199Market Risk Risk Impact Risk Management / Assessment Risk Mitigating Factors RiskFactor RatingLiquidity Risk'L?@GJGRW© High ©© M?PB© NNPMTCB©.MJGAGCQ© 1. Monitoring of Board Approved Mediumto meet 2. Measurement through key ratios 2. *GOSGBGRW©0GQI© NNCRGRC©*GKGRQ©obligations QSAF©?Q©,CR©*M?LQ©RM© QQCRQ© Measurement of liquidity in allas and when ©© *M?LQ©RM©!SQRMKCP©\"CNMQGRQ© ©© major currencies reported to *GOSGB© QQCRQ©RM©1FMPR©2CPK© *!-©?L?JWQCB©?LB©BCAGQGMLQ©they fall due *G?@GJGRGCQ©CRA © ©© R?ICL©?R© *!- © .PCN?P?RGML©MD©K?RSPGRGCQ©MD© 1RPCQQ©2CQRGLE©PCQSJRQ©ML©*GOSGBGRW© 4. assets and liabilities statement 0GQI©?PC©PCNMPRCB©RM© '0+!© ©© into time bands and appropriate risk mitigation Measurement of liquidity in all decisions made. major currencies. QQCQQKCLR©MD©*GOSGBGRW©0GQI© M?PB©?NNPMTCB©*GOSGBGRW© during Economic Capital Contingency plan. !?JASJ?RGML©SLBCP©'LRCPL?J© Capital Adequacy Assessment .PMACQQ©'! .Interest Rate Risk#DžCAR©RM© Medium ©© M?PB©?NNPMTCB©.MJGAGCQ© ©© +?RSPGRW©E?N©?L?JWQGQ©T?PGMSQ© *MU ©© .PSBCLRG?J©JGKGRQ©GC ©K?VGKSK© ©© RGKC©@?LBQ©©PCQGBS?J©RCPK©Economic maturity, duration etc. 3. K?RSPGRW©$GVCB©0?RC©©MP©LCVR© ©© QQCQQKCLR©MD©'LRCPCQR©0?RC© PC ©NPGAGLE©LJM?RGLE©P?RC©Value of 0GQI©BSPGLE©#AMLMKGA©!?NGR?J© 'LRCPCQR©P?RC©PGQI©PCJ?RCB©#OSGRW©#4#© !?JASJ?RGML©SLBCP©'LRCPL?J© PCNMPRGLE©?LB©?L?JWQGQ©?R© *!-© Capital Adequacy Assessment ?LB© '0+!©and Earnings .PMACQQ©'! . Stress Testing and Scenario Analysis, and the results?R©0GQI© ?PC©PCNMPRCB©RM© '0+!©?LB©# 0©BSC©RM© appropriate decisions are made to mitigate risks.interest ratemovement on,CR©'LRCPCQR©+?PEGL©,'+Equity Risk ©© M?PB© NNPMTCB©.MJGAGCQ© ©© 0CRSPL©MD©COSGRW©NMPRDMJGM©© *MU ©©'KN?AR©RM©RFC© Medium #OSGRW©.MPRDMJGM©.CPDMPK?LAC© movements in stock marketvalue of the ©©Bank’s Equity 4. 0CTGCU© KMLGRMPCB©@W©'LTCQRKCLR©.MPRDMJGM©GLTCQRKCLRQ© ©© 'LTCQRKCLR©!MKKGRRCC© Committee and risk mitigationin Share+?PICR©BSC© Mark to market of the decisions made.to adversemovements investment portfolio 2. Stress Testing on a regular basis,in stockmarket prices QQCQQKCLR©MD©#OSGRW©0GQI©BSPGLE© and reported / decisions made by Economic Capital Calculation '0+! SLBCP©'LRCPL?J©!?NGR?J© BCOS?AW© QQCQQKCLR©.PMACQQ©'! .
200 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceRisk Management Risk Impact Risk Management / Assessment Risk Mitigating Factors RiskFactor RatingForeign Exchange Rate Risk0GQI©?PGQGLE© High ©© M?PB© NNPMTCB©.MJGAGCQ© 1. Continuous Monitoring of Board Mediumfrom closing approved limit framework as perout a long 2. Assessment of Foreign Exchange ! 1*©PCOSGPCKCLRQ©BCNCLBGLE©ML©or a short RFC©A?NGR?J©PCOSGPCKCLRQ©?LB©0GQI© 0?RC©0GQI©AMLQGBCPCB©GL©QCRRGLE© Management capability. 0CESJ?P©QRPCQQ©RCQRGLE©DMP©ICW© 2PC?QSPW©*GKGRQ©?LB©.PMBSARQ© T?PG?@JCQ©PCNMPRGLE©RM© '0+!© and appropriate decisions made.position in ©© 0CESJ?P©PCT?JS?RGML©MD©MNCL© ©© Segregation of responsibilitiesa foreign positions @CRUCCL©$PMLR©-LjAC©+GBBJC© -LjAC©?LB© ?AI©-LjAC©currency at 4. Assessment of Foreign Exchange '2©1WQRCK©GL©NJ?AC©CL?@JCQ© tracking and monitoring ofa loss due to 0?RC©0GQI©BSPGLE©#AMLMKGA© exposures Monitoring exposures includingan adverse Capital Calculation under 3. monitoring of forex exposures with preparation of maturity ofmovement 'LRCPL?J©!?NGR?J© BCOS?AW© assets and liabilities +MLGRMPGLE©MD©0GQI© NNCRGRC©in exchange QQCQQKCLR©.PMACQQ©'! .© ©© *GKGRQ©DMP©$MPCGEL©#VAF?LEC©0?RC©rates. ©© 4?JSC©?R©0GQI©4 0©A?JASJ?RGML© 0GQI©?LB©4 0©JGKGRQ ML©$MPCGEL©#VAF?LEC©0?RC© Fluctuation in capital Adequacy Medium ratios are monitored regularly 1CLQGRGTC©NMPRDMJGMQ©RFPMSEF©'2© $GL?LAC© Capital augmentation measures Systems. 5. are put in place depending on the MSRAMKC©MD©KMLGRMPGLE©$GL?LAC© ©© *!-© 0CESJ?P©#AMLMKGA©!?NGR?J©Capital Risk !?JASJ?RGML©SLBCP©'LRCPL?J©!?NGR?J© BCOS?AW© QQCQQKCLR©.PMACQQ©0GQI©MD© High 1. Capital adequacy ratios 1. '! .©?Q©NCP©! 1*©%SGBCJGLCQGLQSLjAGCLR© computed regularly. 2. ©©capital 2. Stress testing under various adverse scenariosresources, toensure theBank is wellcapitalisedrelative tothe minimumregulatoryrequirements
201Operational Risk Register Risk Impact Risk Management / Assessment Risk Mitigating Factors RiskFactor RatingOperational RiskThe risk of loss High © BCOS?AW©?LB©CDžCARGTCLCQQ©MD© ©© -NCP?RGML?J©0GQI©.MJGAGCQ© Mediumresulting frominadequate or -NCP?RGML?J©0GQI©.MJGAGCQ©?PC© reviewed annually or morefailed internalprocesses, PCESJ?PJW©?QQCQQCB©@W©'0+3©?LB© frequently based on the need.people andsystems or ?R© '0+!©KCCRGLEQ© ©© 0GQI©+?L?ECKCLR©KMLGRMPGLE©from externalevents. This ©© -NCP?RGML?J©0GQI©GQ©K?L?ECB© through newly installedBCdžLGRGML©includes by business units in accordance -NCP?RGML?J©0GQI©'2©1WQRCK ©legal risk,but excludes with internal control Comprehensive operational lossstrategic andreputational requirements. database is maintained in therisks. ©© 0GQI©?LB©!MLRPMJ©1CJD© System to track losses by Event Assessments provided by the 2WNC©?LB© SQGLCQQ©*GLC©?Q©NCP© respective business units, and ?QCJ©''© )CW©0GQI©'LBGA?RMPQ 3. Material losses regularly analysed by cause, and action taken to improve systems and controls to prevent future recurrence ©© 0GQI©PCTGCU©ML©LCU©NPMBSARQ© processes, external suppliers / outsourced service providers. ©© 0CESJ?P©+MLGRMPGLE©MD© -NCP?RGML?J©0GQI© NNCRGRC©*GKGRQ© against actual losses.People Risk*?AI©MD© High 1. Manpower planning in line ©© 0M@SQR©&0©NMJGAGCQ©EMTCPL?LAC© Mediumappropriatehuman with expansion and changes in structures, programmes andresources,failure to business requirements. processes in place and policiesmanageperformance 2. Upgrading of minimum are applied in a consistentand rewardlink, OS?JGdžA?RGMLQ©?LB©QIGJJ©JCTCJQ© manner.unauthorisedor ©© 0CAMELGRGML©MD©QNCAG?JGQCB©QIGJJQ© ©© 0CAPSGRKCLR©.PC©CKNJMWKCLR©inappropriateemployee 4. Quarterly reviews / assessment screening, Employer feedback /activity andfailure to of performance Exit interviewscomply withemployment ©© .CPDMPK?LAC©K?L?ECKCLR© ©© .PM?ARGTC©&0©NPMEP?KKCQ©RM©relatedrequirements systems in place to recognise engage and receive feedback and reward performance and DPMK©QR?Dž©RFPMSEFMSR©RFC© ?LI© identify training needs ©© 1RPMLE©QR?Dž©BCTCJMNKCLR© 6. Development and succession programmes in place combining plans e-learning, classroom training and on the job training. .PMEP?KKCQ©AMTCP©@MRF©ECLCP?J© ?LB©QNCAG?JGQCB©?PC?Q©?LB©QMNJ© skills. ©© +?GLR?GLGLE©?©*MU©QR?Dž©RSPLMTCP© ratio 6. Consistently applied disciplinary procedures
202 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceRisk Management Risk Impact Risk Management / Assessment Risk Mitigating Factors RiskFactor RatingTechnology Risk0GQI©?PGQGLE© High 1. Technology planning is 1. Technology planning as a part of Mediumfrom non annual strategic planning process-availability conducted during the annual which covers a 3 year periodMD©'2©QWQRCKQ© Systems audits are performedsystems break strategic planning. for each and every systemdowns, errors, before deploying into production ©© .CPDMPKGLE©QWQRCKQ©?SBGRQ©DMP© 2. environment #VRCPL?J'LRCPL?J©TSJLCP?@GJGRW© each and every system before ?QQCQQKCLR©UGRF©0GQI© +?L?ECKCLR ©.PMACQQ©MD© deploying into production identifying and assessing risk.intrusions and environment ?LIQ©'2©\"CN?PRKCLR©©'2©1RCCPGLE©disruptions, or Committee together with thenot keeping © #VRCPL?J©©'LRCPL?J©TSJLCP?@GJGRW© ©© business lines, continuously review ?LB©?L?JWQC©LCU©AMQR©CLjAGCLR© ?QQCQQKCLR©UGRF©0GQI© delivery channels. Based on the outcome of thein line with +?L?ECKCLR ©.PMACQQ©MD© systems audit, necessary controlsthe trends in are implemented before livetechnology identifying and assessing risk. implementation. External vulnerability assessment ©© '2©?LB©1WQRCKQ© SBGR© ©© carried out by external consultants based on the need.and delivery continuously review and analyse '2©.MJGAGCQ©©NPMACBSPCQ©GLTCQRKCLR©channels. GL©J?RCQR©RCAFLMJMEW©'2©QWQRCKQ© LCU©AMQR©CLjAGCLR©?LB©QCASPC© ensure competitive advantage. Backup and disaster recovery, delivery channels. .J?LLGLE©?LB©RCQRGLE©GL©NJ?AC © !. ©© '2©1RCCPGLE©!MKKGRRCC 5. 6. ©© 8.Legal Risk0GQI©?PGQGLE© High ©© 'LBCNCLBCLR©*CE?J©\"CN?PRKCLR ©© M?PB© NNPMTCB©*CE?J©0GQI© *MUfrom litigation 2. Specialist legal advice obtainedagainst the ©© +?L?ECKCLR©.MJGAW©@CGLE©?NNJGCB© from external consultants on a ©© need basis. in all legal matters ©© BCOS?AW©?LB©CDžCARGTCLCQQ©MD©Bank, faulty RFC©AMLRPMJQ©PCTGCUCB©@W©*CE?J© BCOS?AW©?LB©CDžCARGTCLCQQ©MD©RFC©documentation Department.or business AMLRPMJQ©PCTGCUCB©@W©*CE?J©\"CNR ©not beingconducted .MJGAGCQ©?LB©NPMACBSPCQ©GL©NJ?AC©as per theapplicable laws to ensure that business activities with legal impact are properly risk assessed and executed. 4. All legal documents / Service *CTCJ© EPCCKCLRQ©?PC©QNCAGdžA?JJW© ?NNPMTCB©@W©!FGCD©*CE?J©-LjACP© ?LB©?JQM©QGELCB©MDž©@W©0GQI©?LB© Compliance departments. 5. Company Secretary function / compliance to ensure compliance UGRF©QNCAGdžA©PCESJ?RMPW© requirements
203Strategic and Reputational Risk Register Risk Impact Risk Management / Assessment Risk Mitigating Factors RiskFactor RatingStrategic RiskFailure to High Bank’s 2-3 year strategic plan covering ©© M?PB©?NNPMTCB©1RP?RCEGA©0GQI© *MUmanage +?L?ECKCLR©.MJGAW© all business units approved by the 1RP?RCEGA©0GQI© QQCQQKCLR©GL© '! .©?LB©NPMTGQGMLQ©SLBCP©medium / long Board. ©© Economic Capitalterm strategic 0CESJ?P©KMLGRMPGLE©@W©@SQGLCQQ©goals of the JGLC©FC?BQ©©.J?LLGLE©\"GTGQGML© Accuracy of Financial reportingbusiness ©© ensured by internal controls 4. ?LB©?BMNRGML©MD©1*$01*) 1© standards 5. Monthly / quarterly reporting of assessment of the stages ©© achieved , submitted to the Board of Directors for review. 0CTGCU©?ARGMLQ©©NJ?LQ©BCNCLBGLE© on the outcome and any external, economic environment changes.Reputational Risk,CE?RGTC© High 1. Complaint handling policy / ©© 2GKCJW©?LB©CLjAGCLR© *MUCDžCARQ©MD©public opinion, procedure is in place in terms communications among allcustomer of the customer charter as per stakeholders. ! 1*©ESGBCJGLCQ © 2. Corporate Governance practicesopinion ©© .PMACBSPC©DMP©PCACGTGLE© ©© .PMACBSPC©DMP©PCACGTGLE©ASQRMKCP©and marketreputation and customer complaints and complaints and resolution resolution mechanism is in mechanism in place.the damage place. ©© 0CNSR?RGML?J©0GQI© QQCQQKCLR©caused dueto brands 3. Complaints and process GL©'! .©?LB©NPMTGQGMLQ©SLBCP©by failure tomanage public of resolution relating to Economic Capitalrelations. operational risk / compliance, ©© SQGLCQQ©!MLRGLSGRW©.J?LLGLE© GD©QGELGdžA?LR©GQ©CQA?J?RCB©RM© 6. Training and capacity building. !MPNMP?RC©+?L?ECKCLR©© '0+!© 7. Code of conduct for Board and all QR?Dž©KCK@CPQ
204 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCompliance ReviewThe Compliance Unit standard of compliance which exceeds the mere legalstrives to instil an requirements and embrace higher standards of integrityorganisation-wide and ethical conduct.compliance cultureemphasising standards THE COMPLIANCE STRUCTUREof honesty and integrity. The Bank’s three lines of defence structure facilitate theCompliance risk is the risk arising out of non compliance CDžCARGTC©K?L?ECKCLR©?LB©KMLGRMPGLE©MD©AMKNJG?LAC©UGRF©JCE?J©MP©PCESJ?RMPW©Q?LARGMLQ©ASJKGL?RGLE©GL©džL?LAG?J© risk. At the apex level, the Board of Directors monitor theloss, or loss to the Bank’s reputation as a result of the Bank’s compliance through the Board Audit CommitteeBank’s failure to comply with applicable laws, regulations, ?LB©RFC© M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC©codes of conduct and standards of good practice. The '0+!© ©2FC©!MKNJG?LAC©3LGR©?LB©'LRCPL?J© SBGR©relevant compliance laws could arise from multiple Department which are crucial elements of the Bank’ssources including primary legislation, rules and standards PB©JGLC©MD©BCDCLAC©RMECRFCP©UGRF©RFC©0GQI©+?L?ECKCLR©issued by regulators and legislators, market conventions, Unit are responsible for providing overall assurance tocodes of practice promoted by industry associations and the Board on the Bank’s level of compliance with theGLRCPL?J©AMBCQ©MD©AMLBSAR©?NNJGA?@JC©RM©RFC©QR?Dž©KCK@CPQ© relevant laws, regulations and other applicable standards,of the Bank. At Sampath Bank, we strive to achieve a procedures and practices. THE COMPLIANCE UNIT 'L©?AAMPB?LAC©UGRF©RFC©@CQR©NP?ARGACQ©?LB©EMMB© governance advocated by the Banking Act Direction ,M©©MD©©ML©!MPNMP?RC©%MTCPL?LAC©DMP©*GACLQCB© Commercial Banks, the Bank has established a Compliance Unit which holds the responsibility for monitoring the Bank’s overall compliance risks. The Monitoring Formulating ?LB©0CNMPRGLE© Compliance Status of .MJGAGCQ Compliance COMPLIANCE FRAMEWORK \"CdžLGLE© Compliance Targets Creating Facilitating Compliance Compliance 5MPILJMUQ RFPMSEF©#DžCARGTC© Communication, Training and Awareness
205Unit consistently assesses the Bank’s compliance with ?LB©KCRFMBQ©DMP©PGQI©KGRGE?RGML©?KMLE©MRFCPQ ©2FC©.MJGAW©laws, regulations, statutory guidelines as well as internal is reviewed by the Board periodically, and updated ascontrols and policies. The Compliance Unit functions and when necessary. Meanwhile, the Group ComplianceGLBCNCLBCLRJW©MD©NPMdžR©?LB©TMJSKC©R?PECRQ©?LB©GQ©FC?BCB© .MJGAW©MSRJGLCQ©EPMSN UGBC©AMKNJG?LAC©PGQI©K?L?ECKCLR©@W©?©BCBGA?RCB©%PMSN©!MKNJG?LAC©-LjACP©UFM©BGPCARJW© encapsulating the overall compliance principles adoptedPCNMPRQ©RM©RFC© M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR© by the Bank and its subsidiaries.!MKKGRRCC ©\"SPGLE©RFC©WC?P©RFC©!MKNJG?LAC©3LGRQ©QR?Dž©cadre was further strengthened with the addition of COMPLIANCE CULTURE©K?GLQRPC?K©@?LICPQ ©2FC©RMR?J©QR?Dž©QRPCLERF©GL©RFC©!MKNJG?LAC©3LGR©GQ©ASPPCLRJW© ©'L©?BBGRGML©RM©RFC©QS@© The Compliance Unit strives to instil an organisation-wideunit monitoring regulatory compliance, the Unit is also compliance culture emphasising standards of honestyKMLGRMPGLE© LRG©+MLCW©*?SLBCPGLE©AMKNJG?LAC© +*© and integrity. Training and awareness programmesthrough a separate sub-unit. ?PC©A?PPGCB©MSR©DMP©?JJ©QR?Dž©DPCOSCLRJW©RM©CLQSPC©RF?R© all employees are adequately aware of the Bank’sThe primary responsibilities of the Compliance Unit are; compliance requirements, structures and procedures. © 'BCLRGdžA?RGML©?LB©?QQCQQKCLR©MD©NMRCLRG?J©?PC?Q© +C?LUFGJC©?JJ©LCUJW©PCAPSGRCB©QR?Dž©KCK@CPQ©?PC© introduced to the Bank’s audit and compliance processes EGTGLE©PGQC©RM©!MKNJG?LAC©0GQI BSPGLE©GLBSARGML ©5MPILJMU©GQ©?L?JWQCB©?LB©PCQNMLQG@GJGRW© © 0CAMKKCLB?RGML©MD©KC?QSPCQ©RM©KGRGE?RC© DMP©AMKNJG?LAC©PGQI©K?L?ECKCLR©GQ©AJC?PJW©BCdžLCB©?LB© documented. The Compliance Unit takes a proactive !MKNJG?LAC©0GQI©?LB©AMPPCARGTC©?ARGMLQ©GL©RFC©CTCLR© approach in promoting a culture of compliance, and of non-compliance operates as a strategic partner to all business units. Dissemination of information to business units regarding regulatory requirements and guidelines FOCUS AREAS IN 2014 Ensuring that operational procedures are aligned with the regulatory requirements The Group compliance framework was further Ensuring compliance with the Financial formalised and strengthened during the year. 2P?LQ?ARGMLQ©0CNMPRGLE© AR ©2FGQ©GLAJSBCQ© The Compliance Unit’s responsibilities were monitoring and reporting suspicious transactions . broadened to include Exchange Control related © .CPGMBGA©PCNMPRGLE©RM©RFC© M?PB©'LRCEP?RCB©0GQI© matters. The Compliance Unit now serves as an Management Committee intermediary function between the branches, departments and the Exchange ControlCOMPLIANCE REPORTING \"CN?PRKCLR©MD©RFC©! 1* © 2P?GLGLE©?LB©?U?PCLCQQ©@SGJBGLE©ML©0CESJ?RMPW©The Compliance Unit’s periodic reporting is two-fold. A !MKNJG?LAC© +*©!MKNJG?LAC©!0' ©PCJ?RCB©BCR?GJCB©PCNMPR©©GLAJSQGTC©MD©QGEL©MDž©DPMK©RFC©FC?BQ©MD© AMKNJG?LAC©?LB©#VAF?LEC©!MLRPMJ©0CESJ?RGMLQ©UCPC©business units on statutory and mandatory reporting carried out for compliance unit employees as wellrequirements and the Bank’s level of compliance is as to other team members of the Bank through,provided to the Board of Directors on a quarterly GLRCP©©?JG?©©CQR?@JGQFKCLR©MD©©?©\"CBGA?RCB©UC@©@?QGQ © BBGRGML?JJW©?©KMLRFJW©!MKNJG?LAC©!CPRGdžA?RC©GQ© site depicting Authorised Signatories of ExchangeNPMTGBCB©RM©RFC© '0+!©ML©?©KMLRFJW©@?QGQ ©2FC©KMLRFJW© Control Dept. expediting the approval process,!MKNJG?LAC©!CPRGdžA?RC©GLAJSBCQ © ©BCBGA?RCB©UC@©QGRC©DMP©!0' ©!PCBGR©'LDMPK?RGML© Compliance on statutory / regulatory reporting SPC?S©MD©1PG©*?LI?©UFCPC©?©3QCP©%SGBC©?JJ© requirements © 1GELGdžA?LR©LCU©PCESJ?RGMLQ©©BGPCARGMLQ©GQQSCB©@W© relevant specimen formats readily available for the regulators users have been made available. Events of non-compliance © L© LGK?RCB©# *C?PLGLE©+MBSJC©ML© LRG©+MLCW© © 2P?GLGLE©LCCBQ©GBCLRGdžCB©PCJ?RGLE©RM©RFC©AMKNJG?LAC© *?SLBCPGLE©?T?GJ?@JC©DMP©?JJ©QR?Dž©KCK@CPQ function Direct access to Exchange Control web site for all Monitoring of compliance on regulatory / team members anti-money laundering Action was taken towards strengthening the Bank’s LRG©+MLCW©*?SLBCPGLE©DP?KCUMPI©?LB©AMSLRCPGLE©POLICY FRAMEWORK MD©RCPPMPGQR©džL?LAGLE ©The Bank’s Compliance procedures and guidelines are G4 - 38, 39AJC?PJW©QCR©MSR©GL©GRQ© M?PB©?NNPMTCB©!MKNJG?LAC©.MJGAW ©2FC©.MJGAW©BCR?GJQ©RFC©PGQI©GBCLRGdžA?RGML©PMJCQ©?LB©responsibilities, structure and processes, reporting lines
