanimously are recorded in the minutes. Directors have access to the past Board papers and minutes in case of need via electronic means at all times.

Executive Committee meet weekly/monthly to review performance against the strategic plan and budgets, identifying matters requiring intervention and escalation to Board.

The Board is aware of other commitments of its Directors and is satisfied that all Directors allocate sufficient time to enable them to discharge their responsibilities. Directors declare their outside business interests at appointment and quarterly thereafter. The Company Secretary maintains a register of Directors’ interests, which is tabled to the Board annually. The Register is available for inspection in terms of the Companies Act. Key appointments of the directors are included in their profiles on pages 16 to 19. Related party transactions are given in Note 41 to the Financial Statements.

Directors have unrestricted access to management and organisation information, as well as the resources required to carry out their duties and responsibilities, independently and effectively. Members of the Corporate Management make regular presentations with regard to the business environment and in relation to Group operations. The Company has appointed F J & G De Saram and Nithya Partners as their legal consultants. Access to independent professional advice, co-ordinated through the Company Secretary, is available to Directors at the Company’s expense.

Directors exercise their independent judgement, promoting constructive board deliberations and objective evaluation of the performance of the Company. Independence of Directors is determined by the Board based on annual declarations submitted by NEDs.

On appointment, Directors are provided with an orientation pack with all relevant external and internal regulation documents. The Board of Directors recognise the need to keep abreast of current developments affecting the sectors both globally and locally with reference to regulatory changes and the country’s economy. They undertake training and professional attending seminars/workshops/conferences, participating as speakers at events, using web based learning resources and reading regulatory updates etc.

Performance of Group Managing Director (GMD) is evaluated annually at year end by the Board against predetermined criteria aligned to the short, medium, and long-term objectives of SUN and agreed with GMD at the beginning of the year. Remuneration is revised based on performance.

The provisions of the Company’s Articles require a Director appointed by the Board to hold office until the next Annual General Meeting and seek re-appointment by the shareholders at that meeting. The Articles call for one third of the Directors in office to retire at each Annual General Meeting. The Directors who retire are those who have served for the longest period after their appointment/re-appointment. Retiring Directors are generally eligible for re-election. In addition, a newly appointed Director is required to submit himself for retirement and re-election at the Annual General Meeting immediately following his appointment. The Managing Director does not retire by rotation. Appointments/resignations are communicated to the CSE. Appointment communications include a brief résumé of the Director.

The objectives of the Company’s policy on Directors remuneration it to attract and retain Directors of the caliber needed to direct the Group successfully. In the case of the executive Director, the component parts of the remuneration are structured so as to link rewards to corporate and individual performance. Performance is measured against profits and other targets set from the Company’s annual budget and plans, and from returns provided to shareholders. In the case of Non-Executive Directors, the level of remuneration reflects the experience and level of responsibilities undertaken by the Non-Executive Director concerned.

The Nomination and Remuneration Committee recommends to the Board the frameworks of the Executive Director’s remuneration and the remuneration package for the Executive Director and Senior Management team. It is, nevertheless, the ultimate responsibility of the entire Board to approve the remuneration of the executive Director. The Director’s remuneration is disclosed in Note 41 of the Financial Statements.

The Board in discharging its duties, establishes various Board Committees. The function and terms of reference of the Board Committee are clearly defined and where applicable, comply with the recommendations of the code of best practice on Corporate Governance. The group has five board subcommittees,

• Audit Committee
• Nomination and Remuneration Committee
• Investment Committee
• Related Party Transactions Review Committee
• Risk Review Committee

However, the Board of Directors are collectively responsible for the decisions taken on the recommendation by Board Sub Committees.

The Audit Committee provides an oversight on the Financial Statements and other related information prepared for presentation for external financial reporting, review the work of the internal audit function and ensures that the external auditor carry out their statutory duties in an independent and objective manner. It also assists the Board in ensuring a sound system of internal control. The Committee has full access to the auditors both internal and external who, in turn, have access at all times to the Chairman of the Committee. The Committee meets with the external auditors without any executives present except for the Group Secretaries, at least once a year. The report on the Audit Committee is presented on page 39 and the duties of the Audit Committee are included therein.

The Risk Committee safeguard shareholders’ investment and the Company’s assets and to oversee and, approved the company wide risk management practices to assist the Board.

The Nomination and Remuneration Committee reviews the board composition to ensure board balance and adequacy of skills and experiences among the members of the Board. It recommends any new appointments to the Board.

The Nomination & Remuneration Committee recommends to the Board, the remuneration policy and the remuneration to be paid to each Executive Director. The Nomination and Remuneration Committee reviews the Group’s remuneration policy and the remuneration packages of executive employees of the Group.

The role of the Investment Committee is to review capital expenditure budgets and new projects and make recommendations to the Board of Directors.