206 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceCHAIRMAN’S STATEMENT STAKEHOLDER ENGAGEMENTDear Stakeholder, We are committed to balancing stakeholder interests to ensure there is responsible and sustainableGood corporate governance provides a solid foundation growth. To achieve this, we ensure that there isfor the sustainable growth of business, promoting ethical QSLjAGCLR©QR?ICFMJBCP©CLE?ECKCLR©UGRF©QR?ICFMJBCPQ©business conduct and transparency as we strive to create to understand their needs and formulate appropriatevalue for our stakeholders. The corporate values and responses while balancing their interests. This processa comprehensive policy framework approved by the continues to drive strategy at the Bank and forms theBoard serve to communicate to employees at all levels foundation for many of the innovations which havehow business should be conducted. The organisation QF?NCB©?LB©BGDžCPCLRG?RCB©RFC© ?LI©DPMK©GRQ©AMKNCRGRMPQ ©©structure put in place by the Board serves to ensure 'R©GQ©CTGBCLR©GL©MSP©SLN?P?JJCJCB©QF?PCFMJBCP©CLE?ECKCLR©that authority and responsibility are delegated in a MSP©ASQRMKCP©DMASQ©?LB©MSP©CDžCARGTC©?LB©KMRGT?RCB©manner that facilitates accountability at all levels of the team, long standing supplier relationships and ourorganisation. The Board is committed to maintaining support of the e-governance initiatives and alignmentthe highest standards of Corporate Governance in with the country strategy in many aspects of ourcompliance with the regulatory requirements of the business.!CLRP?J© ?LI©MD©1PG©*?LI?©?LB©RFC©!MBC©MD© CQR©.P?ARGAC©on Corporate Governance issued jointly by the Securities DRIVING PERFORMANCE©#VAF?LEC©!MKKGQQGML©?LB©RFC©'LQRGRSRC©MD©!F?PRCPCB© AAMSLR?LRQ©MD©1PG©*?LI? © As the environment was challenging for the entire džL?LAG?J©QCPTGACQ©QCARMP©BSPGLE©RFC©WC?P©RFC© M?PB©While governance structures, policy frameworks and focussed considerable attention to driving performanceprocesses are important, we are conscious that the UGRFGL©RFC©BCdžLCB©PGQI©?NNCRGRC©MD©RFC© ?LI © ©LSK@CP©implementation and actual functioning of these must be of strategic initiatives were implemented to enhanceEGTCL©BSC©AMLQGBCP?RGML©RM©CLQSPC©CDžCARGTCLCQQ ©© performance in the long term and we are encouraged byThe Board and its Sub Committees receive reports RFC©PCQSJRQ©MD©RFC©Q?KC ©©0CESJ?P©QRPSARSPCB©GLRCP?ARGMLQ©from senior executives, of the Bank’s performance in with the corporate management team has enabledthis regard on a regular basis and provide guidance and CDžCARGTC©BPGTGLE©MD©NCPDMPK?LAC©RM©CLQSPC©RF?R©@MRF©direction to management on enhancing performance short term and long term goals are met.while ensuring compliance. RISK MANAGEMENTBOARD COMPOSITION 2FC© M?PB©F?Q©BCdžLCB©RFC©PGQI©?NNCRGRC©DMP©RFC© ?LI©The Board Composition remains unchanged from the and continues to pay considerable attention to the riskNPCTGMSQ©WC?P©?LB©RFGQ©F?Q©GLAPC?QCB©RFC©CLjA?AW©MD©RFC© management processes of the Bank. The Sub CommitteeBoard as there is greater understanding of the issues tasked with oversight of the risk management functionat hand collectively. There is a diverse mix of skills and meets bi-monthly to monitor the performance of theexperience among the Board members as they bring risk management function and reports to the Board on aprofessional, academic and entrepreneur perspectives regular basis on matters concerned.RM© M?PB©BGQASQQGMLQ ©©5C©?JQM©F?TC©QSLjAGCLR©BGTCPQGRW©in terms of gender and age with three eminent female GOVERNANCEprofessionals on the Board and two Directors below 35years of age. Their collective experience and varied 2FC© M?PB©F?Q©?BMNRCB©RFC©PCTGQCB©!MBC©MD© CQR©.P?ARGAC©perspectives have generated discussion and debate on on Corporate Governance 2013 jointly issued by theICW©GQQSCQ©CLF?LAGLE©RFC©CDžCARGTCLCQQ©MD©RFC© M?PB 1CASPGRGCQ©©#VAF?LEC©!MKKGQQGML©?LB©RFC©'LQRGRSRC©MD© !F?PRCPCB© AAMSLR?LRQ©MD©1PG©*?LI? ©©
207The Board continues to set the learning culture for theorganisation by investing time to update themselveson matters relevant to their assigned roles throughparticipation at various workshops and seminars. Wehave also had guest presentations from experts to obtaina greater understanding of areas of common interestand relevance to the Board to provide an independentperspective.Succession planning, talent management and leadershipdevelopment have continued as a key Board agenda itemRFPMSEFMSR©RFGQ©WC?P©?Q©RFC© M?PB©&0©?LB©0CKSLCP?RGML©!MKKGRRCC©DSPRFCP©PCdžLCB©RFC©NJ?LQ©BP?UL©SN©GL©RFC©previous year.The Board sanctioned donations to the value of0Q© ©+L © NNPMT?J©DMP©RFCQC©BML?RGMLQ©GQ©QMSEFR©?R©RFC©scheduled Annual General Meeting.As governance practices within the country continueto shape corporate culture, the Board is committedto reviewing and revising our policies and governancestructures with the objective of upholding the highstandards in governance and stakeholder engagementwhich have been a tradition carefully nurtured withinSampath Bank.Dhammika PereraChairman!MJMK@M©1PG©*?LI?19th February 2015
208 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceGOVERNANCE STRUCTURE Subsidiaries Board of Directors - Shareholders External Auditors Board Audit Committee Subsidiaries Board of Directors - Board Committees Board HR & Remuneration Committee Siyapatha Finance PLC Leasing and Factoring Bank Board Nomination Committee Board Integrated Risk Management Committee Sampath Centre Ltd - Managing Director Renting of Commercial Property Board Credit Committee Board Strategic Planning Committee SC Securities (Pvt) Ltd - Board Shareholder Relations Committee Stock Broking Board Treasury Committee Sampath Information Technology Board Marketing Committee1MJSRGMLQ©*RB© ©\"CTCJMNGLE©1MNJU?PC© Solutions & Maintenance of HardwareExecutive Director / Group Chief $GL?LAG?J©-LjACP SDGM - SDGM Operations & Branch CreditDGM - Finance DGM - Operations DGM - HR DGM - DGM - Marketing DGM - Corporate Credit and Business Treasury Development AGM - Administration AGM - Strategic Planning & Research AGM - Branch Banking 1 AGM - Branch Banking 2 AGM - New IT Business Development Chief Legal -LjACP AGM - Recoveries AGM - Corporate Credit AGM - Corporate Finance & FCBU AGM - Global Business Head of IT AGM - Card Centre Group Company Secretary Group !MKNJG?LAC©-LjACP Head of Internal Audit Group Senior Risk Manager -LjACP System Audit Strategic Planning Legal Risk & Reserch Management New IT System Recoveries Commercial Corporate Card Centre Treasury Development Credit/ Finance +GBBJC©-LjAC Operations FCBU City Branch Merchant Banking Finance Human Resources Treasury ComplianceDepartment & Training Remittances Branch Treasury Network Corporate Credit/ Trade Services ?AI©-LjAC Corporate Branch Treasury Group CompanyPlanning & Administration & Investment Secretary'sBudgeting Engineering -LjAC Marketing IT System Audit Development Banking Internal Audit Business Development Deposit Mobilisation $SLARGML?J©©0CNMPRGLE© Management Committees BKGLGQRP?RGTC©0CNMPRGLE $GL?LAG?J©0CNMPRGLE (1) Asset & Liability Committee Department / Unit (2) Deposit Mobilisation Committee (3) Investments Committee (4) IT Steering Committee (5) Credit Policy Committee (6) Procurement Committee (7) IFRS Steering Committee (8) Internal Control Steering Committee (9) Corporate Management Committee
209GOVERNANCE OF THE BANK GOVERNANCE STRUCTURE1?KN?RF© ?LI©GQ©?©NS@JGA©JGQRCB©AMKN?LW©?LB©GRQ©?Dž?GPQ© Directors are elected by shareholders at the Annualare governed by the Board of Directors in accordance General Meeting except for casual vacancies which arewith the following: džJJCB©@W©RFC© M?PB©SLRGJ©RFC©LCVR© LLS?J©%CLCP?J©+CCRGLE© in accordance with the Articles of Association. The © !MKN?LGCQ© AR©,M©©MD© Board determines the strategic direction of the Bank © 2FC© ?LIGLE© AR©,M©©MD©©?LB©?KCLBKCLRQ© and provides guidance to the Corporate Management Team in delivering sustainable value to our shareholders thereto over the short, medium and long term. Sub Committees © ?LIGLE© AR©\"GPCARGML©,M©©MD©©ML©!MPNMP?RC© MD©RFC© M?PB©F?TC©@CCL©QCR©SN©UGRF©QNCAGdžA©RCPKQ©MD© PCDCPCLAC©RM©?QQGQR©RFC© M?PB©RM©CLQSPC©RFCPC©GQ©QSLjAGCLR© %MTCPL?LAC©DMP©*GACLQCB©!MKKCPAG?J© ?LIQ©?LB© focus on matters that are of continuing importance to amendments thereto the Bank. The Corporate Management Team lead by the © 2FC© AAMSLRGLE©?LB© SBGRGLE©1R?LB?PBQ© AR©,M©© Managing Director is responsible for implementation of of 1995 strategy and managing the performance of the Bank on © *GQRGLE©0SJCQ©MD©RFC©!MJMK@M©1RMAI©#VAF?LEC a day to day basis. The Board approves strategic plans, © PRGAJCQ©MD© QQMAG?RGML©MD©1?KN?RF© ?LI©.*! governance structures, risk appetite, policies, procedures and delegation of authority providing a framework forThe Board has also voluntarily adopted the following decision making. Stakeholder engagement processesstandards and codes to ensure that the Bank conforms RM©GBCLRGDW©?LB©?BBPCQQ©LCCBQ©MD©MRFCP©QGELGdžA?LR©to the highest standards of governance in managing its stakeholders are embedded in to the organisation policyFSK?L©QMAG?J©džL?LAG?J©?LB©CLTGPMLKCLR©A?NGR?JQ ©2FCQC© frameworks to ensure that there is long term valueinclude the following: created for all stakeholders. © !MBC©MD© CQR©.P?ARGAC©ML©!MPNMP?RC©%MTCPL?LAC© G4-34, 35, 36, 37, 49, 51 2013 issued jointly by the Securities & Exchange !MKKGQQGML©MD©1PG©*?LI?©?LB©RFC©'LQRGRSRC©MD© !F?PRCPCB© AAMSLR?LRQ©MD©1PG©*?LI? © %©QR?LB?PBQ©DMP©1SQR?GL?@GJGRW©0CNMPRGLE©GQQSCB©@W© RFC©%JM@?J©0CNMPRGLE©'LGRG?RGTC Board Committees Key Responsibilities CompositionBoard Audit Committee © $GL?LAG?J©0CNMPRGLE 5 members of whom 4 are M?PB©&0©?LB©0CKSLCP?RGML© Corporate Governance 'LBCNCLBCLR©\"GPCARMPQ © JJ©KCK@CPQ©Committee © External Audit ?PC©,ML©#VCASRGTC©\"GPCARMPQ © © 'LRCPL?J© SBGR M?PB©,MKGL?RGML©!MKKGRRCC © 'LRCPL?J©!MLRPMJQ Comprises 5 Directors of whom 4 © ?PC©,ML©#VCASRGTC©\"GPCARMPQ ©2UM© &0©?LB©0CKSLCP?RGML©NMJGAW Directors including the Chairman © .CPDMPK?LAC©MD©)CW©+?L?ECKCLR© ?PC©'LBCNCLBCLR©\"GPCARMPQ .CPQMLLCJ !MKNPGQCQ©©,ML©#VCASRGTC© © 1SAACQQGML©.J?LLGLE Directors of whom the Chairperson © GQ©?L©'LBCNCLBCLR©\"GPCARMP Board composition M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR© © 'LBCNCLBCLAC©MD©\"GPCARMPQ Comprises 6 members of whomCommittee © .CPDMPK?LAC©MD©RFC© M?PB©?LB©GRQ© ©?PC©,ML©#VCASRGTC©?LB©©?PC© © Committees Executive. Three Directors includingBoard Credit Committee © Appointment and performance of RFC©!F?GPNCPQML©?PC©'LBCNCLBCLR )CW©+?L?ECKCLR©.CPQMLLCJ !MKNPGQCQ©©,ML©#VCASRGTC© © Directors and 2 Executive Directors. © 0GQI© NNCRGRC Three members including the 0GQI©%MTCPL?LAC !F?GPK?L©?PC©'LBCNCLBCLR© 0GQI©.MJGAW©DP?KCUMPIQ Directors. 0GQI©KMLGRMPGLE©?LB©PCNMPRGLE !PCBGR©0GQI !PCBGR©.MJGAGCQ Credit Controls Credit Administration
210 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate Governance Board Committees Key Responsibilities Composition M?PB©1RP?RCEGA©.J?LLGLE©!MKKGRRCC 1RP?RCEGA©.J?LLGLE©NPMACQQ Comprises 8 Directors of whom 0CTGCU©GKN?AR©MD©CVRCPL?J©AF?JJCLECQ ©?PC©,ML©#VCASRGTC©GLAJSBGLE© M?PB©1F?PCFMJBCP©0CJ?RGMLQ© 0CTGCU©GLRCPL?J©QRPCLERFQ©?LB© the Chairman who is also theCommittee !F?GPK?L©MD©RFC© M?PB ©'LAJSBCQ©RUM©Board Treasury Committee weaknesses 'LBCNCLBCLR©\"GPCARMPQ 0CTGCU©CDžCARGTCLCQQ©MD©NPMNMQCB©Board Marketing Committee !MKNPGQCQ©©,ML©#VCASRGTC© strategies Directors 0CTGCU©PCQMSPACQ©?LB©A?N?@GJGRGCQ Comprises 5 Directors of whom 3 ?PC©,ML©#VCASRGTC ©2FC©!F?GPK?L© Shareholder /investor relations and one other Director are 'LBCNCLBCLR©\"GPCARMPQ 2PC?QSPW©+?L?ECKCLR©.MJGAGCQ Treasury Management processes !MKNPGQCQ©©,ML©#VCASRGTC© Monitor risk arising from Treasury Directors of whom 2 are 'LBCNCLBCLR©\"GPCARMPQ functions Treasury performance Customer strategy Brand strategy Customer service !10©NMJGAW©?LB©?ARGTGRGCQCORPORATE GOVERNANCE HIGHLIGHTS FOR 2014 © 0C CJCARGML©MD©RFC©DMJJMUGLE©\"GPCARMPQ©?R©RFC© LLS?J©%CLCP?J©+CCRGLE © +P©!F?LL?©.?J?LQSPGW? Mr Deshal De Mel Miss Annika Senanayake © +P©0?LGJ©.?RFGP?L? The Board appointed Alternate Directors to facilitate the smooth operation of business and minimise the bottlenecks that may arise due to temporary physical unavailability of Directors in the country due to overseas travel commitments. © 0C ?NNMGLRKCLR©MD©+CQQPQ©#PLQR©©7MSLE©!F?PRCPCB© AAMSLR?LRQ©?Q© SBGRMPQ©MD©RFC©!MKN?LW©RM©?QQCQQ© AMKNJG?LAC©UGRF©RFC© ?LIGLE© AR©\"GPCARGML©,M©©MD©©ML©!MPNMP?RC©%MTCPL?LAC©DMP©*GACLQCB©!MKKCPAG?J© ?LIQ©?LB©QS@QCOSCLR©?KCLBKCLRQ©RFCPCRM©?LB©RM©NPMTGBC©?QQSP?LAC©ML©RFC©\"GPCARMPQ©1R?RCKCLR©ML©'LRCPL?J© !MLRPMJ©-TCP©$GL?LAG?J©0CNMPRGLE©EGTCL©ML©N?ECQ©©© © \"PGTGLE©?©NPMEP?KKC©RM©CLQSPC©QSAACQQGML©NJ?LLGLE©DMP©)CW©+?L?ECKCLR©.CPQMLLCJ©UGRFGL©RFC© ?LICOMPOSITION who are both employees of the Bank and part of the !MPNMP?RC©+?L?ECKCLR ©2FC© M?PB©GQ©QSLjAGCLRJW©BGTCPQC©The Board comprises 12 Directors of whom 10 are in terms of gender and experience with 3 females on,ML©#VCASRGTC©\"GPCARMPQ©?LB©©?PC©#VCASRGTC©\"GPCARMPQ© the Board and ages of Board members ranging from 67who combine knowledge, skills and experience from WC?PQ©RM©©WC?PQ ©,ML©#VCASRGTC©\"GPCARMPQ©QNCLB©LMR©QSAF©BGTCPQC©BGQAGNJGLCQ©QSAF©?Q©J?U©džL?LAC©CAMLMKGAQ© less than 48 hours per annum on matters of the Bankand business. The Chairman and Deputy Chairman are and members of the Board Audit Committee and Board,ML©#VCASRGTC©\"GPCARMPQ©?LB©RFC©PMJCQ©MD©RFC©!F?GPK?L© 'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC©QNCLB©?©DSPRFCP©and Managing Director have been segregated and 12 hours per annum at a minimum on subject areasAJC?PJW©BCdžLCB ©$GTC©MD©RFC©,ML©#VCASRGTC©\"GPCARMPQ©?PC© allocated to the two Committees.'LBCNCLBCLR©\"GPCARMPQ ©2FC©+?L?EGLE©\"GPCARMP©?LB©%PMSN©!FGCD©$GL?LAG?J©-LjACP©?PC©RFC©MLJW©#VCASRGTC©\"GPCARMPQ©
211COMPLIANCE WITH CODES ON for key business areas from the Managing Director andCORPORATE GOVERNANCE MRFCP©)CW©+?L?ECKCLR©.CPQMLLCJ ©0CESJ?P©PCNMPRQ©?PC© also provided to the Board and Board Committees on2FC© M?PB©AMKNJGCQ©UGRF©RFC© ?LIGLE© AR©\"GPCARGML©,M© RFC©%PMSNQ©PGQI©?NNCRGRC©NPMdžJC©PGQI©K?L?ECKCLR©APCBGR©11 of 2007 and subsequent amendments thereto on exposures and the Group’s loan portfolio, asset and!MPNMP?RC©%MTCPL?LAC©DMP©*GACLQCB©!MKKCPAG?J© ?LIQ© liability management, liquidity, litigation, compliance andGQQSCB©@W©RFC©!CLRP?J© ?LI©MD©1PG©*?LI?©?Q©PCNMPRCB©ML© reputational issues. The agenda and supporting paperspages 236 to 251. Our External Auditors, Messrs Ernst are distributed in advance of all Board and Committee©7MSLE©F?TC©NPMTGBCB©!CLRP?J© ?LI©UGRF©?©ACPRGdžA?RC© meetings to allow time for appropriate review and toof compliance on the requirements of the Banking Act facilitate full discussion at the meetings. All Directors\"GPCARGML©,M©©MD©©ML©!MPNMP?RC©%MTCPL?LAC©DMP© have full and timely access to all relevant information*GACLQCB©!MKKCPAG?J© ?LIQ©GQQSCB©@W©RFC©!CLRP?J© ?LI© and may take independent professional advice ifMD©1PG©*?LI? ©!MKNJG?LAC©UGRF©RFC©TMJSLR?PGJW©?BMNRCB© necessary at the Company’s expense. Directors have free!MBC©MD© CQR©.P?ARGAC©ML©!MPNMP?RC©%MTCPL?LAC©GQQSCB© and open contact with management at all levels and Keyjointly by the Securities & Exchange Commission of Sri +?L?ECKCLR©.CPQMLLCJ©PCESJ?PJW©K?IC©NPCQCLR?RGMLQ©RM©*?LI?©1#!©?LB©RFC©'LQRGRSRC©MD©!F?PRCPCB© AAMSLR?LRQ©MD© the Board on matters relating to their work.1PG©*?LI?©'! 1*©GL©©GQ©BCR?GJCB©ML©N?ECQ©©RM©©of this report. The compliance with CSE listing rules on \"GPCARMPQ©PCACGTC©@PGCdžLEQ©DPMK©!MPNMP?RC©+?L?ECKCLR©!MPNMP?RC©%MTCPL?LAC©F?Q©LMR©@CCL©BGQAJMQCB©?Q©*GQRCB© and attend external seminars including Central BankBanks are exempted from complying with the said rules Director Forums to ensure that they are regularlyfrom 2010 onwards. This is because such a requirement updated on matters that impact the Bank from ahas been adequately covered in the Banking Act Direction regulatory perspective. They also keep themselves,M©©MD©©?Q©?KCLBCB©ML©!MPNMP?RC©%MTCPL?LAC© updated on matters that impact the Bank which includeDMP©*GACLQCB©!MKKCPAG?J© ?LIQ©GL©1PG©*?LI? regulatory changes, economic factors, demographic changes, social trends and other matters that impact theROLE OF CHAIRMAN & MANAGING @SQGLCQQ©MD©RFC© ?LI©?LB©?JQM©?RRCLB©CVRCPL?J©@PGCdžLEQ©DIRECTOR conferences and seminars which provide them with insights in to developing trends in business and banking.The roles of the Chairman and the Managing Directorhave been segregated to maintain a balance of power The Bank’s values, ethics and code of conduct are set?LB©?SRFMPGRW©RFSQ©CLF?LAGLE©RFC©CDžCARGTCLCQQ©MD©RFC© MSR©GL©RFC©#KNJMWCC©!MBC©MD©!MLBSAR© JSC© MMI©UFGAF© is made available to all employees to ensure that high M?PB ©2FC©!F?GPK?L©GQ©?©,ML©#VCASRGTC©\"GPCARMP©UFGJC© standards of conduct are maintained throughout thethe CEO / MD is an Executive Director. The Bank has Bank in conduct of business and our interactions withformal terms of reference for the Chairman which QR?ICFMJBCPQ © ©5FGQRJC© JMUGLE©.MJGAW©GQ©GL©NJ?AC©RM©GLAJSBCQ©?JJ©?QNCARQ©QNCAGdžCB©GL©RFC©!MBC©RFC©AMLRGLSGLE© ensure that high standards of conduct are upheld andlisting requirements of the CSE and the Banking Act RM©QCPTC©?Q©?©AF?LLCJ©MD©C?PJW©GBCLRGdžA?RGML©MD©AMPNMP?RC©\"GPCARGML©,M©©MD© © AAMPBGLEJW©RFC©!F?GPK?L© fraud or risk management. This policy facilitatesprovides leadership to the Board and ensures its voluntary escalation of legitimate concerns on anyCDžCARGTCLCQQ©@W©CLQSPGLE©RF?R©?JJ©\"GPCARMPQ©?PC©NPMNCPJW© potential “wrong doing” occurring within the Bank bybriefed and make an active contribution in the best ?LW©QR?Dž©KCK@CP©RM©RFC©LMRGAC©MD©RFC©!F?GPK?L©MD©RFC©interests of the Bank. He is also responsible for ensuring Audit Committee. The procedure is clearly set out in thecompliance with statutory requirements and ensuring GLRP?LCR©RM©CLQSPC©RF?R©?JJ©QR?Dž©KCK@CPQ©?PC©?U?PC©MD©that shareholder views are addressed by the Board. the procedure.HOW WE OPERATE SETTING STRATEGIC DIRECTIONThe Board is responsible for determining the strategic The Board is responsible for setting the strategicdirection, the risk appetite of the Bank, its governance direction of the Bank and is assisted in this by thestructures and an appropriate policy framework to 1RP?RCEGA©.J?LLGLE©!MKKGRRCC©MD©RFC© M?PB ©2FC© ?LI©ESGBC©K?L?ECKCLR ©0CQNMLQG@GJGRW©DMP©MTCPQGEFR©MD© F?Q©?©RFPCC©WC?P©PCTMJTGLE©1RP?RCEGA©.J?LLGLE©KMBCJ©performance of the Bank is discharged by reviewing which has been in force since 2009 which is revised everyregular reports on progress in implementing strategic quarter with a comprehensive review done annually.plans, risk management, key performance indicators and An assessment of the Bank’s competitive strengthsQR?ICFMJBCP©PCJ?RGMLQ ©'R©?JQM©PCTGCUQ©NMJGAGCQ©NPMACBSPCQ© together with a review of the operating environment withstrategic plans, risk appetite and internal controls of the emphasis on emerging trends in the local market andBank to ensure that an appropriate governance structure global industry trends forms the basis for the planningand policy framework is in place to ensure that day to dayactivities are conducted within an approved framework. G4-13, 39Chairpersons of the Board Committees provide feedbackto the Board on the activities of the Committees. TheBoard receives regular reports and presentations onstrategy and developments in the operating environment
212 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceThe Bank’s values, ethics process. Areas for improvement and strategic prioritiesand code of conduct are are set with the overall objective of delivering sustainableset out in the Employee stakeholder value through earnings, growth, stability andCode of Conduct which MNCP?RGML?J©CLjAGCLAW ©2FC© LLS?J© SBECR©GQ©NPCN?PCB©is made available to all @?QCB©ML©RFC©QRP?RCEGA©NJ?L©?LB©)CW©.CPDMPK?LAC©employees to ensure 'LBGA?RMPQ©?PC©QCR©DMP©RFC©WC?P©RM©AMKKCLAC ©2FC© M?PB©that high standards of KMLGRMPQ©NPMEPCQQ©?E?GLQR©1RP?RCEGA©.J?L©©©©conduct are maintained and the Budget for 2014 during the year using the Keythroughout the Bank. .CPDMPK?LAC©'LBGA?RMPQ©GL©RFC©R?@JC©@CJMU ©2FC©1RP?RCEGA© .J?L©DMP© ©F?Q©@CCL©PCTGCUCB©?LB©?NNPMTCB©@W© the Board along with the Budget for 2015 using the same model. Business Growth Earnings Growth Credit Quality Deposits Growth > 26% 0CRSPL©ML© QQCRQ© ,. ©0?RGM©,CR©MD©''1©©̎ ?NJCP©2?V© © ̎FINANCIAL KPIS 0CRSPL©ML©#OSGRW© ©̎ ,CR©'LRCPCQR©+?PEGL© ©̎ Credit Growth > 23% #DžCARGTC©2?V©?LB©4 2©0?RC©© ̎ !MQR©RM©'LAMKC©0?RGM©©̎ \"GTGBCLB©.?WMSR©0?RGM© ©̎ -NCL©!PCBGR©.MQGRGML© #VNMQSPC©©̎ Assets Growth > 23% Minimum Dividend per 1F?PC© ©0Q© Infrastructure Growth Enhance online bankingNON FINANCIAL KPIS Risk Management Human Resource Development services Enhance mobile banking ̎©MD©!MKNJCRGML©MD©0GQI©?LB©!MLRPMJ©1CJD© % Core areas of expertise to be services Assessment for Strategic Business Units covered in training % of credit facilities risk ratings/ % training objectives met NPMNMQ?JQ©PCTGCUCB©@W©0+3©NPGMP©RM© granting ,CU©QR?Dž©PCAPSGRKCLR©AMQR©TQ© 'LAPC?QC© 2+©?AACQQ©NMGLRQ© /S?PRCPJW©+?PICR©0GQI©1RPCQQ©2CQRGLE ASPPCLR©QR?Dž©QIGJJ©CLF?LACKCLR©AMQR© through partnerships with RM©džJJ©?©A?N?@GJGRW©E?N other banks
213STRATEGIC RISK MANAGEMENT ?LB©RF?R©RFCPC©GQ©?©QSLjAGCLRJW©PM@SQR©QWQRCK©MD©GLRCPL?J© AMLRPMJQ©UGRFGL©RFC© ?LI ©'R©F?Q©?JQM©PCTGCUCB©RFC©0GQI©+?L?ECKCLR©GQ©RFC©ICW©RM©BCJGTCPGLE©QSQR?GLCB©EPMURF© \"GPCARMPQ©1R?RCKCLR©ML©'LRCPL?J©!MLRPMJ©-TCP©$GL?LAG?J©and value creation to stakeholders over the short, medium 0CNMPRGLE©NPGMP©RM©GRQ©CLBMPQCKCLR©@W©RFC© M?PB©?LB©and long term and a separate Board Committee has the policies and processes for identifying, assessing andoversight responsibility for this. The risk appetite for the managing business models. ?LI©GQ©BCRCPKGLCB©@W©RFC© M?PB©?LB©RFC© M?PB©'LRCEP?RCB© The Directors’ undertake an annual assessment of the0GQI©+?L?ECKCLR©!MKKGRRCC©PCNMPRQ©RM©RFC© M?PB©?R©?JJ© CDžCARGTCLCQQ©MD©GLRCPL?J©AMLRPMJ©MTCP©džL?LAG?J©PCNMPRGLE©regular meetings of the Board as it is a standing item on GL©?AAMPB?LAC©UGRF©RFC©1CARGML©GG@©MD©RFC© ?LIGLE©the agenda. All Directors are briefed on developments AR©\"GPCARGML©,M©MD© © Q©PCOSGPCB©@W©RFC©\"GPCARGML©in this regard. The risk management framework and the Bank has obtained reports from the Bank’s External?ARGTGRGCQ©?PC©KMPC©DSJJW©BCQAPG@CB©GL©RFC©0GQI©+?L?ECKCLR© SBGRMPQ©+CQQPQ ©#PLQR©©7MSLE©DMP©RFC©'LRCPL?J©!MLRPMJ©0CNMPR©ML©N?ECQ©©RM©©?LB©RFC©0CNMPR©MD©RFC© M?PB© -TCP©$GL?LAG?J©0CNMPRGLE©DMP©RFC©WC?P©CLBCB©QR©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC©ML©N?ECQ©©RM© December 2014.261 Additionally, the Board has noted and complied withRFC©BGPCARGMLQ©?LB©ESGBCJGLCQ©GQQSCB©@W©! 1*©BSPGLE© © OTHER ASPECTS OF CORPORATEThe Board also reviewed the appointment of the present GOVERNANCE%PMSN©0GQI©-LjACP©BSC©RM©RFC©PCRGPCKCLR©MD©RFC©DMPKCP©%PMSN©!FGCD©0GQI©-LjACP©BSPGLE©RFC©WC?P The Board has approved a governance framework which maps out the internal approvals processes andINTERNAL CONTROL those matters which may be delegated. These matters principally relate to the operational management of theThe Board of Directors is responsible for the Bank’s operation and include predetermined authorityCQR?@JGQFKCLR©MD©?L©CDžCARGTC©QWQRCK©MD©'LRCPL?J©!MLRPMJQ© limits delegated by the Board to the Bank’s Managingthat supports business operations, ensures compliance Director for further delegation by him in respectwith regulations, internal policies and procedures, MD©K?RRCPQ©UFGAF©?PC©LCACQQ?PW©RM©CL?@JC©CDžCARGTC©and ensures reliable reporting. Accordingly, the Board day-to-day Operations. Additionally, ManagementAudit Committee has been tasked with the oversight Committees have been established as principal standingresponsibility for this key function in line with the Committees with written terms of reference which arerequirements of the Central Bank Directions, the Code of regularly reviewed by the Board. These CommitteesCorporate Governance and international best practice. are key elements of the Bank’s Operational Governance2FC©!MKKGRRCC©PCTGCUQ©RFC©?ARGTGRGCQ©MD©RFC©'LRCPL?J© SBGR© Framework.Department and has communications with the ExternalAuditors to ensure that their concerns are addressedADDITIONAL GOVERNANCE COMMITTEES Additional Governance Purpose and Tasks Committees Formulates, monitors and reviews all asset and liability management strategies and QQCR©?LB©*G?@GJGRW©!MKKGRRCC their implementation. These include decisions on advances and liabilities pricing, maintaining the appropriate mix of assets and liabilities, introduction of new asset ?LB©JG?@GJGRW©NPMBSARQ©džVCB©TCPQSQ©LJM?RGLE©GLRCPCQR©P?RC©QRPSARSPCQ©BC@R©QRPSARSPCQ© the magnitude of the interest rate and liquidity risks, buying and selling of securities, foreign exchange exposures and regulatory compliance.Deposit Mobilisation Mobilises adequate deposits to support credit expansions at a reasonable cost.Committee'LTCQRKCLR©!MKKGRRCC 'LTCQRKCLR©!MKKGRRCC©CT?JS?RCQ©?LB©BCAGBCQ©ML©RFC©?NNPMT?J©MP©PCHCARGML©MD©LCU© investment proposals received by the Committee, if within their limits, or else, submits recommendations to the Board, where the Board is the approving authority. © 'LTCQRKCLR©GL©#OSGRW©1RMAIQ©JGQRCB©GL©RFC©!MJMK@M©1RMAI©#VAF?LEC©!1# © 'LTCQRKCLR©GL©\"C@CLRSPCQ © 'LTCQRKCLR©GL©1PG©*?LI?©\"CTCJMNKCLR© MLBQ©1*\" Other special investments such as Securitisations, private equity and venture capital investments
214 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate Governance Additional Governance Purpose and Tasks Committees Takes responsibility for the feasibility, business case and the achievement of'2©1RCCPGLE©!MKKGRRCC outcomes of operations, infrastructure, automation, development, procurement and QCASPGRW©?ARGTGRGCQ©PCJ?RCB©RM©'LDMPK?RGML©2CAFLMJMEW©?R©1?KN?RF© ?LI©GL©JGLC©UGRF©!PCBGR©.MJGAW©!MKKGRRCC the strategic vision and long term goals as stipulated by the Board of Directors. The.PMASPCKCLR©!MKKGRRCC '2©1RCCPGLE©!MKKGRRCC©UGJJ©KMLGRMP©?LB©PCTGCU©RFC©QRP?RCEGA©?JGELKCLR©MD©RFC© ?LIQ© MTCP?JJ©TGQGML©KGQQGML©?LB©EM?JQ©UGRF©RF?R©MD©RFC©'2©\"CN?PRKCLR©?Q©UCJJ©?Q©NPMTGBC© oversight of the deliverables and rollout of such strategies. \"CRCPKGLCQ©RFC©!PCBGR©.MJGAW©MD©RFC© ?LI ©2FC©!PCBGR©.MJGAW©!MKKGRRCC©F?Q©RFC© ?SRFMPGRW©RM©K?IC©?©džL?J©BCAGQGML©ML©?NNPMT?J©MP©PCHCARGML©MD©NPMNMQCB©RP?LQ?ARGMLQ© as well as to establish personal limits and client limits in accordance with its powers. Evaluates and make recommendations to the Board with the concurrence of the CEO/MD, on the capital expenditure proposals, where the Board is the approving authority. The Committee also acts as the approving authority on capital expenditure projects and purchases within certain delegated limits.IT GOVERNANCE © 0CQMSPAC©K?L?ECKCLR© ©0CESJ?P©?QQCQQKCLRQ© CLQSPC©RF?R©'2©F?Q©QSLjAGCLR©AMKNCRCLR©?LB©As an innovative Bank we rely on information and CLjAGCLR©PCQMSPACQ©RM©KCCR©RFC© ?LIQ©BCK?LBQ communication technologies for facilitating, originatingand recording transactions and for producing information © 0GQI©K?L?ECKCLR©©0GQI©+?L?ECKCLR©NPGLAGNJCQ©used for regulatory reporting and decision making. embedded in the responsibilities of the Bank,'LTCQRKCLRQ©GL©'2©?PC©?KMLE©RFC©KMQR©QGELGdžA?LR© CLQSPC©RF?R©RFC© ?LI©?LB©'2©PCESJ?PJW©?QQCQQ©?LB©investments made by the Bank and are directly linked to PCNMPR©'2 PCJ?RCB©PGQIQ©?LB©MPE?LGQ?RGML?J©GKN?ARQ RFC© ?LIQ©MTCP?JJ©QRP?RCEW © AAMPBGLEJW©'2©EMTCPL?LAC©MD©RFC© ?LI©CLQSPCQ©RF?R©RFC©GLTCQRKCLRQ©GL©'2©ECLCP?RC© © 1RP?RCEGA©?JGELKCLR©© ©QF?PCB©SLBCPQR?LBGLE©T?JSC©?TMGB©D?GJSPC©?LB©KGRGE?RC©'2 ?QQMAG?RCB©PGQIQ©@W© @CRUCCL©RFC© ?LIQ©K?L?ECKCLR©?LB©RFC©'2©CLQSPGLE©UCJJ©BCdžLCB©PMJCQ©?LB©PCQNMLQG@GJGRGCQ©DMP©'2© department, enables the Board and seniorQR?ICFMJBCPQ©GLAJSBGLE©'LDMPK?RGML©1WQRCK© SBGRMPQ© K?L?ECKCLR©RM©SLBCPQR?LB©QRP?RCEGA©'2©GQQSCQ UGRFGL©?L©MPE?LGQ?RGML?J©QRPSARSPC©RF?R©?BCOS?RCJW©BCdžLCQ©the role of information, business processes, applications © 4?JSC©BCJGTCPW© ©2FC©@CLCdžRQ©?AFGCTCB©DPMK©C?AF©?LB©GLDP?QRPSARSPC ©1SAF©?©DP?KCUMPI©CLQSPCQ©RF?R©'2© '2©GLTCQRKCLR©GQ©?QQCQQCB©NPGMP©RM©?LB©?NJCP©investments are aligned and delivered in accordance implementation to ensure that expected value haswith corporate objectives and strategies. The following been delivered.@CQR©NP?ARGACQ©GL©'2©%MTCPL?LAC©F?TC©@CCL©QSAACQQDSJJW©implemented by the Bank: © .CPDMPK?LAC©K?L?ECKCLR©PCNMPRGLE © AASP?RC© RGKCJW©?LB©PCJCT?LR©NMPRDMJGM©NPMEP?KKC©?LB©'2© © &GEF JCTCJ©DP?KCUMPI©©\"CdžLCQ©JC?BCPQFGN© project reports to senior management, provides processes, roles and responsibilities, information a thorough review of the progress being made requirements and organisational structures RMU?PBQ©RFC©GBCLRGdžCB©M@HCARGTCQ©MD©RFC©'2©NPMHCAR © 'LBCNCLBCLR©?QQSP?LAC© ©'LRCPL?J©©CVRCPL?J© ?SBGRQ©MP©PCTGCUQ©NPMTGBC©RGKCJW©DCCB@?AI©?@MSR© AMKNJG?LAC©MD©'2©UGRF©RFC© ?LIQ©NMJGAGCQ©QR?LB?PBQ© procedures, and overall objectives.
215MEMBERSHIP OF SUB COMMITTEES OF THE BOARD Director Board Board HR and Board Board Board Board Board Board Board+P©\"F?KKGI?©.CPCP? Audit Remuneration Nomination Integrated Credit Strategic Shareholder Treasury Marketing Committee Committee Committee Planning Committee Committee Committee Risk Committee Relations ϒ Management Committee Committee Chairman+P©!F?LL?©.?J?LQSPGW? ϒ ϒ ϒ ϒ ϒ ChairmanMr Sanjiva Senanayake ϒ ϒ ϒϒ ChairmanMr Deepal Sooriyaarachchi ϒ Chairman Chairman.PMD©+?JGI©0?L?QGLEFC ϒ ϒ Chairman ϒ ϒMrs Dhara Wijayatilake ϒ ϒ ChairpersonMiss Annika Senanayake ϒ Chairperson ϒ ϒMr Deshal De Mel ϒ ϒϒ ϒ ϒϒ+P©0?LGJ©.?RFGP?L? Chairman ϒMrs Saumya Amarasekera ϒ ϒ+P© P?TGLB?©.CPCP? ϒ ϒ ϒϒ ϒ+P©0?LHGRF©1?K?P?L?W?IC ϒ ϒϒ ϒ2CPKQ©MD©0CDCPCLAC Available Available Available Available Available Available Available Available Available.J?LLCB©$PCOSCLAW©MD©+CCRGLEQ Quarterly ,CCB©@?QGQ ,CCB©@?QGQ Once in two ,CCB©@?QGQ Bi-Annual Bi-Annual Once Once ARS?J©,M©MD©+CCRGLEQ months in two in two months months 10 5 12 8 15 8 1 6 3Circulation of agenda and papers 7 days 7 days prior 7 days prior 7 days prior 7 days 7 days 7 days prior 7 days 7 days prior prior prior prior priorThe Group Company Secretary Mr S Sudarshan is the Focus Area %Secretary for all the Board Sub Committees and the Main Banking Operationsminutes of meetings are available in his custody. Written .CPDMPK?LAC©0CTGCU 282CPKQ©MD©0CDCPCLAC©RF?R©AMKNJW©UGRF©RFC©!MPNMP?RC© Strategy and Budget 10%MTCPL?LAC©PCOSGPCKCLRQ©MD©!CLRP?J© ?LI©MD©1PG©*?LI?© 0GQI©0CJ?RCB©'RCKQ 20are available for the Sub Committees with the Group Governance 12Company Secretary. 1SAACQQGML©.J?LLGLE 10 Shareholder Matters 16BOARD MEETINGS Others 2The Board of Directors held 20 Board meetings during G4 -39, 42, 43, 49, 50 2the year and its Sub Committees held a total of 68meetings. Their main focus areas and attendance atmeetings are given below.
216 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate Governance Director Board Board Board HR and Board Board Board Board Board Board Board Meetings Audit Remuneration Nomination Integrated Credit Strategic Shareholder Treasury MarketingMr Dhammika Committee Committee Committee Planning Committee Committee.CPCP? 16 Committee Risk Committee RelationsMr Channa 19 04 Management Committee.?J?LQSPGW? 20 10 CommitteeMr Sanjiva 20 05Senanayake 05Mr Deepal 20 04 12 08 11 07 01Sooriyaarachchi 19 10.PMD©+?JGI© 18 10 05 10 08 15 08 060?L?QGLEFC© 19 10 08Mrs Dhara 17 10 12 03Wijayatilake 19 07Miss Annika 20 05 08 15 07 05Senanayake 20 03 08Mr Deshal De Mel 20 09 11 02+P©0?LGJ©.?RFGP?L?Mrs Saumya 05 13 07 01 06 02Amarasekera 06+P© P?TGLB?©.CPCP? 10 05+P©0?LHGRF© 03Samaranayake2MR?J©,M©MD© 14 08 06Meetings 15 08 06 15 08 01 06 03Joined the Committee on 29th May 2014STAKEHOLDERS’ RIGHTS FRAMEWORK encourages active co-operation between the Bank and stakeholders. The commitment of the Bank towards thisThe Board recognises the rights of all stakeholders, aspect, are as follows:established by law or through mutual agreements andhas in place a Corporate Governance framework which Stakeholder Bank’s CommitmentShareholdersCustomers The Bank is committed to enhance long term shareholder value and facilitate the exercise ofEmployees shareholders’ rightsCommunity The Bank is committed to maintain and enhance its public image as a sound, high quality, progressive, friendly place to conduct banking. 2FC© ?LI©GQ©AMKKGRRCB©RM©@SGJB©?©UMPI©CLTGPMLKCLR©UFCPC©NCMNJC©A?L©K?IC©?©BGDžCPCLAC© both as individuals and as part of a team. The Bank is committed to meet its corporate responsibility and decisions on social and economic issues concerning activities of the Bank are developed and adopted by its governance bodies with the participation of Bank personnel.