The Committee exercises oversight on behalf of the Board, that all Related Party Transactions (RPTs, other than those exempted by the CSE listing rules on the RPTs) are carried out and disclosed in a manner consistent with the CSE Listing Rules.

Membership of Board Subcommittees are listed below:

	Appointment to the Board	Nomination and Remuneration Committee	Audit Committee	Investment Committee	Related Party Transactions Review Committee	Risk Review Committee
Executive
Mr V Govindasamy	8 February 2000
Mr S G Sathasivam	13 June 2006
Non-Executive
Mr G Sathasivam	8 February 2000
Independent Non-Executive
Mr S Shishoo	18 December 2017
Mr A D B Talwatte	30 May 2016
Mr A Cabraal	30 May 2017
Mr H Abeywickrama	30 June 2014
Mrs S Ratwatte	30 May 2019
Mrs W Y R Fernando	21 February 2022
Subsidiary Board Director
Mr N Weerasekera
Consultant
Mr R Mihular*

*Appointed on 1 April 2022

The Board comprises of a Senior Chartered Accountant and he serves as members of the Audit Committee and Related Party Transaction Review Committee.

Directors are provided with quarterly reports on performance, minutes of quarterly meetings and such other reports and documents as necessary. The Chairman ensures all Directors are adequately briefed on issues arising at Meetings.

The services and advice of the Company Secretaries are made available to Directors as necessary. The Company Secretaries keep the Board informed of new laws, regulations and requirements coming into effect which are relevant to them as individual Directors and collectively to the Board.

Corporate Services (Private) Limited having their registered office at No. 216, De Saram Place, Colombo 10 are the Company Secretaries since 1 April 2016.

The Directors after making necessary inquiries and reviews including reviews of the Group’s budget for the ensuring year, capital expenditure requirements, future prospects and risks, cash flows and borrowings facilities, have a reasonable expectation of the Company’s existence in the foreseeable future. Therefore, the going concern basis is adopted in the preparation of the Financial Statements.

The Board is responsible for the Company’s internal controls and for reviewing their effectiveness. Internal control is established with emphasis placed on safeguarding assets, making available accurate and timely information and imposing greater discipline on decision making. It covers all controls, including financial, operational and compliance control and risk management. It is important to state, however that any system can ensure only reasonable and not absolute, assurance that errors and irregularities are prevented or detected within a reasonable time.

During the year, there were no major transactions as defined by Section 185 of the Companies Act No. 07 of 2007.

Engagement with shareholders and potential investors is a key element of good corporate governance. The Board is conscious of their responsibility towards stakeholders and is committed to fair disclosure, with emphasis on the integrity, timeliness and relevance of the information provided, to avoid the creation of a false market.

Shareholders are provided with Quarterly Financial Statements and the Annual Report which the Group considers as its principal communication with them and other stakeholders. These reports are provided to the Colombo Stock Exchange and also published in print media. Shareholders may bring up concerns they have, either with the Chairman or Group Managing Director as appropriate. Sunshine Holdings PLC’s website www.sunshineholdings.lk and websites of listed companies within the Group serve to provide a wide range of information on the Group. The Company has reported a fair assessment of its position via the published audited Financial Statements and quarterly accounts. In preparation of these documents, the company has complied with the requirements of the Companies Act No. 07 of 2007 and in accordance with the Sri Lanka Financial Reporting Standards.

The AGM is the main mechanism for the Board to interact with and account to shareholders and provides an opportunity for shareholders’ views to be heard. Notice of the AGM, the Annual Report and Financial Statements and any other resolution together with the corresponding information that may be set before the shareholders at the AGM, are circulated to shareholders minimum 15 working days prior to the AGM allowing for all the shareholders to attend the AGM. A separate resolution is proposed for each item of business, giving shareholders the opportunity to vote on each of such issue, separately. Voting procedures at the AGM are circulated to the shareholders in advance. An effective mechanism to count all proxies lodged on each resolution is maintained. The Board is mindful of their accountability to shareholders. At the AGM, the Board provides an update to shareholders on the Company’s performance and shareholders ask questions and vote on resolutions. It is the key forum for shareholders to engage in decision making matters reserved for the shareholders which typically include proposals to adopt the Annual Report and Financial Statements, appointment of Directors and auditors and other matters requiring special resolutions. The Board Chairman and Board members particularly Chairmen of the sub-committees are present and available to answer questions. All Shareholders are encouraged to participate at the AGM and exercise their voting rights. Details of votes cast against a resolution are made available at the AGM and subsequently posted on the company website, as soon as practicable.

The Company has published quarterly financial statements with the necessary explanatory notes as required by the rules of the Colombo Stock Exchange and the Securities and Exchange Commission of Sri Lanka to all stakeholders. Any other financial and non-financial information, which is price sensitive or warrants the shareholders and stakeholders’ attention and consideration is promptly disclosed to the public.