217Special Resolutions Passed at the Last AnnualGeneral Meeting (AGM)There were no matters that required passing of specialresolutions at the AGM held on 31st March 2014.Means of CommunicationWe communicate with our stakeholders through thefollowing mechanisms: The quarterly results are published in the ,CUQN?NCPQ©GL©?JJ©RFPCC©J?LES?ECQ©?LB©PCJC?QCB©RM© RFC©!MJMK@M©1RMAI©#VAF?LEC©9!1#; © 2FC©džL?LAG?J©PCQSJRQ©?PC©BGQNJ?WCB©ML© www.sampath.lk in an area of the website devoted RM©'LTCQRMP©0CJ?RGMLQ Financial results and business strategies of the Bank are explained to investors, Business leaders and media personnel through 'LTCQRMP©$MPSKQ©?LB©NPCQQ©PCJC?QCQ © © 'LRCEP?RCB©+?L?ECKCLR©\"GQASQQGML©?LB© L?JWQGQ© N?ECQ©©RM©STATUTORY COMPLIANCE & PENALTIESThe Company has complied with the requirements of theColombo Stock Exchange on all matters related to capitalK?PICRQ©BSPGLE©RFC©WC?P ©,M©NCL?JRGCQ©F?TC©@CCL©GKNMQCB©on the Company by the authorities.DECLARATION'© P?TGLB?©.CPCP?©+?L?EGLE©\"GPCARMP©MD©1?KN?RF© ?LI©.*!©FCPC@W©BCAJ?PC©RF?R©?JJ©RFC©KCK@CPQ©MD©RFC© M?PB©of Directors and the Senior Management personnel have?LjPKCB©AMKNJG?LAC©UGRF©RFC©!MBC©MD©!MLBSAR©?NNJGA?@JC©to them as laid down by the Board of Directors in termsMD©1CARGML©GGE©MD©RFC© ?LIGLE© AR©\"GPCARGML©,M©©MD©2007, for the year ended 31st December 2014.$MP©1?KN?RF© ?LI©.*! P?TGLB?©.CPCP?Managing Director!MJMK@M©1PG©*?LI?19th February 2015
218 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BYTHE SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA AND THE INSTITUTE OFCHARTERED ACCOUNTANTS OF SRI LANKA Principle SEC & CA Compliance and Implementation Adoption Sri Lanka StatusA. DIRECTORS CodeA.1 THE BOARD Reference©#DžCARGTC© M?PB A.1 2FC© M?PB©MD©\"GPCARMPQ©AMKNPGQCQ©©\"GPCARMPQ©MD©UFMK©©?PC©,ML© Adopted©0CESJ?P© A.1.1 Executive including the Chairman. The two Executive Directors aremeetings RFC©+?L?EGLE©\"GPCARMP©?LB©RFC©%PMSN©!FGCD©$GL?LAG?J©-LjACP©UFM© are also part of the Corporate Management to whom the day to day operations of the organisation have been delegated. The Board has appointed Board Sub Committees to assist in the discharge of their collective duties and also approves policies, governance structures and the delegation of authority to provide a conducive @SQGLCQQ©CLTGPMLKCLR©DMP©CDžCARGTC©NCPDMPK?LAC©MD©RFC© ?LI ©2FC© Board is closely involved in developing strategy and setting the short, medium and long term goals of the Bank and regularly KMLGRMPQ©NCPDMPK?LAC©?E?GLQR©NPC BCRCPKGLCB©)CW©.CPDMPK?LAC© 'LBGA?RMPQ©UFGAF©GLAJSBC©@MRF©OS?LRGR?RGTC©?LB©OS?JGR?RGTC©KC?QSPCQ© on a regular basis. Board meetings are held monthly while special Board meetings Adopted are convened as the need arises. During 2014 the Board held 20 scheduled meetings and 8 strategic meetings. The following Board Sub Committees met regularly: Board Audit Committee © M?PB©&SK?L©0CQMSPACQ©©0CKSLCP?RGML©!MKKGRRCC © M?PB©,MKGL?RGML©!MKKGRRCC © M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC Board Credit Committee © M?PB©1RP?RCEGA©.J?LLGLE©!MKKGRRCC Board Treasury Committee Board Marketing Committee The Board uses ipad to access Board papers via secure connections and Directors are able to join meetings even remotely. Details of Board meetings, Sub Committee Meetings and attendance are given on page 216 of this report.BOARD’S RESPONSIBILITIES: THE FOLLOWING PROCEDURES ARE CARRIED OUT TO STRENGTHEN THE SAFETYAND SOUNDNESS OF THE BANK©#LQSPC©RFC© A.1.2 The Board is responsible for setting strategy, policies and for Adoptedformulation andimplementation KMLGRMPGLE©NCPDMPK?LAC©?E?GLQR©?EPCCB©EM?JQ©?LB©).'Q ©\"SPGLE©RFC©of sound businessstrategy year, the Board had 8 strategic planning sessions which reviewed the proposals of the Corporate Management and re-aligned strategy and approved the medium term strategy for the period 2014 to 2016.
219Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code Reference©#LQSPC© A.1.2 2FC© M?PB©,MKGL?RGML©!MKKGRRCC©CLQSPCQ©RF?R©RFC© M?PB© Adoptedthat the Chief#VCASRGTC©-LjACP© +CK@CPQ©?LB©)CW©+?L?ECKCLR©.CPQMLLCJ©F?TC©RFC©PCOSGPCB©QIGJJQ©!#-+?L?EGLE©\"GPCARMP©+\"©?LB© experience and knowledge to implement strategy.management teampossess the skills,experience andknowledge toimplement thestrategy©#LQSPC©CDžCARGTC© A.1.2 A succession plan has been recommended by the Board AdoptedCEO/MD and senior ,MKGL?RGML©!MKKGRRCC©?LB©GQ©GL©RFC©NPMACQQ©MD©@CGLE©džL?JGQCB©@W©management the Board.succession strategy©#LQSPC©CDžCARGTC© A.1.2 0CDCP©RM©\"GPCARMPQ©1R?RCKCLR©ML©'LRCPL?J©!MLRPMJ©-TCP©$GL?LAG?J© Adoptedsystems to secure 0CNMPRGLE©EGTCL©ML©N?ECQ©©©© M?PB© SBGR©!MKKGRRCC©integrity of 0CNMPR©EGTCL©ML©N?ECQ©©RM©©?LB© M?PB©'LRCEP?RCB©0GQI©information, internal +?L?ECKCLR©!MKKGRRCC©0CNMPR©EGTCL©ML©N?ECQ©©RM© controls and riskmanagement©#LQSPC© A.1.2 There is a separate Compliance function reporting directly to Adoptedcompliance with RFC© M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC©UFGAF©F?Q©laws, regulations PCQNMLQG@GJGRW©DMP©AMKNJG?LAC ©%PMSN©!MKNJG?LAC©-LjACP©PCNMPRQ©and ethical BGPCARJW©RM©RFC© M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC standards©#LQSPC©?JJ© A.1.2 The Articles of the Bank require the Directors to take decisions Adoptedstakeholderinterests are taking into account the interests of the customers, shareholders,considered incorporate decisions employees and the community. Additionally there is a Customer !F?PRCP©?© M?PB©1F?PCFMJBCP©0CJ?RGMLQ©!MKKGRRCC©?LB©&0©.MJGAW©GL© order to uphold the interests of these key stakeholders.©#LQSPC©RF?R©RFC© A.1.2 The Board Audit Committee and Board review accounting policies Adoptedcompany’s values annually to ensure that they are in line with the business model ofand standards are the Bank and evolving international and local accounting standardsset with emphasis and industry best practice.on adoptingappropriateaccounting policiesand fosteringcomplianceUGRF©džL?LAG?J©regulations©$SJdžJJ©QSAF© A.1.2 2FC© M?PB©GQ©AMKKGRRCB©RM©DSJdžJJGLE©GRQ©DSLARGMLQ©GL©JGLC©UGRF©RFC© Adopted law, regulations and good governance practices adopted by theother Board Bank.functions as arevital, given the scale,natureand complexityof the businessconcerned
220 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGECOMMISSION OF SRI LANKA AND THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKAPrinciple SEC & CA Compliance and Implementation Adoption Sri Lanka Status The Board has put in place a framework of policies, procedures and Code a risk management framework to ensure compliance with relevant Adopted Reference J?UQ©! 1*©ESGBCJGLCQ©?LB©GLRCPL?RGML?J©@CQR©NP?ARGAC©UGRF©PCE?PBQ© to the operations of the Bank. The Board obtains independent AdoptedA. DIRECTORS professional advice as and when necessary in accordance with the Board approved policy on independent professional adviceA.1 THE BOARD and these functions are co-ordinated through the Group Company 1CAPCR?PW ©'LBCNCLBCLR©NPMDCQQGML?J©QCPTGACQ©UCPC©QMSEFR©ML©© AR©GL© A.1.3 matters during the year in accordance with the above provision inaccordance with 2014.laws relevant to the All Directors have the opportunity to obtain the advice and servicesorganisation and of the Group Company Secretary, Mr S Sudarshan, who is aprocedure !F?PRCPCB©!MPNMP?RC©1CAPCR?PW©UFGAF©GQ©?L©?NNPMTCB©OS?JGdžA?RGML©for Directors to SLBCP©RFC©!MKN?LGCQ© AR©,M©©MD© ©&C©GQ©PCQNMLQG@JC©DMP©obtain independent ensuring follow up of Board procedures, compliance with rulesprofessional advice and regulations, directions and statutes, keeping and maintainingat company expense minutes and relevant records of the Bank.© AACQQ©RM©?LB© A.1.4appointment orremoval of CompanySecretary©'LBCNCLBCLR© A.1.5 The Articles of the company specify that the appointment and Adoptedjudgement A.1.6 removal of the Company Secretary should be by resolution Adopted involving the whole Board.©\"CBGA?RC©adequate time and The Directors of the Bank have no vested interests and takeCDžMPR©RM©K?RRCPQ©MD© decisions on matters before them using independent judgement.the Board and theCompany Dates of regular Board meetings and Board Sub Committee meetings are scheduled well in advance and the relevant papers are circulated a week prior to the meeting. There is provision to circulate papers closer to the meeting on an exceptional basis. 'R©GQ©CQRGK?RCB©RF?R©,ML©#VCASRGTC©\"GPCARMPQ©BCBGA?RC©LMR©JCQQ©RF?L© ©FMSPQ©NCP©?LLSK©DMP©RFC©?Dž?GPQ©MD©RFC© ?LI©?LB©RFMQC©\"GPCARMPQ© who are also on Sub Committees dedicate not less than 136 hours DMP©RFC©?Dž?GPQ©MD©RFC© ?LI ©2FC©?RRCLB?LAC©?R©KCCRGLEQ©DMP©RFC© Board and its Sub Committees are given in page 216.
221 Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status©2P?GLGLE©DMP©Directors Code The Group Company Secretary in consultation with the Chairman Adopted Reference recommends Directors to attend training sessions/seminars. $PCOSCLRJW©RFC©džPQR©GRCK©MD©RFC© M?PB© ECLB?©GQ©BCTMRCB©RM©FC?PGLE© A.1.7 an outside expert views on matters relevant to the Bank. During 2014 the following areas were covered Directors’ responsibilities State of the economy and future outlook Additionally, the Board encourages knowledge sharing among the Directors. They also participate in the sessions organised by NPMDCQQGML?J©@MBGCQ©?LB©1PG©*?LI?©'LQRGRSRC©MD©\"GPCARMPQ ©2FC©?LLS?J© self-assessment by Directors also covers aspects on training to identify training needs.A.2 DIVISION OF RESPONSIBILITIES BETWEEN CHAIRMAN AND CEO / MD©!MLBSARGLE© A.2 The positions of the Chairman and the CEO/MD have been Adoptedthe business of the separated in line with best practice in order to maintain a balanceBoard separately; MD©NMUCP©?LB©?SRFMPGRW ©2FC©!F?GPK?L©GQ©?©,ML©#VCASRGTC©\"GPCARMP©to the executive while the CEO/MD is an Executive Director.responsibilities ofthe management ofthe CompanyA.3 CHAIRMAN’S ROLE©!F?GPK?LQ© A.3 The Bank has developed a formal terms of reference for the Adoptedrole in preserving !F?GPK?L©UFGAF©GLAJSBCQ©?JJ©?QNCARQ©QNCAGdžCB©GL©RFC©!MBC©RFC©good corporate continuing listing requirements of the CSE and the Banking Actgovernance \"GPCARGML©,M©©MD©©ML©!MPNMP?RC©%MTCPL?LAC©DMP©*GACLQCB© !MKKCPAG?J© ?LIQ©GL©1PG©*?LI? ©!MLBSAR© M?PB©proceedings in aproper mannerA.4 FINANCIAL ACUMEN© T?GJ?@GJGRW©MD© A.4 Financial acumen has been a key attribute of successful careers AdopteddžL?LAG?J©?ASKCL© of the following Directors who have held senior managementand knowledge to NMQGRGMLQ©PCJ?RCB©RM©džL?LAC©GL©MRFCP©JC?BGLE©džL?LAG?J©GLQRGRSRGMLQMDžCP©ESGB?LAC©ML©K?RRCPQ©MD©džL?LAC Mr Sanjiva Senanayake Mr Deepal Sooriyaarachchi +P©0?LGJ©.?RFGP?L? +P© P?TGLB?©.CPCP? +P©0?LHGRF©1?K?P?L?W?IC BBGRGML?JJW©RFC©!F?GPK?L©+P©\"F?KKGI?©.CPCP?©F?Q©QCPTCB©ML©RFC© M?PBQ©MD©?©LSK@CP©MD©džL?LAG?J©GLQRGRSRGMLQ © Two Directors, including the CEO/MD, have MBAs and two Directors ?PC©$CJJMU©+CK@CPQ©MD©RFC©!F?PRCPCB©'LQRGRSRC©MD©+?L?ECKCLR© Accountants, UK.
222 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGECOMMISSION OF SRI LANKA AND THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKAPrinciple SEC & CA Compliance and Implementation Adoption Sri Lanka Status 2FC© M?PB©AMKNPGQCQ©©,ML©#VCASRGTC©\"GPCARMPQ©GLAJSBGLE©RFC© Code Chairman and 2 Executive Directors who are the CEO/MD and the Adopted Reference %!$- ©2FC©,ML©#VCASRGTC©\"GPCARMPQ©?PC©NPMDCQQGML?JQ?A?BCKGAQ @SQGLCQQ©JC?BCPQ©FMJBGLE©QCLGMP©NMQGRGMLQ©GL©RFCGP©PCQNCARGTC©džCJBQ©A. DIRECTORS ?LB©RFCPCDMPC©BCCKCB©RM©@C©MD©QSLjAGCLR©A?JG@PC © Q©RFC©K?HMPGRW©MD© RFC© M?PB©AMKNPGQCQ©,ML©#VCASRGTC©\"GPCARMPQ©RFCGP©MNGLGMLQ©?LB©A.5 BOARD BALANCE TGCUQ©A?PPW©QGELGdžA?LR©UCGEFR©GL©RFC© M?PB©BCAGQGMLQ ©,ML©#VCASRGTC© A.5.1 &Directors of A.5.2QSLjAGCLR©A?JG@PC©?LB©number EXECUTIVE DIRECTORS VS NON EXECUTIVE DIRECTORS 2 10©'LBCNCLBCLAC© A.5.3 Executive Directors AdoptedMD©,ML©#VCASRGTC© Non Executive DirectorsDirectors ©,ML©#VCASRGTC©\"GPCARMPQ©?PC©GLBCNCLBCLR©MD©K?L?ECKCLR©?LB© free of any business or other relationship that could materially interfere with or could reasonably be perceived to materially interfere with the exercise of their unfettered and independent judgement. INDEPENDENT DIRECTORS VS NON INDEPENDENT DIRECTORS 5 7 Independent Directors Non Independent Directors
223 Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status© LLS?J© Annual declarations of independence or non-independence havedeclarations of Code been obtained from the Directors for 2014. Adoptedindependence from ReferenceDirectors Adopted© LLS?J© A.5.4evaluation ofindependence A.5.5 The Board makes an annual evaluation of independence of the Directors based on the submission of the annual declarations. Based on these, the following Directors are deemed to be independent: Mr Sanjiva Senanayake Mr Deepal Sooriyaarachchi © .PMD©+?JGI©0?L?QGLEFC Ms Dhara Wijayatilake Miss Annika Senanayake©1CLGMP© A.5.6 2FCPC©UCPC©LM©\"GPCARMPQ©BCCKCB©'LBCNCLBCLR©UFCPC©?JJ©APGRCPG?© Adopted'LBCNCLBCLR© & were not met. AdoptedDirector A.5.7 A.5.8 +P©1?LHGT?©1CL?L?W?IC©F?Q©@CCL©?NNMGLRCB©?Q©1CLGMP©'LBCNCLBCLR©©1CLGMP© Director in view of the requirements of the Banking Act Direction'LBCNCLBCLR© A.5.9 ,M©©MD© \"GPCARMP©1'\"©meeting with other A.5.10 ©2FC©\"GPCARMPQ©KCR©1'\"©BSPGLE©RFC©WC?P Directors !F?GPK?L©KCCRQ©UGRF©,ML©#VCASRGTC©\"GPCARMPQ©UGRFMSR©RFC©NPCQCLAC© Adopted©!F?GPK?L©RM© MD©RFC©#VCASRGTC©\"GPCARMPQ©ML©?©LCCB©@?QGQ ©2FC©,ML©#VCASRGTC©hold meetings with Directors met once without the presence of the Executive Directors,ML© during the year 2014.Executive Directors,without Executive Board minutes are prepared in order to record any concerns of the AdoptedDirectors being Board as a whole or those of individual Directors regarding matterspresent placed for their approval/guidance/action. These minutes are circulated and formally approved at the subsequent Board meeting,©0CAMPBGLE©MD© Additionally, Directors have access to the past Board papers andDirectors’ concerns minutes in case of need at all times.in Board Minutes 'D©?©\"GPCARMP©PCQGELQ©MTCP©?L©SLPCQMJTCB©GQQSC©RFC©!F?GPK?L©UGJJ© bring the issue to the attention of the Board. The Director concerned is also required to provide a written statement to the Chairman for circulation to the Board.A.6 SUPPLY OF RELEVANT INFORMATION©.PMTGQGML©MD© A.6.1 The management provides comprehensive information including Adoptedappropriate and both quantitative and qualitative information for the monthlytimely information Board Meetings generally 7 days prior to the Board/Sub Committee meetings. The Directors also have free and open access to Management at all levels to obtain further information or clarify any concerns they may have. As described above, they also have the right to seek independent professional advice at the Company’s expense and copies of advice obtained in this manner are circulated to other Directors who request it.
224 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGECOMMISSION OF SRI LANKA AND THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKA G4-40, 44Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code Adopted ReferenceA. DIRECTORSA.6 SUPPLY OF RELEVANT INFORMATION©!F?GPK?L©RM© A.6.1 All Directors are adequately briefed on matters arising at Boardensure all Directors meetings through comprehensive Board papers. Additionally, theare properly relevant members of the Management Team are on standby forbriefed on issues DSPRFCP©AJ?PGdžA?RGMLQ©?Q©K?W©@C©PCOSGPCB©@W©\"GPCARMPQ©MP©UGJJ©K?IC©arising at Board presentations at Board meetings.meetings Any Director who does not attend a meeting is updated on proceedings prior to the next meeting through: Formally documented minutes of meetings A separate Board paper is prepared highlighting the items which need to be completed and need follow-up action of RFC©NPCTGMSQ©KCCRGLEQ ©2FGQ©GQ©R?ICL©SN©GKKCBG?RCJW©?NJCP© AMLdžPK?RGML©MD©KGLSRCQ Archived minutes and Board papers accessible electronically at the convenience of the Directors. ,ML©#VCASRGTC©\"GPCARMPQ©F?TC©?L©MNCL©GLTGR?RGML©RM©?RRCLB© the meetings of the Management Committees and have the MNNMPRSLGRW©RM©GLRCP?AR©UGRF©QCLGMP©K?L?ECKCLR©?NJCP© M?PB© Meetings.© M?PB©N?NCPQ© A.6.2 As described above, Board papers are generally circulated 7 days Adoptedand agenda to be before the meeting. There is provision for circulation of urgentcirculated 7 days papers within a shorter time frame and also for approval ofprior to meetings. matters by circulation but such instances are the exception and not the rule.A.7 APPOINTMENTS TO THE BOARD©$MPK?J©?LB© A.7.1 2FC© M?PB©F?Q©CQR?@JGQFCB©?© M?PB©,MKGL?RGML©!MKKGRRCC©UFMQC© Adoptedtransparent 2CPKQ©MD©0CDCPCLAC©AMKNJW©UGRF©RFC©1NCAGKCL©EGTCL©GL©RFC©!MBC©procedure for new ?LB©! 1*©\"GPCARGML©ML©!MPNMP?RC©%MTCPL?LAC ©+CK@CPQFGN©MD©appointments this important Board Sub Committee is given on page 215 of thethrough an LLS?J©0CNMPR © AAMPBGLEJW©LCU©\"GPCARMPQ©GLAJSBGLE©#VCASRGTC©established ?LB©,ML©#VCASRGTC©\"GPCARMPQ©?PC©?NNMGLRCB©@W©RFC© M?PB©SNML©,MKGL?RGML© AMLQGBCP?RGML©MD©PCAMKKCLB?RGMLQ©@W©RFC© M?PB©,MKGL?RGML©Committee Committee.© LLS?JJW©?QQCQQ© A.7.2 The Board annually assesses its composition to ascertain whether AdoptedBoard composition the combined knowledge and experience of the Board match the QRP?RCEGA©BCK?LBQ©D?AGLE©RFC©!MKN?LW©?LB©GQ©Q?RGQdžCB©RF?R©GR© complies with the criteria.
225 Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status©\"GQAJMQSPC©of information to Code All new appointments are communicated to the shareholders via Adoptedshareholders upon Reference the Colombo Stock Exchange both in English and Sinhala languagesappointment of new A.7.3 GL©ICCNGLE©UGRF©RFC©RP?BGRGMLQ©MD©RFC© ?LI ©2FC©NPMdžJCQ©MD©RFC©Directors current Directors are given on pages 10 to 15 in this report whichA.8 RE-ELECTION A.8 have also been translated in to Sinhala.© JJ©\"GPCARMPQ©should submit As per the Articles, 1/3rd of the Directors should retire at each Adoptedthemselves for re- Annual General Meeting and be subject to re-election. Suchelection at regular \"GPCARMPQ©UFM©PCRGPC©?PC©RFMQC©UFM©FCJB©MLjAC©DMP©RFC©JMLECQR©RGKC©intervals NCPGMB©QGLAC©RFC©CJCARGMLPC ?NNMGLRKCLR ©'L©?AAMPB?LAC©UGRF©RFGQ© NPMTGQGML©RFC©DMJJMUGLE©\"GPCARMPQ©PCRGPC©?LB©MDžCP©RFCKQCJTCQ©DMP© re-election: Mr Deepal Sooriyaarachchi © .PMD©+?JGI©0?L?QGLEFC Mrs Dharani Wijayatilake Mr Sanjiva Senanayake A brief resume of Directors standing for re-election is provided in English and Sinhala to enable shareholders to make an informed decision. 2FC© M?PB©?LB©RFC© M?PB©,MKGL?RGML©!MKKGRRCC©?PC©?ARGTCJW© CLE?ECB©GL©QSAACQQGML©NJ?LLGLE©DMP©@MRF©#VCASRGTC©?LB©,ML© Executive roles to ensure that Board composition is periodically PCLCUCB©?LB©RF?R©RFC© M?PB©PCR?GLQ©GRQ©CDžCARGTCLCQQ©?R©?JJ©RGKCQ ©©,ML©#VCASRGTC© A.8.1 ,ML©#VCASRGTC©\"GPCARMPQ©?PC©?NNMGLRCB©UGRF©?NNPMT?J©MD©RFC©!CLRP?J© AdoptedDirectors are ?LI©MD©1PG©*?LI?©! 1*©?LB©QR?LBQ©DMP©PC CJCARGML©?R© LLS?J©appointed forQNCAGdžCB©RCPKQ© General Meetings in terms of Articles of Association.subject to re-election© JJ©\"GPCARMPQ© A.8.2 Described in response to A8 above. Adoptedincluding Chairmanto be subject toPC CJCARGML©?R©džPQR©MNNMPRSLGRW©?NJCP©appointment andre-election at leastevery 3 yearsRFCPC?NJCPA.9 APPRAISAL OF BOARD PERFORMANCE© NNP?GQ?J©MD© A.9.1 The Board annually appraises its own performance to ensure that Adopted M?PB©.CPDMPK?LAC it is discharging its responsibilities satisfactorily. This process PCOSGPCQ©C?AF©\"GPCARMP©RM©džJJ©?© M?PB©.CPDMPK?LAC©#T?JS?RGML©$MPK© in line with the provisions of this section of the Code. The responses are reviewed by the Group Company Secretary who compiles a report which is discussed at a Board Meeting.© NNP?GQ?J© A.9.2 The Board Sub Committees follow the same process and the Adoptedof Board Sub reports are retained by the respective Committee Chairperson.Committees
226 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGECOMMISSION OF SRI LANKA AND THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKAPrinciple SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code ReferenceA. DIRECTORSA.9 APPRAISAL OF BOARD PERFORMANCE©\"GQAJMQSPC© A.9.3 0CDCP© ©© ©?@MTC Adoptedof the method ofappraisal of theBoard and BoardSub CommitteeperformanceA.10 DISCLOSURE OF INFORMATION IN RESPECT OF DIRECTORS© LLS?J©0CNMPR© A.10.1 'LDMPK?RGML©QNCAGdžCB©GL©RFC©!MBC©UGRF©PCE?PBQ©RM©\"GPCARMPQ©?PC© AdoptedRM©BGQAJMQC©QNCAGdžCB© BGQAJMQCB©UGRFGL©RFGQ© LLS?J©0CNMPR©?Q©DMJJMUQinformationregarding Directors © ,?KC©OS?JGdžA?RGMLQ©CVNCPRGQC©K?RCPG?J©@SQGLCQQ©GLRCPCQRQ© ?LB©@PGCD©NPMdžJCQ©?PC©EGTCL©ML©N?ECQ©©RM© © \"CR?GJQ©UFCRFCP©?©\"GPCARMP©GQ©#VCASRGTC©,ML©#VCASRGTC©MP© 'LBCNCLBCLR©,ML©'LBCNCLBCLR©?PC©EGTCL©ML©N?ECQ©©RM© © 0CJ?RCB©N?PRW©RP?LQ?ARGMLQ©?PC©EGTCL©ML©N?ECQ©©RM© Membership of Board Sub Committees and attendance at Board Meetings and Board Sub Committee meetings are given on pages 215 & 216.A.11 APPRAISAL OF CHIEF EXECUTIVE OFFICER / MANAGING DIRECTOR©1CR©PC?QML?@JC© A.11.1 2FC© M?PB©BGQASQQCB©?LB©QCR©džL?LAG?J©?LB©LML džL?LAG?J©R?PECRQ© AdopteddžL?LAG?J©?LB©LML to be achieved during the year by the CEO / MD with referencedžL?LAG?J©R?PECRQ©RM© to the short, medium and long term objectives of the Bank at thebe met by the CEO/ beginning of 2014. The targets for 2015 have also been set at theMD end of 2014.©#T?JS?RC© A.11.2 The Managing Directors’ performance is evaluated by the Board Adoptedperformance of &0©©0CKSLCP?RGML©!MKKGRRCC©UGRF©PCDCPCLAC©RM©R?PECRQ©?LB©EM?JQ©the CEO/MD with achieved by the Bank. This is reported to the Board.reference to targetsG4 - 51, 52, 53
227Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code ReferenceB. DIRECTORS’ REMUNERATIONB.1 REMUNERATION PROCEDURE© NNMGLRKCLR© B.1.1 2FC© M?PB©F?Q©CQR?@JGQFCB©?© M?PB©&0©©0CKSLCP?RGML©!MKKGRRCC© AdoptedMD©?©0CKSLCP?RGML© to develop policy and determine remuneration for the Directors,Committee +?L?ECKCLR©?LB©#VCASRGTC©QR?Dž ©,M©\"GPCARMP©GQ©GLTMJTCB©GL©BCAGBGLE© FGQ©MUL©PCKSLCP?RGML ©2FC©2CPKQ©MD©0CDCPCLAC©AMKNJGCQ©UGRF© Schedule C of the Code, other investor guidelines and requires the Committee to ensure that the Company adopts a remuneration policy which rewards Executive Directors, Management and #VCASRGTC©1R?Dž©DMP©RFCGP©AMLRPG@SRGML©RM©QSQR?GL?@JW©?LB©PCQNMLQG@JW© enhancing shareholder value. $SPRFCP©GLDMPK?RGML©PCE?PBGLE©RFC© M?PB©&0©©0CKSLCP?RGML© !MKKGRRCC©GQ©EGTCL©GL©RFC© M?PB©&0©©0CKSLCP?RGML©!MKKGRRCC© 0CNMPR©ML©N?EC© ©0CKSLCP?RGML© B.1.2 & 2FC© M?PB©&0©©0CKSLCP?RGML©!MKKGRRCC©AMKNPGQCQ©RFC©DMJJMUGLE© AdoptedCommittee to B.1.3 \"GPCARMPQ©UFM©?PC©?JJ©,ML©#VCASRGTCQ©CVACNR©+P© P?TGLB?©.CPCP?©comprise exclusively Managing Director:,ML©#VCASRGTC©Directors © +P©\"CCN?J©1MMPGW??P?AFAFG©!F?GPK?L © +P©!F?LL?©.?J?LQSPGW? Miss Annika Senanayake Mr Deshal De Mel © +P© P?TGLB?©.CPCP?©0CKSLCP?RGML© B.1.4 0CKSLCP?RGML©MD©,ML©#VCASRGTC©\"GPCARMPQ©GQ©PCAMKKCLBCB©@W©RFC© AdoptedDMP©,ML M?PB©&0©©0CKSLCP?RGML©!MKKGRRCC©DMP©?NNPMT?J©MD©RFC© M?PB©GL©Executive Directors line with market practice.©0CKSLCP?RGML© B.1.5 0CKSLCP?RGML©MD©#VCASRGTC©\"GPCARMPQ©GQ©BCRCPKGLCB©@W©RFC© M?PB© Adoptedof Executive &0©©0CKSLCP?RGML©!MKKGRRCC©UFGAF©F?Q©?AACQQ©RM©NPMDCQQGML?J©Directors advice from within or outside the company in formulating their proposals which then are discussed with the Chairman.B.2 THE LEVEL AND MAKE UP OF REMUNERATION©0CKSLCP?RGML© B.2.1 & 0CKSLCP?RGML©DMP©#VCASRGTC©\"GPCARMPQ©GQ©BCQGELCB©RM©?RRP?AR©PCR?GL© Adoptedfor Executive B.2.2 and motivate the Executive Directors as determined by the BoardDirectors should &0©©0CKSLCP?RGML©!MKKGRRCC ©2FCGP©PCKSLCP?RGML©AMKNPGQCQ©?©attract, retain and džVCB©Q?J?PW©AMKNMLCLR©UFGAF©GLAJSBCQ©NCPOSGQGRCQ©?LB©?JJMU?LACQmotivate 2FC©0CKSLCP?RGML©!MKKGRRCC©R?ICQ©GL©RM©?AAMSLR©K?PICR©NP?ARGACQ© and seeks professional advice when required in order to discharge its responsibilities.©.MQGRGMLGLE© B.2.3 2FC© M?PB©&0©©0CKSLCP?RGML©!MKKGRRCC©PCTGCUQ©RFC© ?LIQ© Adoptedcompany remuneration levels in relation to other Banks in the countryremuneration levels annually.relative to othercompanies©.CPDMPK?LAC© B.2.4 There were no performance related elements of remuneration for Adoptedrelated elements of Executive Directors.remuneration forExecutive Directors©1F?PC©MNRGML© B.2.5 The employees had a uniform employee share option scheme Adoptedschemes based on grade and salary of the employee. This scheme expired on 30th June 2014.
228 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGECOMMISSION OF SRI LANKA AND THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKAPrinciple SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code Adopted ReferenceB. DIRECTORS’ REMUNERATIONB.2 THE LEVEL AND MAKE UP OF REMUNERATION©\"CQGELGLE© B.2.6 ,M©QAFCKCQ©MD©NCPDMPK?LAC©PCJ?RCB©PCKSLCP?RGML©F?TC©@CCL©schemes of implemented by the Bank during 2014.performancerelatedremuneration©!MKNCLQ?RGML© B.2.7 There are no provisions for compensation for early termination in Adoptedcommitments in the the letters of contract/appointment. However, the Directors wouldevent determine this on a case by case basis.of early termination©\"C?JGLE©UGRF© B.2.8 Directors determine this on a case by case basis. Adoptedearly termination©*CTCJQ©MD© B.2.9 2FC© M?PB©&0©©0CKSLCP?RGML©!MKKGRRCC©BCRCPKGLCQ©RFC©JCTCJQ© Adoptedremuneration for MD©PCKSLCP?RGML©DMP©,ML©#VCASRGTC©\"GPCARMPQ©R?IGLE©GL©RM©?AAMSLR© Adopted,ML©#VCASRGTC the time commitment and responsibilities of their role and marketDirectors NP?ARGACQ ©0CKSLCP?RGML©DMP©,ML©#VCASRGTC©\"GPCARMPQ©BMCQ©LMR© include share options.B.3 DISCLOSURE OF REMUNERATION©!MKNMQGRGML© B.3.1 2FC©AMKNMQGRGML©MD©RFC© M?PB©&0©?LB©0CKSLCP?RGML©!MKKGRRCC©MD© M?PB©&0©© and its policy is given on page 256.0CKSLCP?RGML©Committee, 2FC©?EEPCE?RC©PCKSLCP?RGML©RM©#VCASRGTC©?LB©,ML©#VCASRGTC©0CKSLCP?RGML©.MJGAW© \"GPCARMPQ©?PC©EGTCL©GL©,MRC©,M© ©RM©RFC©$GL?LAG?J©1R?RCKCLRQ©and disclosure on page 371.of aggregateremuneration paid ,?KCQ©MD©RFC©\"GPCARMPQ©MD©RFC© M?PB©&0©©0CKSLCP?RGML©to Directors !MKKGRRCC©?PC©BGQAJMQCB©GL©RFC© LLS?J©0CNMPR©ML©N?EC©
229Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code ReferenceC. RELATIONS WITH SHAREHOLDERSC.1 CONSTRUCTIVE USE OF THE ANNUAL GENERAL MEETING (AGM) AND CONDUCT OF GENERAL MEETINGS©!MLQRPSARGTC© C.1 The Annual General Meeting is the main forum of contact between Adopteduse of the AGM small shareholders and the Board. A separate Sub Committee of& Other General RFC© M?PB© M?PB©1F?PCFMJBCP©0CJ?RGMLQ©!MKKGRRCC©F?Q©@CCL©QCR©Meetings up for the purpose of building up relations with the shareholders and addressing their concerns. This Committee conducts an open QCQQGML©UGRF©RFC©QF?PCFMJBCPQ©GKKCBG?RCJW©?NJCP©RFC© %+©C?AF© year. 2FC© LLS?J©0CNMPR©GQ©AGPASJ?RCB©RM©?JJ©QF?PCFMJBCPQ©©UMPIGLE©B?WQ© prior to the AGM and a Sinhala version is published each year to meet the needs of a diverse group of shareholders. Additionally, the Chairman’s and CEO/MD’s messages are translated in to Tamil each year. 'L©JGLC©UGRF©K?PICR©NP?ARGAC©RFC©!#-+\"©F?Q©PCESJ?P©AMLR?AR©UGRF© the major shareholders and the Chairman also participates if needed in such meetings.©!MSLR©MD©?JJ© C.1.1 All proxy votes lodged, together with the votes of shareholders Adoptedproxy votes lodged C.1.2 present at the AGM are considered for each resolution. C.1.3©1CN?P?RC© A separate resolution is proposed at the AGM for each substantially Adoptedresolutions for each C.1.4 separate issue. The adoption of the report and accounts issubstantially proposed as a separate resolution.separate issue C.1.5 All Board Sub Committee Chairpersons are present at the AGM Adopted© T?GJ?@GJGRW© to answer any questions raised at the AGM and will respond whenof Board Sub requested to do so by the Chairman.CommitteeChairpersons at ,MRGAC©MD©RFC© %+©?LB©PCJ?RCB©N?NCPQ©?PC©QCLR©RM©QF?PCFMJBCPQ©?R© AdoptedAGM least 15 working days prior to the meeting in accordance with the regulations.©!GPASJ?RGML©MD©,MRGAC©MD© %+©?LB© A summary of the procedures governing voting at the AGM is Adoptedrelated provided in the proxydocuments to form, which is circulated to shareholders 15 working days prior toshareholders the AGM.©1SKK?PW©of proceduresgoverning votingat the AGM
230 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGECOMMISSION OF SRI LANKA AND THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKAPrinciple SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code ReferenceC. RELATIONS WITH SHAREHOLDERSC.2 COMMUNICATION WITH SHAREHOLDERS©!F?LLCJ© C.2.1 The Board has appointed a Sub Committee on Shareholder Adoptedto reach allshareholders of the 0CJ?RGMLQ©R?QICB©UGRF©GBCLRGDWGLE©?LB©?BBPCQQGLE©RFC©QF?PCFMJBCPQ©company AMLACPLQ ©'R©GQ©RFC©džPQR©JGQRCB©AMKN?LW©GL©1PG©*?LI?©RM©F?TC©QSAF© a Committee. This Committee conducts an annual Shareholder 0CJ?RGMLQ©$MPSK©RM©GBCLRGDW©QF?PCFMJBCP©AMLACPLQ © BBGRGML?JJW©RFC© AGM is also a key forum for contact with shareholders and the Bank has a proud history of well attended AGMs where shareholders R?IC©?L©?ARGTC©PMJC©GL©CVCPAGQGLE©RFCGP©PGEFRQ ©2FC© LLS?J©0CNMPR©GQ© translated in to Sinhala language and the Chairman’s and CEO/ MD’s messages are translated in to Tamil language as well to facilitate greater communication with shareholders.©.MJGAW©?LB© C.2.2 2FC© ?LI©NMQRQ©ML©GRQ©UC@QGRC©UUU Q?KN?RF JI©AMNGCQ©MD©?LLS?J© Adoptedmethodology for reports, interim reports etc. These are posted on the website ascommunication with QMML©?Q©NP?ARGA?@JC©?NJCP©RFCW©F?TC©@CCL©PCJC?QCB©RM©RFC©1RMAI©shareholders Exchange. The Bank provides fair disclosure with emphasis on the integrity, accuracy, timeliness and relevance of the information provided.©'KNJCKCLR?RGML© C.2.3 Shareholders are consulted on their preference to receive the AdoptedMD©RFC©.MJGAW©?LB© LLS?J©0CNMPR©DPMK©RFC© ?LI©CGRFCP©@W©KC?LQ©MD©?©!MKN?AR©\"GQI©methodology for or in printed form. Shareholders may at anytime elect to receivecommunication with LLS?J©0CNMPR©DPMK©RFC© ?LI©GL©NPGLRCB©DMPK©DPCC©MD©AF?PEC shareholders©!MLR?AR©NCPQML© C.2.4 & 'LRCPGK©0CNMPRQ©?PC©NS@JGQFCB©GL©?JJ©RFPCC©J?LES?ECQ©#LEJGQF© Adopted 1GLF?J?©?LB©2?KGJ©GL©JC?BGLE©LCUQ©N?NCPQ©UGRFGL©©B?WQ©MD©RFC© Adoptedin relation to C.2.6 quarter end.shareholder matters Shareholders may, at anytime, direct questions and request for publicly available information to the Directors or Management of©.PMACQQ©RM© C.2.5 the Bank. They may also provide their comments and suggestionsmake all Directors to the Directors or Management. Such questions, requests andaware of major suggestions should be addressed to the Group Company Secretary.issues and concernsof shareholders The Group Company Secretary maintains a record of all correspondences received. He directs as soon as practicable such correspondences to the Board, individual Directors or the relevant MLjACPQ©?Q©?NNJGA?@JC
231 Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code Reference©.PMACQQ© C.2.7 .JC?QC©PCDCP©! ©?@MTC Adoptedresponding toshareholder mattersC.3 MAJOR AND MATERIAL TRANSACTIONS©\"GQAJMQSPC©MD© C.3.1 During the year 2014, the Bank had not engaged in or committed Adoptedmajor transactions RM©?LW©+?HMP©0CJ?RCB©.?PRW©2P?LQ?ARGML©UFGAF©K?RCPG?JJW©?DžCARCB© the Bank’s net asset base.D. ACCOUNTABILITY AND AUDITD.1©.PCQCLR©?© D.1 The Bank’s position and prospects have been discussed in detail in Adoptedbalanced and RFC©DMJJMUGLE©QCARGMLQ©MD©RFGQ© LLS?J©0CNMPR understandable © !F?GPK?LQ©0CNMPR©EGTCL©ML©N?ECQ©©© assessment of the © +?L?EGLE©\"GPCARMPQ©0CTGCU©EGTCL©ML©N?ECQ©©RM© Company’s © 'LRCEP?RCB©+?L?ECKCLR©\"GQASQQGML©?LB© L?JWQGQ©EGTCL©ML©džL?LAG?J©NMQGRGML©performance and pages 48 to 175.prospects©'LRCPGK©PCNMPRQ© D.1.1 'LRCPGK©PCNMPRQ©UCPC©AGPASJ?RCB©UGRFGL©©B?WQ©MD©C?AF©OS?PRCP© Adoptedprice-sensitive which includes information to assist shareholders gain anpublic reports, SLBCPQR?LBGLE©MD©RFC©QR?RC©MD©?Dž?GPQ©MD©RFC© ?LI ©regulatory reportsand .PGAC©QCLQGRGTC©GLDMPK?RGML©U?Q©BGQAJMQCB©GL©?©AMKNPCFCLQGTC©@SR©statutory concise manner to the Colombo Stock Exchange on a timely basis.informationrequirements 0CNMPRQ©PCOSGPCB©@W©RFC©PCESJ?RMPQ©GLAJSBGLE©!CLRP?J© ?LI©'LJ?LB© 0CTCLSC©0CEGQRP?P©MD©!MKN?LGCQ©!MJMK@M©1RMAI©#VAF?LEC©UCPC© ?JJ©džJCB©GL©?©RGKCJW©K?LLCP©GL©AMKNJG?LAC©UGRF©RFCGP©PCOSGPCKCLRQ© ?LB©RFCQC©NPMTGBCB©?©QSLjAGCLR©GLDMPK?RGML©DMP©RFC©SQCP©RM©M@R?GL©?© balanced assessment of the Bank`s operations.©\"CAJ?P?RGML©GL© D.1.2 2FC© LLS?J©0CNMPR©MD©RFC© M?PB©MD©\"GPCARMPQ©ML©RFC© Dž?GPQ©MD© Adopted\"GPCARMPQ©0CNMPR the Company on pages 272 to 282 contains the declarations as required by the Code.©0CQNMLQG@GJGRGCQ© D.1.3 2FC©1R?RCKCLR©MD©\"GPCARMPQ©0CQNMLQG@GJGRW©DMP©$GL?LAG?J©0CNMPRGLE© Adoptedof the Board for ?LB©0CNMPR©MD©RFC© SBGRMPQ©UFGAF©GLAJSBCQ©?©QR?RCKCLR©?@MSR©RFCGP©the preparation reporting responsibilities are provided on pages 287 & 288 and onand presentation of page 289 respectively.FinancialStatements andstatement by theAuditors about theirreportingresponsibilities
232 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGECOMMISSION OF SRI LANKA AND THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKA Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code Adopted Reference AdoptedD. ACCOUNTABILITY AND AUDIT AdoptedD.1©'LAJSBC©?© D.1.4 2FC©'LRCEP?RCB©+?L?ECKCLR©\"GQASQQGML©?LB© L?JWQGQ©GQ©QCR©MSR©ML©Management N?ECQ©©RM©©?LB©AMTCPQ©RFC©GLDMPK?RGML©QNCAGdžCB©GL©RFC©!MBC©Discussion and as given belowAnalysis industry structure and developments opportunities and threats risks and concerns internal control systems and their adequacy social and environmental protection activities carried out by the Company © džL?LAG?J©NCPDMPK?LAC material developments in human resource/industrial relations and prospects for the future.©\"CAJ?P?RGML©MD© D.1.5 2FGQ©GLDMPK?RGML©GQ©NPMTGBCB©GL©RFC© LLS?J©0CNMPRthe Directors that MD©RFC© M?PB©MD©\"GPCARMPQ©ML©RFC©?Dž?GPQ©MD©RFC©!MKN?LW©EGTCL©ML©the business is a pages 272 to 282.going concern©,MRGDW© D.1.6 This situation has not arisen.shareholders in casenet assets of thecompany fall below50%©0CJ?RCB©.?PRW© D.1.7 There is a documented process approved by the Board identifyingTransactions related parties, type of related party transactions and favourable treatment granted to said parties in order for Board members ?LB©)+.Q©RM©?TMGB©?LW©AMLLJGAR©MD©GLRCPCQR©GL©RFGQ©PCE?PB ©2FCPC© GQ©?L©CDžCARGTC©?LB©AMKNPCFCLQGTC©QWQRCK©MD©'LRCPL?J©!MLRPMJ©DMP© identifying, recording and disclosure of related party transactions. A procedure is in place for granting accommodation to Directors or to close relations of Directors. Such accommodation requires approval at a meeting of the Board of Directors, by not less than 2/3rds of the number of Directors other than the Director concerned, voting in favour of such accommodation. The terms and conditions of the facility include a proviso that it will be secured by such security as may from time to time be determined by the Monetary Board as well.G4 - 41
233 Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status©0CJ?RCB©.?PRW© \"GPCARMPQ©?LB©)+.Q©QS@KGR©BCAJ?P?RGMLQ©BCAJ?PGLE©RFCGP©Transactions Code transactions to the Bank on a quarterly and annual basis. Adopted Reference D.1.7 JJ©PCJ?RCB©N?PRW©RP?LQ?ARGMLQ©?Q©BCdžLCB©GL©1PG©*?LI?© AAMSLRGLE© 1R?LB?PBQ© ©*) 1©©0CJ?RCB©.?PRW©2P?LQ?ARGMLQ©GQ©BGQAJMQCB©GL© ,MRC©,M©©RM©RFC©$GL?LAG?J©1R?RCKCLRQ©ML©N?ECQ©©RM© D.2 INTERNAL CONTROL©+?GLR?GL©?© D.2.1 The Board is responsible for formulating and implementing Adoptedsound system of appropriate and adequate internal control systems. The Board Adoptedinternal control to Audit Committee has responsibility to the Board to ensure that thesafeguard QWQRCK©MD©GLRCPL?J©AMLRPMJQ©GQ©QSLjAGCLR©?LB©CDžCARGTC ©0CTGCUQ©MD©shareholders’ RFC©?BCOS?AW©?LB©CDžCARGTCLCQQ©MD©RFCQC©GLRCPL?J©AMLRPMJ©QWQRCKQ©investments and the ?PC©A?PPGCB©MSR©@W©RFC©'LRCPL?J© SBGR©\"CN?PRKCLR©UFM©PCNMPR©ML©?©Company’s assets regular basis to the Board Audit Committee.©0CTGCU©LCCB© D.2.2 Q©RFC© ?LI©F?Q©?L©'LRCPL?J© SBGR©DSLARGML©RFGQ©GQ©LMR©?NNJGA?@JC DMP©'LRCPL?J© SBGR©FunctionD.3 AUDIT COMMITTEE©#QR?@JGQF© D.3 The Bank has established Board Audit Committee in keeping Adoptedarrangements with good governance since 1997. The principle responsibilityfor selection and MD©RFC© M?PB© SBGR©!MKKGRRCC©GQ©RM©F?TC©MTCPQGEFR©MTCP©džL?LAG?J©application of reporting, internal controls and monitoring auditor independence.accounting policies, 'RQ©BSRGCQ©GLAJSBC©E?GLGLE©?QQSP?LAC©ML©RFC©AMLRPMJ©MTCP©džL?LAG?J©džL?LAG?J NPMACQQCQ©?LB©RFC©GLRCEPGRW©MD©RFC© ?LIQ©džL?LAG?J©PCNMPRQ©reporting and monitoring the performance, objectivity and independence of theinternal control External Auditor and reviewing work of the internal Auditor. Theprinciples M?PB© SBGR©!MKKGRRCC©0CNMPR©GQ©EGTCL©ML©N?ECQ©©RM©©MD©RFC© LLS?J©0CNMPR ©©!MKNMQGRGML© D.3.1 2FC© M?PB© SBGR©!MKKGRRCC©AMLQGQRQ©MD©,ML©#VCASRGTC©\"GPCARMPQ©and Terms of ?LB©AF?GPCB©@W©?©,ML©#VCASRGTC©\"GPCARMP ©+CK@CPQ©?PC©QCJCARCB©0CDCPCLAC©DMP© M?PB© RM©NPMTGBC©?©@PM?B©QCR©MD©džL?LAG?J©AMKKCPAG?J©?LB©MRFCP©PCJCT?LR©Audit Committee experience to meet the Committee’s objectives. The CEO/MD, %!$-©\"%+© $GL?LAC©&C?B©MD©'LRCPL?J© SBGR©1CLGMP©+?L?ECP© Systems Audit and representatives of the External Auditors are invited to attend the meetings.©0CTGCU©MD© D.3.2 The Committee has a key oversight role in relation to the External AdoptedExternal Audit Auditor Ernst & Young, whose primary relationship is with thefunction and !MKKGRRCC ©2FC© ?LIQ© SBGRMP©'LBCNCLBCLAC©.MJGAW©CLQSPCQ©RF?R©relationship with the independence and objectivity of the Auditor is not impaired.External Auditors The Committee has responsibility for recommending to the Board the appointment/re-appointment of the External Auditors and reviewing the nature, scope and results of the annual External Audit. The audit fee is determined by the Board Audit Committee UFM©?JQM©?QQCQQCQ©RFC©CDžCARGTCLCQQ©?LB©RFC©GLBCNCLBCLAC©MD©RFC© External Auditors.©2CPKQ©MD© D.3.3 2FC©2CPKQ©MD©0CDCPCLAC©DMP©RFC© M?PB© SBGR©!MKKGRRCC©AMKNJGCQ© Adopted0CDCPCLAC UGRF©RFC©!MBC©MD© CQR©.P?ARGAC©ML©!MPNMP?RC©%MTCPL?LAC©GQQSCB©@W© RFC©1#!©?LB©'! 1*©?LB©RFC©!MBC©MD© CQR©.P?ARGAC©ML© M?PB© SBGR© !MKKGRRCCQ©GQQSCB©@W©'! 1* ©2CPKQ©MD©0CDCPCLAC©?JQM©AMKNJGCQ© UGRF©RFC© ?LIGLE© AR©\"GPCARGML©,M©©MD©©ML©!MPNMP?RC© %MTCPL?LAC©DMP©*GACLQCB©!MKKCPAG?J© ?LIQ©GQQSCB©@W©! 1*©?LB© PCJCT?LR©!MJMK@M©1RMAI©#VAF?LEC©0CESJ?RGMLQ ©2FCQC©BMASKCLRQ© are available with the Group Company Secretary.
234 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE CODE OF BEST PRACTICE ON CORPORATE GOVERNANCE ISSUED JOINTLY BY THE SECURITIES AND EXCHANGECOMMISSION OF SRI LANKA AND THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKAPrinciple SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code Adopted ReferenceD. ACCOUNTABILITY AND AUDITD.3 AUDIT COMMITTEE©\"GQAJMQSPCQ© D.3.4 2FC© LLS?J©0CNMPR©MD©RFC© M?PB©MD©\"GPCARMPQ©ML©RFC© Dž?GPQ©MD©regarding Board the Company given on pages 272 to 282 provides the followingAudit Committee disclosures: The composition of the Board Audit Committee A statement regarding the independence of the AuditorsD.4 CODE OF BUSINESS CONDUCT AND ETHICS©!MBC©MD© D.4.1 Codes of Conduct and Ethics are in place as per the Employee Hand Adoptedbusiness conduct Book.and ethicsD.5 CORPORATE GOVERNANCE DISCLOSURES©!MPNMP?RC© D.5.1 2FC©!MPNMP?RC©%MTCPL?LAC©0CNMPR©EGTCL©ML©N?ECQ©©RM©© Adopted%MTCPL?LAC©0CNMPR© .PMTGBCQ©GLDMPK?RGML©PCE?PBGLE©!MPNMP?RC©%MTCPL?LAC©NP?ARGACQ©GL© the Bank which are in compliance with: © RFC©!MBC©MD© CQR©.P?ARGAC©ML©!MPNMP?RC©%MTCPL?LAC©GQQSCB© HMGLRJW©@W©RFC©1CASPGRGCQ©#VAF?LEC©!MKKGQQGML©MD©1PG©*?LI?© ?LB©'LQRGRSRC©MD©!F?PRCPCB© AAMSLR?LRQ©MD©1PG©*?LI?© © RFC© ?LIGLE© AR©\"GPCARGML©,M©©MD©©ML©!MPNMP?RC© %MTCPL?LAC©DMP©*GACLQCB©!MKKCPAG?J© ?LIQ©GQQSCB©@W©! 1*E. SHAREHOLDERS – INSTITUTIONAL INVESTORSE.1 SHAREHOLDER VOTING©#LAMSP?EC© E.1 The Bank has a history of active shareholder involvement at Adoptedvoting at AGM General Meetings and all shareholders are regularly encouraged to state their intentions to vote and translate it into practice.©0CESJ?P© E.1.1 The CEO/MD has regular structured meetings with institutional Adoptedstructured dialogues QF?PCFMJBCPQ©?LB©RFC©!F?GPK?L©MNJCL©N?PRGAGN?RCQ©GL©QSAF©with institutional meetings. Board members are briefed about the matters discussedinvestors at such meetings.E.2 EVALUATION OF GOVERNANCE DISCLOSURES©#LAMSP?EC© E.2 'LQRGRSRGML?J©GLTCQRMPQ©?PC©ICNR©?NNPGQCB©MD©RFC© ?LIQ©EMTCPL?LAC© Adoptedinstitutional NP?ARGACQ©RFPMSEF©RFC© LLS?J©0CNMPR©?LB©?LW©LCU©GLGRG?RGTCQ©?PC©investors to highlighted at regular meetings to ensure that due weightage isgive due weight to given to good Corporate Governance.relevant governancearrangements
235Principle SEC & CA Compliance and Implementation Adoption Sri Lanka Status Code Adopted ReferenceF. SHAREHOLDER RELATIONS – INDIVIDUAL SHAREHOLDERSF.1 INVESTING / DIVESTING DECISION©'LBGTGBS?J© F.1 2FC© LLS?J©0CNMPR©AMLR?GLQ©QSLjAGCLR©GLDMPK?RGML©DMP©?©NMRCLRG?J©shareholders are GLTCQRMP©RM©A?PPW©MSR©FGQFCP©MUL©?L?JWQGQ ©2FC© LLS?J©0CNMPR©encouraged to do is published in both Sinhala and English to facilitate bettertheir own analysis understanding by retail investors. This, together with the interimor seek independent džL?LAG?J©QR?RCKCLRQ©NPMTGBCB©C?AF©OS?PRCP©NPMTGBC©QSLjAGCLR©advice information to enable retail investors make informed judgements regarding the performance of the Bank. Additionally, there is a separate part of the company website BCBGA?RCB©RM©'LTCQRMP©0CJ?RGMLQ©UFGAF©NPMTGBCQ©RFGQ©GLDMPK?RGML© online to all investors. Shareholders can contact, the Group Company Secretary for further information.F.2 SHAREHOLDER VOTING©#LAMSP?EC© F.2 'R©GQ©?©RP?BGRGML©?R©1?KN?RF© ?LI©RM©CLAMSP?EC©PCR?GJ©GLTCQRMPQ©RM© Adoptedshareholders to participate and vote at the AGM. Additionally, they are encouragedparticipate and vote RM©N?PRGAGN?RC©GL© ?LIQ©?Dž?GPQ©@W©U?W©MD©QS@KGRRGLE©NPMNMQ?JQ©at the AGM RFPMSEF©1F?PCFMJBCP©0CJ?RGMLQ©DMPSKQ G. SUSTAINABILITY REPORTINGG.1 PRINCIPLES OF SUSTAINABILITYSustainability is a business approach that creates long term stakeholder value by embracing opportunities andmanaging risks derived from economic, environmental and social developments and their potential implications andimpacts on the business activities of the entity.Sustainability reporting is the practice of recognising, measuring, disclosing and being accountable to internal andexternal stakeholders for organisational performance towards the goals of sustainable development in the contextof the overall business activities and strategy of the entity and be directed to the target stakeholders, usuallyshareholders, employees, consumers, society and government.©#AMLMKGA© G.1.1 .JC?QC©PCDCP©N?ECQ©©RM©©?LB©©RM© AdoptedSustainability .JC?QC©PCDCP©N?ECQ©©RM© Adopted .JC?QC©PCDCP©N?ECQ©©RM© Adopted©2FC© G.1.2 .JC?QC©PCDCP©N?ECQ©©RM© AdoptedEnvironment .JC?QC©PCDCP©N?ECQ©©RM© Adopted©*?@MSP©.P?ARGAC G.1.3 .JC?QC©PCDCP©N?ECQ©©RM© Adopted©1MAGCRW G.1.4 .JC?QC©PCDCP©N?ECQ©©RM© Adopted©.PMBSAR© G.1.5and Service0CQNMLQG@GJGRW©1R?ICFMJBCP© G.1.6GBCLRGdžA?RGML©engagement©CDžCARGTC©communication©1SQR?GL?@JC© G.1.7reporting &disclosure
236 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE BANKING ACT DIRECTION NO 11 OF 2007 AND SUBSEQUENT AMENDMENTSTHERETO ON CORPORATE GOVERNANCE FOR LICENSED COMMERCIAL BANKS IN SRILANKA ISSUED BY THE CENTRAL BANKCorporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference3(1) RESPONSIBILITIES OF THE BOARD©1RP?RCEGA©M@HCARGTCQ© G? The Bank’s strategic objectives and corporate values are determined byand corporate values the Board and are given on page 28. These are communicated to all levels MD©QR?Dž©RFPMSEF©PCESJ?P©@PGCdžLE©QCQQGMLQ©?LB©PCGLDMPACB©@W©RFC©!MPNMP?RC© Management Team. Additionally the values are included in the Employee Code MD©!MLBSAR© JSC© MMI©UFGAF©GQ©?JQM©?T?GJ?@JC©ML©RFC©GLRP?LCR ©-TCP?JJ© SQGLCQQ© G@ The Bank strategy is set by the Board in consultation with the Corporate1RP?RCEW©GLAJSBGLE©0GQI© +?L?ECKCLR©?LB©RFC©1RP?RCEGA©.J?L©DMP©RFC©NCPGMB©© ©F?Q©@CCL©.MJGAW©?LB©+?L?ECKCLR approved by the Board. The risk appetite, policy, management framework and mechanisms have also been approved by the Board in line with the strategic plan. Measurable goals for the Bank as a whole have been set and performance is measured in line with these goals regularly at monthly Board Meetings.©0GQI©+?L?ECKCLR GA 2FC© M?PB©F?Q©?NNMGLRCB©?© M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC© R?QICB©UGRF©?NNPMTGLE©RFC© ?LIQ©0GQI©.MJGAW©BCdžLGLE©RFC©PGQI©?NNCRGRC©©!MKKSLGA?RGML©UGRF© GB identifying principal risks, setting governance structures and implementingall stakeholders systems to measure, monitor and manage the principal risks. The following reports provide further insights in this regard: 0GQI©+?L?ECKCLR©0CNMPR©ML©N?ECQ©©RM© M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC©0CNMPR©ML©N?ECQ©©RM© There is a Board approved communication policy with all stakeholders, including depositors, creditors, shareholders and borrowers in place. The Board has approved and implemented the following communication policies: © 1F?PCFMJBCPQ©©2FC© M?PB©F?Q©?NNMGLRCB©?©1S@©!MKKGRRCC©ML© 1F?PCFMJBCP©0CJ?RGMLQ©R?QICB©UGRF©GBCLRGDWGLE©?LB©?BBPCQQGLE©RFC© QF?PCFMJBCPQ©AMLACPLQ ©'R©GQ©RFC©džPQR©JGQRCB©AMKN?LW©GL©1PG©*?LI?©RM©F?TC© such a Committee. This Committee conducts an annual Shareholder 0CJ?RGMLQ©$MPSK©RM©GBCLRGDW©QF?PCFMJBCP©AMLACPLQ © BBGRGML?JJW©RFC© AGM is also a key forum for contact with shareholders and the Bank has a proud history of well attended AGMs where shareholders take an ?ARGTC©PMJC©GL©CVCPAGQGLE©RFCGP©PGEFRQ ©2FC© LLS?J©0CNMPR©GQ©RP?LQJ?RCB© in to Sinhala language and the Chairman’s and CEO/MD’s messages are translated in to Tamil language as well to facilitate greater communication with shareholders.
237Corporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference !SQRMKCPQ©©!SQRMKCPQ©GLAJSBC©BCNMQGRMPQ©APCBGRMPQ©?LB©@MPPMUCPQ © 2FC© ?LI©F?Q©?©!SQRMKCP©!MKNJ?GLR©&?LBJGLE©.MJGAW©UFGAF©F?Q©@CCL©©!MKKSLGA?RGML©UGRF© GB © printed in all three languages and disseminated to all customerall stakeholders contact points of the Bank. This document outlines the complaints handling policy of the Bank, provides contact numbers of the Bank for this purpose and also of the Financial Ombudsman. There is a 24 hour trilingual customer hotline set up for this purpose and reports ?PC©PCTGCUCB©@W©RFC© M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC © Additionally, a customer satisfaction survey is carried out by External consultants to evaluate service levels provided by the Bank.©'LRCPL?J© GC © 1R?Dž©©1R?Dž©KCK@CPQ©?PC©EGTCL©?AACQQ©RM©RFC©K?L?ECKCLR©RM©TMGAC©Control System their concerns.and Management'LDMPK?RGML©1WQRCKQ The Board is tasked with reviewing the adequacy and the integrity of the Bank’s internal control systems and management information systems.©)CW©+?L?ECKCLR© GD AAMPBGLEJW©RFC© M?PB© SBGR©!MKKGRRCC©PCTGCUQ©'LRCPL?J© SBGR©PCNMPRQ©.CPQMLLCJ QS@KGRRCB©@W©RFC©'LRCPL?J© SBGR©\"CN?PRKCLR©?LB©KMLGRMPQ©DMJJMU©SN©?ARGML © 2FC© ?LI©UGJJ©GLGRG?RC©?ARGML©RM©PCTGCU©RFC©+?L?ECKCLR©'LDMPK?RGML©1WQRCK©©\"CdžLC©?PC?Q©MD© GE +'1©MD©RFC© ?LI©?LB©UGJJ©QS@KGR©?©PCNMPR©RM©RFC© M?PB©DMP©RFCK©RM©PCTGCU©RFC©authority and Key ?BCOS?AW©MD©RFC© ?LIQ©+'1 0CQNMLQG@GJGRGCQ©DMP© 2FC© M?PB©F?Q©GBCLRGdžCB©)CW©+?L?ECKCLR©.CPQMLLCJ©?Q©BCdžLCB©GL©RFC©Directors and Key 1PG©*?LI?© AAMSLRGLE©1R?LB?PBQ©UFM©QGELGdžA?LRJW©GLLJSCLAC©NMJGAW©BGPCAR©+?L?ECKCLR©.CPQMLLCJ activities and exercise control over business activities, operations and risk K?L?ECKCLR © JJ©?NNMGLRKCLRQ©MD©BCQGEL?RCB©)CW©+?L?ECKCLR©.CPQMLLCJ©©-TCPQGEFR©MD©?Dž?GPQ© GF ?PC©PCAMKKCLBCB©@W©RFC© M?PB©,MKGL?RGML©!MKKGRRCC©?LB©?NNPMTCB©@W©RFC©of the Bank by Key Board.+?L?ECKCLR©.CPQMLLCJ PC?Q©MD©?SRFMPGRW©?LB©ICW©PCQNMLQG@GJGRGCQ©F?TC©@CCL©BCdžLCB©DMP©RFC©\"GPCARMPQ© ?LB©)CW©+?L?ECKCLR©.CPQMLLCJ © QQCQQ©CDžCARGTCLCQQ© GGof own Governance )CW©+?L?ECKCLR©.CPQMLLCJ©K?IC©PCESJ?P©NPCQCLR?RGMLQ©RM©RFC© M?PB©ML©practices matters under their purview and are also called in by the Board to explain matters relating to their areas. Selection, nomination and election of Directors are made by the Board ,MKGL?RGML©!MKKGRRCC©@?QCB©ML©RFCGP©džCJB©MD©CVNCPRGQC ©\"GPCARMPQ©GLRCPCQRQ© are disclosed to the Board at the start of every meeting. A Director who has a particular interest abstains from voting in such a situation and he/she is not counted in the quorum.©1SAACQQGML©NJ?L© GH 2FC© M?PB©?NNP?GQCQ©RFCGP©NCPDMPK?LAC©@W©džJJGLE©RFC© M?PB©#T?JS?RGML©for Key Management $MPK©UFGAF©GQ©džJJCB©@W©C?AF©\"GPCARMP©GL©PCJ?RGML©RM©@SQGLCQQ©QRP?RCEW©?LB©.CPQMLLCJ AMLRPG@SRGMLQ©MD© M?PB©KCK@CPQ©@?QCB©ML©RFCGP©džCJB©MD©CVNCPRGQC ©2FC© responses are collated by the Group Company Secretary and submitted to the M?PB©,MKGL?RGML©!MKKGRRCC©DMP©GRQ©PCTGCU ©+?RRCPQ©MD©AMLACPL©?PC©@PMSEFR© RM©RFC©?RRCLRGML©MD©RFC© M?PB©@W©RFC© M?PB©,MKGL?RGML©!MKKGRRCC 2FC© M?PB©,MKGL?RGML©!MKKGRRCC©džL?JGQCB©RFC©BP?NJ©QRPSARSPC©MD©RFC© ?LI© which has been principally approved by the Board. A succession plan is being implemented based on the said structural plan.
238 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE BANKING ACT DIRECTION NO 11 OF 2007 AND SUBSEQUENT AMENDMENTS THERETO ON CORPORATEGOVERNANCE FOR LICENSED COMMERCIAL BANKS IN SRI LANKA ISSUED BY THE CENTRAL BANKCorporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference3(1) RESPONSIBILITIES OF THE BOARD©0CESJ?P©KCCRGLEQ© GI )CW©+?L?ECKCLR©.CPQMLLCJ©?PC©PCESJ?PJW©NPCQCLR©MP©?PC©A?JJCB©GL©DMP©with Key Management discussions at the meetings of the Board and its Sub Committees on policy.CPQMLLCJ ?LB©MRFCP©K?RRCPQ©PCJ?RGLE©RM©RFCGP©?PC?Q ©.PMEPCQQ©RMU?PBQ©AMPNMP?RC© objectives is a regular agenda item for the Board and the Key Management©0CESJ?RMPW© GJ .CPQMLLCJ©?PC©PCESJ?PJW©GLTMJTCB©GL©RFC© M?PB©JCTCJ©BGQASQQGMLQ©ML©RFC©Q?KC environment and Directors are briefed about developments in the regulatory environment at Board Meetings to ensure that their knowledge is updated regularly toK?GLR?GLGLE©?L©CDžCARGTC© D?AGJGR?RC©CDžCARGTC©BGQAF?PEC©MD©RFCGP©PCQNMLQG@GJGRGCQ relationship with !MKNJG?LAC©0CNMPRQ©QS@KGRRCB©RM©! 1*©UFGAF©GLAJSBCQ©?JJ©PCRSPLQ©RM© regulators are presented to the Board quarterly and monitored closely by theregulator Board.©&GPGLE©#VRCPL?J© GK 2FC©!#-+\"©?RRCLBCB©?JJ©!#-+\"©DMPSKQ©ML©%MTCPL?LAC©MPE?LGQCB©@W©! 1*©Auditors and briefed the Board. The Board Audit Committee carries out the necessary due diligence regarding© NNMGLRKCLR©MD© GG the hiring of the External Auditor and makes recommendations to the Board.Chairman and CEO and GGG The appointment of the External Auditor is made at the Annual GeneralBCdžLGLE©?LB©?NNPMTGLE© Meeting. Oversight of the External Auditor is carried out by the Board Audittheir functions and Committee and the Board is briefed of any concerns in this regard if theresponsibilities necessity arises. 2FC© M?PB©F?Q©?NNMGLRCB©RFC©!F?GPK?L©?LB©RFC©!FGCD©#VCASRGTC©-LjACP©0CESJ?P© M?PB© Managing Director and also approved their functions and responsibilitiesMeetings maintaining the balance of power between the two roles.© PP?LECKCLRQ©DMP© GT 0CESJ?P©KMLRFJW© M?PB©KCCRGLEQ©?PC©FCJB©?LB©QNCAG?J©KCCRGLEQ©?PC©QAFCBSJCB©Directors to include as and when the need arises. The Board met 20 times during 2014.We haveproposals in the agenda minimised obtaining approval via circular resolutions and it is done only on ?L©CVACNRGML?J©@?QGQ©?LB©QSAF©PCQMJSRGMLQ©?PC©P?RGdžCB©@W©RFC© M?PB©?R©RFC©LCVR©©,MRGAC©MD©+CCRGLEQ© T meeting. Board approved procedure is in place to enable all Directors to include matters and proposals in the agenda. Monthly meetings are scheduled and informed to the Board at the beginning of each calendar year to enable submission of proposals in the agenda for regular meetings where such matters and proposals relate to the promotion of business and the management of risk of the Bank. ,MRGAC©MD©+CCRGLEQ© ECLB?©?LB© M?PB©N?NCPQ©DMP©RFC© M?PB©KCCRGLEQ©?PC© circulated to the Directors 7 days prior to the meeting giving Directors time to attend and submit any urgent proposals. BBGRGML?JJW©,MRGAC© ECLB?©?LB©?JJ©PCJ?RCB© M?PB©N?NCPQ©?PC©JM?BCB©RFPMSEF©?© secure line to the ipad for Directors to access.
239Corporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference The Directors are apprised of their attendance in accordance with the Articles of the Company and the Corporate Governance Code. Details of the©\"GPCARMPQ© TG \"GPCARMPQ©?RRCLB?LAC©GQ©QCR©MSR©ML©N?EC©©,M©\"GPCARMP©F?Q©@CCL©?@QCLR©DMP©Attendance 3 consecutive meetings and all Directors have attended at least 2/3 of the meetings during the year.©!MKN?LW© TGGSecretary 2FC©%PMSN©!MKN?LW©1CAPCR?PW©UFM©Q?RGQdžCQ©RFC©NPMTGQGMLQ©MD©1CARGML©©MD© RFC© ?LIGLE© AR©,M ©MD©©?LB©UFMQC©NPGK?PW©PCQNMLQG@GJGRGCQ©QF?JJ©@C©©\"GPCARMPQ©?AACQQ©RM© TGGG to handle the secretariat services to the Board and Shareholder meeting andadvice and services of A?PPW©MSR©MRFCP©DSLARGMLQ©QNCAGdžCB©GL©RFC©QR?RSRCQ©?LB©MRFCP©PCESJ?RGMLQ Company Secretary All members of the Board have opportunity to obtain advice and services©+?GLRCL?LAC©MD© GV of the Group Company Secretary who is a Chartered Corporate SecretaryBoard Minutes ?LB©UFM©GQ©PCQNMLQG@JC©RM©RFC© M?PB©DMP©DMJJMU©SN©MD© M?PB©.PMACBSPCQ© !MKNJG?LAC©UGRF©0SJCQ©?LB©0CESJ?RGMLQ©\"GPCARGMLQ©?LB©1R?RSRCQ©?LB©ICCNGLE©©+GLSRCQ©RM©@C©MD© V and maintaining Minutes and relevant records of the Bank.QSLjAGCLR©BCR?GJ©?LB©serve as a reference Group Company Secretary maintains the minutes of the Board Meetingsfor regulators and and circulates same to all Board Members. The minutes are approved at thesupervisory authorities subsequent Board Meeting. Additionally, the Directors have access to the past Board papers and Minutes through a secure electronic link.©\"GPCARMPQ©?@GJGRW© VGto seek independent The detailed Minutes of the meetings include:professional advice ?©© ?©QSKK?PW©MD©B?R?©?LB©GLDMPK?RGML©SQCB©@W©RFC© M?PB©GL©GRQ© deliberations @©©© RFC©K?RRCPQ©AMLQGBCPCB©@W©RFC© M?PB A©©© RFC©D?AR džLBGLE©BGQASQQGMLQ©?LB©RFC©GQQSCQ©MD©AMLRCLRGML©MP©BGQQCLR B©©© RFC©RCQRGKMLGCQ©?LB©AMLdžPK?RGMLQ©MD©PCJCT?LR©CVCASRGTCQ©UGRF©PCE?PB©RM© the Board’s strategies and policies and adherence to relevant laws and regulations C©©© K?RRCPQ©PCE?PBGLE©RFC©PGQIQ©RM©UFGAF©RFC© ?LI©GQ©CVNMQCB©?LB©?L© overview of the risk management measures including reports of the M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC©?LB D©©© RFC©BCAGQGMLQ©?LB© M?PB©PCQMJSRGMLQ©GLAJSBGLE©PCNMPRQ©MD©?JJ© M?PB©1S@© Committees 2FC© ?LI©F?Q©?BMNRCB©?© M?PB©?NNPMTCB©.MJGAW©DMP©\"GPCARMPQ© AACQQ©RM© 'LBCNCLBCLR©.PMDCQQGML?J© BTGAC©?LB©RFC© M?PB©PCQMPRQ©RM©QSAF©?BTGAC©UFCL© deem necessary.©\"C?JGLE©UGRF© VGG The Board Sub Committees and various professionals in Corporate and!MLLJGARQ©MD©'LRCPCQR 1CLGMP©+?L?ECKCLR©?BTGAC©RFC© M?PB©ML©T?PGMSQ©K?RRCPQ©PCJCT?LR©RM©RFCK ©'L© addition, Directors are able to obtain independent professional advice, as and when necessary, in discharging their responsibilities. These functions are co- ordinated by the Group Company Secretary. The Directors are conscious of their obligation to deal with situations where RFCPC©GQ©?©AMLLJGAR©MD©GLRCPCQR©GL©?AAMPB?LAC©UGRF©RFC© PRGAJCQ©MD© QQMAG?RGML©MD© RFC© ?LI©?LB©RFC© ?LIGLE© AR©\"GPCARGML©,M©©MD© ©2FC© ?LI©K?GLR?GLQ© ?L©CJCARPMLGA©PCEGQRCP©MD©\"GPCARMPQ©?LB©)CW©+?L?ECKCLR©.CPQMLLCJ©'LRCPCQRQ© which is regularly updated and includes interests of the spouse, children under 18 years of age and their business concerns. Directors abstain from participating in the discussions, voicing their opinion or approving in situations UFCPC©RFCPC©GQ©?©AMLLJGAR©MD©GLRCPCQR © BBGRGML?JJW©FCQFC©GQ©LMR©AMSLRCB©GL©RFC© quorum in such instances.
240 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE BANKING ACT DIRECTION NO 11 OF 2007 AND SUBSEQUENT AMENDMENTS THERETO ON CORPORATEGOVERNANCE FOR LICENSED COMMERCIAL BANKS IN SRI LANKA ISSUED BY THE CENTRAL BANKCorporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference3(1) RESPONSIBILITIES OF THE BOARD©1AFCBSJC©MD© VGGG 2FC© M?PB©F?Q©?©QAFCBSJC©MD©K?RRCPQ©QNCAGdžA?JJW©PCQCPTCB©DMP©GRQ©BCAGQGML©RM©matters reserved for ensure that the direction and control of the Bank is within its authority in lineBoard decision with regulatory codes, guidelines and international best practice.©'LDMPK©!CLRP?J© VGT The Board is aware of the need to inform the Director of Banking SupervisionBank if there are prior to taking any decision or action if the Bank is about to become insolventsolvency issues or about to suspend payments to its depositors and other creditors and such a situation has not arisen during the year.©!?NGR?J© BCOS?AW VT The Board monitors capital adequacy and other prudential measures viz a TGX©PCESJ?RMPW©PCOSGPCKCLRQ©RFC© ?LIQ©BCdžLCB©PGQI©?NNCRGRC©?LB©GLBSQRPW© benchmarks on a monthly basis. The Bank is in compliance with the minimum capital requirements.©.S@JGQF©!MPNMP?RC© VTG 2FC© M?PB©NS@JGQFCQ©RFC©!MPNMP?RC©%MTCPL?LAC©0CNMPR©GL©RFC© ?LIQ© LLS?J©%MTCPL?LAC©0CNMPR©GL© 0CNMPR ©2FGQ©PCNMPR©GQ©EGTCL©ML©N?ECQ©©RM© LLS?J©0CNMPR The Board has adopted a scheme of self-assessment to be undertaken by©1CJD ?QQCQQKCLR©MD© VTGG each Director annually and records of these assessments are maintainedDirectors with the Group Company Secretary. The Chairman discusses these with the Directors individually.3(2) THE BOARDS’ COMPOSITION©,SK@CP©MD© G Q©NCP©! 1*©%MTCPL?LAC©BGPCARGML©RFC©LSK@CP©MD©\"GPCARMPQ©QFMSJB©LMR©@C©JCQQ©Directors than 07 nor more than 13. The Bank’s Board comprises 12 Directors as at 31st December 2014.©.CPGMB©MD©QCPTGAC©MD© GG The period of services of a Director excluding the Managing Director/Chiefa Director #VCASRGTC©-LjACP©GQ©JGKGRCB©RM©©WC?PQ©?Q©NCP©RFC©\"GPCARGML©ML©!MPNMP?RC© Governance. There are no Directors whose tenure of service has exceeded 09 years on the Board. Details of their tenures of service are given on pages 10 to 15.© M?PB© ?J?LAC GGG 2FCPC©?PC©©#VCASRGTC©\"GPCARMPQ©?LB©©,ML©#VCASRGTC©\"GPCARMPQ©UFGAF©GQ©UCJJ© within the requirement to limit the number of Executive Directors to 1/3rd of the total.©'LBCNCLBCLR©,ML© GT 2FC© M?PB©F?Q©©'LBCNCLBCLR©\"GPCARMPQ©UFGAF©AMKNJGCQ©UGRF©RFC©PCOSGPCKCLR Executive Directors© JRCPL?RC©\"GPCARMPQ T 4 Directors have been appointed as alternative Directors for the existing Directors during the year.©!PGRCPG?©DMP©,ML© TG ,ML©#VCASRGTC©\"GPCARMPQ©?PC©NCPQMLQ©UGRF©APCBG@JC©RP?AI©PCAMPBQ©?LB©F?TC©Executive Directors necessary skills and experience to bring an independent judgement to bear ML©GQQSCQ©MD©QRP?RCEW©NCPDMPK?LAC©?LB©PCQMSPACQ ©2FC©NPMdžJCQ©MD©RFC©,ML© Executive Directors are detailed on pages 10 to 15 2FC© ?LI©F?Q©?©QNCAGdžA©BMASKCLRCB© M?PB©?NNPMTCB©NPMACQQ©GL©NJ?AC©DMP© ?NNMGLRGLE©'LBCNCLBCLR©\"GPCARMPQ ©
241Corporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference©!PGRCPG?©DMP©,ML© TG Directors nominate names of eminent professionals or academics fromExecutive Directors T?PGMSQ©BGQAGNJGLCQ©RM©RFC© M?PB©,MKGL?RGML©!MKKGRRCC©UFM©NCPSQC©RFC© NPMdžJCQ©?LB©PCAMKKCLB©QSGR?@JC©A?LBGB?RCQ©RM©RFC© M?PB ©/SMPSK©DMP©RFC© TGG This requirement is strictly observed and it is noteworthy that the majorityBoard meeting is more ?PC©,ML©#VCASRGTC©\"GPCARMPQ than 50% of Directorsand more than half the 2FC©'LBCNCLBCLR©,ML©#VCASRGTC©\"GPCARMPQ©?PC©CVNPCQQJW©GBCLRGdžCB©?Q©QSAF©GL©quorum to comprise all corporate communications that disclose the names of Directors of the,ML©#VCASRGTC©\"GPCARMPQ Bank. The composition of the Board, by category of Directors, including the L?KCQ©MD©RFC©AF?GPK?L©#VCASRGTC©\"GPCARMPQ©,ML©#VCASRGTC©\"GPCARMPQ©?LB©©'BCLRGDW© TGGG 'LBCNCLBCLR©,ML©#VCASRGTC©\"GPCARMPQ©?PC©EGTCL©ML©N?ECQ©©RM©©MD©RFC©'LBCNCLBCLR©,ML© LLS?J©0CNMPR Executive Directorsin communicationsdisclose categories ofDirectors in Annual0CNMPR©1SAACQQGML© GV 2FC© M?PB©F?Q©CQR?@JGQFCB©?© M?PB©,MKGL?RGML©!MKKGRRCC©UFMQC©2CPKQ©MD©planning and 0CDCPCLAC©AMKNJW©UGRF©RFC©1NCAGKCL©EGTCL©GL©RFC©!MBC©MD© CQR©.P?ARGAC©ML©appointments to the Corporate Governance. Accordingly, new Directors including the CEO/MD andBoard GCFO are appointed by the Board upon consideration of recommendations @W©RFC© M?PB©,MKGL?RGML©!MKKGRRCC ©2FC© M?PB©F?Q©?JQM©BCTCJMNCB©?©©0C CJCARGML©MD© V QSAACQQGML©NJ?L©RMECRFCP©UGRF©RFC© M?PB©,MKGL?RGML©!MKKGRRCC©RM©CLQSPC©RFC©\"GPCARMPQ©džJJGLE©A?QS?J© CDžCARGTCLCQQ©MD©RFC© M?PB vacancies Directors appointed to the Board since the AGM will stand for election at the džPQR© %+©GL©?AAMPB?LAC©UGRF©RFC©NPMTGQGMLQ©GL©RFC© PRGAJCQ©MD© QQMAG?RGML ©2FGQ© situation has not arisen during the year.©!MKKSLGA?RGML©MD© VG 0CQGEL?RGMLQ©MD©\"GPCARMPQ©?LB©RFC©PC?QMLQ©?PC©GLDMPKCB©RM©RFC©PCESJ?RMPW©reasons for removal or authorities and shareholders as per CSE requirements together with aresignation of Director QR?RCKCLR©AMLdžPKGLE©UFCRFCP©MP©LMR©RFCPC©?PC©?LW©K?RRCPQ©RF?R©LCCB©RM©@C© brought to the attention of shareholders.©.PMFG@GRGML©MD© VGG 2FC© M?PB©?LB©RFC© M?PB©,MKGL?RGML©!MKKGRRCC©R?IC©GL©RM©?AAMSLR©RFGQ©Directors or Employees requirement in their deliberations when considering appointments ofof a bank becoming \"GPCARMPQ ©2FC©#KNJMWCC©!MBC©MD©!MLBSAR© JSC© MMI©NPMFG@GRQ©CKNJMWCCQ©RM©a Director at another be elected/nominated as a director of another bank.bank3(3) CRITERIA TO ASSESS FITNESS AND PROPRIETY OF DIRECTORS© EC©MD©\"GPCARMP© G There are no Directors who are over 70 years of age.should not exceed 70©\"GPCARMPQ©QFMSJB© GG ,MLC©MD©RFC©\"GPCARMPQ©FMJB©MLjAC©?Q©?©BGPCARMP©MD©KMPC©RF?L©©AMKN?LGCQ not be Directorsof more than 20companies
242 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE BANKING ACT DIRECTION NO 11 OF 2007 AND SUBSEQUENT AMENDMENTS THERETO ON CORPORATEGOVERNANCE FOR LICENSED COMMERCIAL BANKS IN SRI LANKA ISSUED BY THE CENTRAL BANKCorporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference3(4) MANAGEMENT FUNCTIONS DELEGATED BY THE BOARD©3LBCPQR?LB©?LB© G The Board periodically reviews and approves the delegation arrangements instudy delegation GG place and ensures that the extent of the delegation addresses the needs ofarrangements RFC© ?LI©UFGJC©CL?@JGLE©RFC© M?PB©RM©BGQAF?PEC©GRQ©DSLARGMLQ©CDžCARGTCJW ©#VRCLR©MD©delegation should nothinder Board ability todischarge its functions©0CTGCU©BCJCE?RGML© GGGarrangementsperiodically to ensurerelevance to operationsof the Bank3(5) THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER / MANAGING DIRECTOR©1CN?P?RGML©MD©PMJCQ G The roles of the Chairman and CEO/MD are separate.©,ML©#VCASRGTC© GG 2FC©!F?GPK?L©GQ©?©,ML©#VCASRGTC©\"GPCARMP©@SR©LMR©?L©'LBCNCLBCLR©\"GPCARMP©Chairman and as he holds more than 1% of the share capital. The Board has appointedappointment of a +P©1?LHGT?©1CL?L?W?IC©?Q©1CLGMP©'LBCNCLBCLR©\"GPCARMP©?LB©RFCPC©GQ©?©1CLGMP©'LBCNCLBCLR© BMASKCLRCB©2CPKQ©MD©0CDCPCLAC©DMP©RFC©1CLGMP©'LBCNCLBCLR©\"GPCARMP©RM©Director ensure the independent element.©\"GQAJMQSPC©MD© GGG 2FC©GBCLRGRW©MD©RFC©!F?GPK?L©?LB©!#-+\"©?PC©BGQAJMQCB©GL©RFC© LLS?J©0CNMPR©identity of Chairman on pages 10 to 15 and there are many references to these roles throughout.and CEO/ MD and anyrelationships with the 2FCPC©?PC©LM©K?RCPG?J©džL?LAG?J©@SQGLCQQ©MP©D?KGJW©PCJ?RGMLQFGNQ©@CRUCCL©Board members the Chairman, CEO/MD and other members of the Board other than those BGQAJMQCB©ML©N?ECQ©©RM©©?LB©GL©,MRC©,M©©RM©RFC©$GL?LAG?J©1R?RCKCLRQ©©!F?GPK?L©RM GT given on pages 371 to 376 as per annual declarations and the register of?©NPMTGBC©JC?BCPQFGN© \"GPCARMPQ©'LRCPCQRQ©UFGAF©GQ©SNB?RCB©PCESJ?PJW to the Board;@©CLQSPC©RF?R©RFC© The Board approved the key responsibilities of the Chairman and this BMASKCLR©GLAJSBCQ©RFC©K?RRCPQ©GBCLRGdžCB©GL©PCJCT?LR©ESGBCJGLCQ©?LB©AMBCQ © M?PB©UMPIQ©CDžCARGTCJW© Self-evaluation process ensures that the Chairman provides leadership to theand discharges itsresponsibilities; M?PB©RFC© M?PB©UMPIQ©CDžCARGTCJW©©BGQAF?PECQ©GRQ©PCQNMLQG@GJGRGCQ©?LB©?JJ©ICW©A©CLQSPC©RF?R©?JJ© and appropriate issues are discussed by the Board in a timely manner.key and appropriateissues are discussed bythe Board in a timelymanner.©0CQNMLQG@GJGRW© T The Group Company Secretary draws up the agenda for the meetings infor agenda lies with consultation with the Chairman.Chairman but may bedelegated to CompanySecretary
243Corporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference©#LQSPC©RF?R© TG The Chairman ensures that the Board is adequately briefed and informedDirectors are properly regarding the matters arising at Board. The following procedures are in placebriefed and provided to ensure this:adequate information Board papers are circulated 7 days prior to the Board meetings © 0CJCT?LR©KCK@CPQ©MD©RFC©+?L?ECKCLR©RC?K©?PC©?T?GJ?@JC©DMP© CVNJ?L?RGMLQ©?LB©AJ?PGdžA?RGMLQ©GD©PCOSGPCB Management information is provided in agreed formats on a regular basis to enable Directors to assess the performance and stability of the Bank Directors are able to seek independent professional advice on a needs basis at the Bank’s expense©#LAMSP?EC©?ARGTC© TGG The Board has a self-evaluation process that encourages all Directors to makeparticipation by all a full and active contribution. This is evident by the self-evaluation formsDirectors and lead in submitted by each Director at the year end.acting in the interestsof the Bank©#LAMSP?EC© TGGG ©MD©RFC©©KCK@CPQ©MD©RFC© M?PB©?PC©,ML©#VCASRGTC©\"GPCARMPQ©UFGAF©N?PRGAGN?RGML©MD©,ML© APC?RCQ©?©AMLBSAGTC©CLTGPMLKCLR©DMP©?ARGTC©N?PRGAGN?RGML©@W©RFC©,ML©#VCASRGTC©Executive Directors and \"GPCARMPQ © JJ©,ML©#VCASRGTC©\"GPCARMPQ©N?PRGAGN?RC©GL©1S@©!MKKGRRCCQ©MD©RFC©relationships between Board providing further opportunity for active participation. The Bank has also,ML©#VCASRGTC©?LB© ?NNMGLRCB©?©1CLGMP©'LBCNCLBCLR©\"GPCARMPQ©UFGAF©QSNNMPRQ©RFC©N?PRGAGN?RGML©MD©Executive Directors RFC©,ML©#VCASRGTC©\"GPCARMPQ ©©0CDP?GL©DPMK©BGPCAR© GV The Chairman does not get involved in the supervision of Key Managementsupervision of Key .CPQMLLCJ©MP©?LW©MRFCP©CVCASRGTC©BSRGCQ +?L?ECKCLR©.CPQMLLCJ©and executive duties©#LQSPC©CDžCARGTC© V The Bank historically has active shareholder participation at the Annualcommunication with %CLCP?J©+CCRGLE©?LB©?R©RFC©1F?PCFMJBCP©0CJ?RGMLQ©+CCRGLE©UFGAF©GQ©FCJB©shareholders GKKCBG?RCJW©?NJCP©RFC© %+©UFCPC©QF?PCFMJBCP©GQQSCQ©?PC©BGQASQQCB © © M?PB©1S@©!MKKGRRCC©F?Q©@CCL©?NNMGLRCB©RM©CLQSPC©RF?R©RFCPC©GQ©CDžCARGTC© communication with shareholders.©!#-+\"©DSLARGMLQ© VG The day-to-day operations of the Bank has been delegated to the CEO/MD.as the apex executivein charge of the day today operations3(6) BOARD APPOINTED COMMITTEES©#QR?@JGQFGLE© M?PB© G ,GLC©1S@©!MKKGRRCCQ©F?TC©@CCL©CQR?@JGQFCB©@W©RFC© M?PB©UGRF©UPGRRCL©RCPKQ©Sub Committees, their of reference for each. The Group Company Secretary serves as the Secretaryfunctions and reporting for all Sub Committees and maintains minutes and records with oversight by the respective Chairpersons. The reports of the Sub Committees are included GL©RFC© LLS?J©0CNMPR Board Audit Committee on pages 252 to 255. © M?PB©&SK?L©0CQMSPACQ©©0CKSLCP?RGML©!MKKGRRCC©ML©N?EC© © M?PB©,MKGL?RGML©!MKKGRRCC©ML©N?ECQ©©© © M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC©ML©N?ECQ©©RM© Board Credit Committee on pages 262 & 263. © M?PB©1RP?RCEGA©.J?LLGLE©!MKKGRRCC©ML©N?EC© © M?PB©1F?PCFMJBCP©0CJ?RGMLQ©!MKKGRRCC©ML©N?ECQ©©© Board Treasury Committee on pages 267. Board Marketing Committee on pages 268. The Chairpersons of the Sub Committees are available at the AGM to clarify any matters that may be referred to them by the Chairman.
244 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE BANKING ACT DIRECTION NO 11 OF 2007 AND SUBSEQUENT AMENDMENTS THERETO ON CORPORATEGOVERNANCE FOR LICENSED COMMERCIAL BANKS IN SRI LANKA ISSUED BY THE CENTRAL BANKCorporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference3(6) BOARD APPOINTED COMMITTEES3(6)(II) BOARD AUDIT COMMITTEE©!F?GPK?L©RM©@C© GG? 2FC©!F?GPK?L©MD©RFC© M?PB© SBGR©!MKKGRRCC©GQ©?©,ML 'LBCNCLBCLR©,ML©?L©GLBCNCLBCLR©,ML© #VCASRGTC©\"GPCARMP©UFM©GQ©?©DCJJMU©KCK@CP©MD©RFC©!F?PRCPCB©'LQRGRSRC©MD©Executive Director Management Accountants, UK.UGRF©OS?JGdžA?RGMLQ©and experience inaccountancy and/oraudit©!MKKGRRCC©RM© GG@ JJ©KCK@CPQ©MD©RFC© M?PB© SBGR©!MKKGRRCC©?PC©,ML©#VCASRGTC©\"GPCARMPQ AMKNPGQC©QMJCJW©MD©,ML©Executive Directors© SBGR©!MKKGRRCC© GGA 'L©?AAMPB?LAC©UGRF©RFC©2CPKQ©MD©0CDCPCLAC©RFC© M?PB© SBGR©!MKKGRRCC©F?Q©functions made the following recommendations: G© RFC©?NNMGLRKCLR©MD©RFC©#VRCPL?J© SBGRMP©DMP©?SBGR©QCPTGACQ©RM©@C© provided in compliance with the relevant statutes; GG© RFC©GKNJCKCLR?RGML©MD©RFC©!CLRP?J© ?LI©ESGBCJGLCQ©GQQSCB©RM© SBGRMPQ© from time to time; GGG© RFC©?NNJGA?RGML©MD©RFC©PCJCT?LR©?AAMSLRGLE©QR?LB?PBQ©?LB© the service period, audit fee and any resignation or dismissal of the Auditor©0CTGCU©?LB© GGB The Board Audit Committee ensures that the service period of themonitor External CLE?ECKCLR©MD©RFC©#VRCPL?J© SBGR©N?PRLCP©QF?JJ©LMR©CVACCB©džTC©WC?PQ©?LB©RF?R©Auditor’s independence GGC the particular Audit partner is not re-engaged for the audit before the expiryand objectivity and the GGD of three years from the date of the completion of the previous term.CDžCARGTCLCQQ©MD©RFC© The Board Audit Committee obtains representations from the External Auditoraudit processes on its independence and that the audit is carried out in accordance with the 1PG©*?LI?© AAMSLRGLE©1R?LB?PBQ ©©.PMTGQGML©MD©non-audit services by When such services are obtained from External Auditors prior approval isExternal Auditor obtained from the Board Audit Committee in accordance with regulations. Further, there is a policy in place approved by the Board in this regard.©\"CRCPKGLCQ©QAMNC© 2FC©!MKKGRRCC©BGQASQQCB©?LB©džL?JGQCB©UGRF©RFC©#VRCPL?J© SBGRMPQ©RFC©L?RSPC©of audit and scope of the audit to ensure that it includes: G© ?L©?QQCQQKCLR©MD©RFC© ?LIQ©AMKNJG?LAC©UGRF©RFC©PCJCT?LR©\"GPCARGMLQ©GL© PCJ?RGML©RM©!MPNMP?RC©%MTCPL?LAC©?LB©'LRCPL?J©!MLRPMJQ©-TCP©$GL?LAG?J© 0CNMPRGLE© GG© RFC©NPCN?P?RGML©MD©džL?LAG?J©QR?RCKCLRQ©DMP©CVRCPL?J©NSPNMQCQ©GL© accordance with relevant accounting principles and reporting obligations;
245Corporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference As all audits within the group are carried out by the same External Auditor, there was no requirement to discuss arrangements for co-ordinating activities©\"CRCPKGLCQ©QAMNC© GGD with other auditors.of audit 2FC© M?PB© SBGR©!MKKGRRCC©PCTGCUQ©RFC©džL?LAG?J©GLDMPK?RGML©MD©RFC© ?LI©©0CTGCU©džL?LAG?J© GGE in order to monitor the integrity of the Financial Statements of the Bank, itsinformation of the Bank LLS?J©0CNMPR©?AAMSLRQ©?LB©OS?PRCPJW©PCNMPRQ©NPCN?PCB©DMP©BGQAJMQSPC©?LB© RFC©QGELGdžA?LR©džL?LAG?J©PCNMPRGLE©HSBEKCLRQ©AMLR?GLCB©RFCPCGL ©2FC©PCTGCU© focuses on the following: G© K?HMP©HSBECKCLR?J©?PC?Q© GG© ?LW©AF?LECQ©GL©?AAMSLRGLE©NMJGAGCQ©?LB©NP?ARGACQ GGG© QGELGdžA?LR©?BHSQRKCLRQ©?PGQGLE©DPMK©RFC©?SBGR GT© RFC©EMGLE©AMLACPL©?QQSKNRGML© T© RFC©AMKNJG?LAC©UGRF©PCJCT?LR©?AAMSLRGLE©QR?LB?PBQ©?LB©MRFCP©JCE?J© requirements.©\"GQASQQGMLQ©UGRF© GGF The Board Audit Committee makes its recommendations to the Board on theExternal Auditor on above on a quarterly basis.GLRCPGK©?LB©džL?J©?SBGRQ The Board Audit Committee discusses issues, problems and reservations ?PGQGLE©DPMK©RFC©GLRCPGK©?LB©džL?J©?SBGRQ©UGRF©RFC©#VRCPL?J© SBGRMP ©2FC©©0CTGCU©MD© GGG !MKKGRRCC©KCR©RFC©#VRCPL?J© SBGRMPQ©GL©RFC©?@QCLAC©MD©CVCASRGTC©QR?Dž©MD©RFC©+?L?ECKCLR©*CRRCP© GGH Bank.and Bank’s response The Board Audit Committee has reviewed the External Auditor’s management letter and the management’s response thereto.©0CTGCU©MD©'LRCPL?J©Audit function 2FC© M?PB© SBGR©!MKKGRRCC©F?Q©MTCPQGEFR©MD©RFC©'LRCPL?J© SBGR©DSLARGML©?LB© carries out the following duties with regard to the same: G© 0CTGCUQ©RFC©?BCOS?AW©MD©RFC©QAMNC©DSLARGMLQ©?LB©PCQMSPACQ©MD©RFC© 'LRCPL?J© SBGR©BCN?PRKCLR©?LB©CLQSPCQ©RF?R©RFC©BCN?PRKCLR©F?Q©RFC© necessary authority to carry out its work; GG© 0CTGCUQ©RFC©'LRCPL?J© SBGR©NPMEP?KKC©?LB©PCQSJRQ©MD©RFC©?SBGRQ©?LB© ensures that appropriate actions are taken on the recommendations of RFC©'LRCPL?J© SBGR©BCN?PRKCLR GGG© 0CTGCUQ©?NNP?GQ?JQ©MD©RFC©NCPDMPK?LAC©MD©RFC©FC?B©?LB©QCLGMP©QR?Dž© KCK@CPQ©MD©RFC©'LRCPL?J© SBGR©BCN?PRKCLR GT© 0CAMKKCLBQ©?LW©?NNMGLRKCLR©MP©RCPKGL?RGML©MD©RFC©FC?B©QCLGMP©QR?Dž© members T© #LQSPCQ©RF?R©RFC©!MKKGRRCC©GQ©?NNP?GQCB©MD©PCQGEL?RGMLQ©MD©QCLGMP©QR?Dž© KCK@CPQ©MD©RFC©'LRCPL?J© SBGR©BCN?PRKCLR©GLAJSBGLE©RFC©!FGCD©'LRCPL?J© SBGRMP©?LB©NPMTGBCQ©?L©MNNMPRSLGRW©DMP©RFC©PCQGELGLE©QCLGMP©QR?Dž© members to submit reasons for resigning; TG© #LQSPCQ©RF?R©RFC©'LRCPL?J© SBGR©DSLARGML©GQ©GLBCNCLBCLR©MD©RFC©?ARGTGRGCQ© GR©?SBGRQ©?LB©RF?R©GR©GQ©NCPDMPKCB©UGRF©GKN?PRG?JGRW©NPMdžAGCLAW©?LB©BSC© professional care 2FCPC©?PC©LM©MSRQMSPACB©DSLARGMLQ©MD©'LRCPL?J© SBGR©?R©NPCQCLR©?LB©NPMTGQGMLQ© in this regard are not applicable.©'LRCPL?J© GGI 2FC© M?PB© SBGR©!MKKGRRCC©F?Q©PCTGCUCB©RFC©K?HMP©džLBGLEQ©MD©GLRCPL?J©'LTCQRGE?RGMLQ GLTCQRGE?RGMLQ©?LB©K?L?ECKCLRQ©PCQNMLQCQ©RFCPCRM ©'R©F?Q©?JQM©CLQSPCB©RF?R© the recommendations of such investigations are implemented.
246 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE BANKING ACT DIRECTION NO 11 OF 2007 AND SUBSEQUENT AMENDMENTS THERETO ON CORPORATEGOVERNANCE FOR LICENSED COMMERCIAL BANKS IN SRI LANKA ISSUED BY THE CENTRAL BANKCorporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference3(6) BOARD APPOINTED COMMITTEES3(6)(II) BOARD AUDIT COMMITTEE© RRCLBCCQ©?R© SBGR© GGJ 2FC©!#-+\"©%!$-©\"%+© ©$GL?LAC©&C?B©MD©'LRCPL?J© SBGR©?LB©?©Committee Meetings representative of the External Auditors normally attend meetings. Other Board members may also attend meetings upon the invitation of the Committee. The Committee met the External Auditors without the Executive Directors being present in terms of the Corporate Governance Code.©#VNJGAGR©?SRFMPGRW© GGK The Board Audit Committee has:resources and access toinformation G© CVNJGAGR©?SRFMPGRW©RM©GLTCQRGE?RC©GLRM©?LW©K?RRCP©UGRFGL©GRQ©RCPKQ©MD© reference; GG© RFC©PCQMSPACQ©UFGAF©GR©LCCBQ©RM©BM©QM© GGG© DSJJ©?AACQQ©RM©GLDMPK?RGML©?LB© GT© ?SRFMPGRW©RM©M@R?GL©CVRCPL?J©NPMDCQQGML?J©?BTGAC©?LB©RM©GLTGRC©MSRQGBCPQ© with relevant experience to attend, if necessary.©0CESJ?P©KCCRGLEQ GGL The Board Audit Committee has scheduled regular quarterly meetings and additional meetings are scheduled when required. Accordingly, the Committee met 8 times during the year. Members of the Board Audit Committee are served with due notice of issues to be discussed and the conclusions in discharging its duties and responsibilities are recorded in the Minutes of the meetings maintained by the Group Company Secretary.©\"GQAJMQSPC©GL© GGM 2FC©0CNMPR©MD©RFC© M?PB© SBGR©!MKKGRRCC©ML©N?EC©©RM©©GLAJSBCQ©RFC© LLS?J©0CNMPR following: details of the activities of the Board Audit Committee; the number of Board Audit Committee meetings held in the year; and details of attendance of each individual Director at such meetings.©+?GLR?GL©+GLSRCQ© GGN The Group Company Secretary serves as the Secretary for the Board Auditof meetings Committee and maintains minutes of the Committee meetings.©5FGQRJC©@JMUGLE© GGO The Bank has a Board approved whistle blowing policy whereby an employeepolicy and relationship MD©RFC© ?LI©K?W©GL©AMLdžBCLAC©P?GQC©AMLACPLQ©?@MSR©NMQQG@JC©GKNPMNPGCRGCQ©with External Auditor GL©džL?LAG?J©PCNMPRGLE©GLRCPL?J©AMLRPMJ©MP©MRFCP©K?RRCPQ ©2FC©%PMSN©!MKN?LW© Secretary forwards all communications received in this regard, including anonymous communications, to the Chairman of the Board Audit Committee who takes up the issues and addresses them in an appropriate manner. This NMJGAW©GQ©@CGLE©?LLS?JJW©PCTGCUCB©@W©RFC© M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR© Committee. The Board Audit Committee is the key representative body for overseeing the Bank’s relations with the External Auditor and meets the Auditor on a regular basis to discharge this function.
247Corporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference3(6)(III) BOARD HUMAN RESOURCES AND REMUNERATION COMMITTEE©.MJGAW©RM©BCRCPKGLC© GGG? Q©NCP©RFC©RCPKQ©MD©PCDCPCLAC©MD©RFC©!MKKGRRCC©RFC© M?PB©&0©?LB©the remuneration of 0CKSLCP?RGML©!MKKGRRCC©F?Q©RM©GKNJCKCLR©?©NMJGAW©RM©BCRCPKGLC©RFC©\"GPCARMPQ©?LB©)+.Q PCKSLCP?RGML©Q?J?PGCQ©?JJMU?LACQ©?LB©MRFCP©džL?LAG?J©N?WKCLRQ©PCJ?RGLE©RM© \"GPCARMPQ©!#-+\"©?LB©)+.Q ©!MKKGRRCC©F?Q©PCTGQCB©RFC©@?QGQ©DMP©\"GPCARMPQ© fees and monthly emoluments during the year 2014.©%M?JQ©?LB©R?PECRQ© GGG@ %M?JQ©?LB©R?PECRQ©DMP©RFC©+\"!#-©?LB©RFC©)+.Q©?PC©BMASKCLRCB©SLBCP©RFC©for the Directors, MD M?PB©?NNPMTCB©1RP?RCEGA©.J?L©© ARGML©.J?L©DMP©RFC©WC?P ?LB©)+.Q 2FCPC©?PC©LM©R?PECRQ©QCR©DMP©RFC©,ML©#VCASRGTC©\"GPCARMPQ©QGLAC©RFCW©?PC©LMR©©#T?JS?RGML©MD©RFC© GGGA expected to get involved in executive functions.performance of the MD?LB©)+.Q©?E?GLQR©RFC© .CPDMPK?LAC©CT?JS?RGML©NPMACQQ©MD©RFC©!#-+\"©?LB©RFC©)+.Q©F?Q©@CCL©set targets and goals GLGRG?RCB©@W©RFC© ?LI ©.CPDMPK?LAC©MD©RFC©!#-+\"©DMP©RFC©WC?P©F?Q©@CCL© CT?JS?RCB©@W©RFC©!MKKGRRCC ©.CPDMPK?LAC©MD©RFC©)+.Q©DMP©RFC©WC?P©CLB©© ?E?GLQR©RFCGP©QCR©R?PECRQ©?LB©EM?JQ©F?Q©RM©@C©PCTGCUCB©@W©RFC© M?PB©&0©?LB© 0CKSLCP?RGML©!MKKGRRCC ©©2CPKQ©MD© GGGB Terms of reference of the Committee provides that the MD/CEO should not0CDCPCLAC©NPMTGBCQ© be present at meetings of the Committee, when matters relating to him areMD is not present at being discussed. MD/CEO was not present when matters relating to him weremeetings when matters discussed during the year.relating to the MD arebeing discussed3(6)(iv) BOARD NOMINATION COMMITTEE© NNMGLRKCLR©MD© GT? 2FC© M?PB©,MKGL?RGML©!MKKGRRCC©F?Q©BCTCJMNCB©?LB©GKNJCKCLRCB©?©Directors, CEO and Key procedure to appoint new Directors. A procedure is being implemented to+?L?ECKCLR©.CPQMLLCJ QCJCAR©!#-+\"©?LB©)CW©+?L?ECKCLR©.CPQMLLCJ ©0C CJCARGML©MD© GT@ The Committee makes recommendations regarding the re-election ofDirectors current Directors, taking into account the performance and contribution made by the Director concerned towards the overall discharge of the Board’s responsibilities.©#JGEG@GJGRW©APGRCPG?© GTA The Committee sets the eligibility criteria to be considered, includingfor appointments to key OS?JGdžA?RGMLQ©CVNCPGCLAC©?LB©ICW©?RRPG@SRCQ©DMP©?NNMGLRKCLR©MP©NPMKMRGML©managerial positions to key managerial positions including the position of the CEO/MD. Theincluding CEO Committee considers the applicable statutes and guidelines in setting the criteria.©$GR©©.PMNCP© GTB Job descriptions have been documented for the CEO/MD and Keypersons +?L?ECKCLR©.CPQMLLCJ ©1SAACQQGML©.J?L© GTC 2FC©!MKKGRRCC©M@R?GLQ©?LLS?J©BCAJ?P?RGMLQ©DPMK©\"GPCARMPQ©!#-+\"©?LB©&0©and new expertise \"CN?PRKCLR©M@R?GLQ©?LLS?J©BCAJ?P?RGMLQ©DPMK©)CW©+?L?ECKCLR©.CPQMLLCJ©RM© CLQSPC©RF?R©RFCW©?PC©džR©?LB©NPMNCP©NCPQMLQ©RM©FMJB©MLjAC©?Q©QNCAGdžCB©GL©RFC© APGRCPG?©EGTCL©GL©\"GPCARGML©©?LB©?Q©QCR©MSR©GL©RFC©1R?RSRCQ The Committee has developed a succession plan for the Directors. The need DMP©LCU©CVNCPRGQC©K?W©@C©GBCLRGdžCB©@W©RFC© M?PB©MP©GRQ©!MKKGRRCCQ©?LB© @PMSEFR©RM©RFC©?RRCLRGML©MD©RFC© M?PB©,MKGL?RGML©!MKKGRRCC©UFGAF©UGJJ©R?IC© ?NNPMNPG?RC©?ARGML ©2FC© M?PB©,MKGL?RGML©!MKKGRRCC©džL?JGQCB©RFC©BP?NJ© structure of the Bank which was principally approved by the Board. The succession plan will be implemented based on the approved structure.
248 SAMPATH BANK PLC ANNUAL REPORT 2014 Financial, Social and Environmental PerformanceCorporate GovernanceTHE BANKING ACT DIRECTION NO 11 OF 2007 AND SUBSEQUENT AMENDMENTS THERETO ON CORPORATEGOVERNANCE FOR LICENSED COMMERCIAL BANKS IN SRI LANKA ISSUED BY THE CENTRAL BANKCorporate Governance CBSL Rule Compliance and ImplementationPrinciple Reference3(6) BOARD APPOINTED COMMITTEES3(6)(iv) BOARD NOMINATION COMMITTEE©!MKKGRRCC© GTD !MKKGRRCC©GQ©AF?GPCB©@W©?L©'LBCNCLBCLR©\"GPCARMP © KMLE©RFC©MRFCP©KCK@CPQ©Chairman and other MLC©\"GPCARMP©GQ©'LBCNCLBCLR©?LB©MRFCP©RUM©KCK@CPQ©?PC©LMR©'LBCNCLBCLR ©members CEO/MD is present at meetings by invitation.3(6)(v) BOARD INTEGRATED RISK MANAGEMENT COMMITTEE©!MKNMQGRGML©MD© T? 2FC© M?PB©'LRCEP?RCB©0GQI©+?L?ECKCLR©!MKKGRRCC©AMKNPGQCQ©©,ML©0GQI©+?L?ECKCLR© #VCASRGTC©\"GPCARMPQ©!#-+\"©!FGCD©0GQI©?LB©!MKNJG?LAC©-LjACP©?LB©MRFCP©Committee )CW©+?L?ECKCLR©.CPQMLLCJ©QSNCPTGQGLE©APCBGR©K?PICR©JGOSGBGRW©MNCP?RGML?J© and strategic risk. The Committee works closely with Key Management .CPQMLLCJ©UGRFGL©RFC©DP?KCUMPI©MD©?SRFMPGRW©?LB©PCQNMLQG@GJGRW©?QQGELCB©RM©RFC© Committee©0GQI© QQCQQKCLR T@ 2FC©!MKKGRRCC©F?Q©?NNPMTCB©RFC©NMJGAGCQ©ML©!PCBGR©0GQI©+?L?ECKCLR© +?PICR©0GQI©+?L?ECKCLR©?LB©-NCP?RGML?J©0GQI©+?L?ECKCLR©UFGAF©NPMTGBCQ© a framework for management and assessment of risks. Accordingly, monthly information on pre-established risk indicators is reviewed by the Committee in BGQAF?PEGLE©GRQ©PCQNMLQG@GJGRGCQ©?Q©NCP©RFC©2CPKQ©MD©0CDCPCLAC ©©0CTGCU©MD© TA The Committee has a process to assess and evaluate all risks of the Bank andmanagement level RFC©džLBGLEQ©?LB©GQQSCQ©?PC©QS@KGRRCB©RM©RFC© M?PB©DMP©GRQ©PCTGCU©?LB©?ARGML©Committees on risk if any. The Committee will initiate action to evaluate the risk management of Subsidiary companies both on a Bank basis and Group basis.©!MPPCARGTC©?ARGML© TB The Committee reviews the reports of the management level Creditto mitigate risks .MJGAW©0GQI©?LB©.MPRDMJGM©0CTGCU©!MKKGRRCCQ©?LB©RFC© QQCR©?LB©*G?@GJGRW©exceeding prudential +?L?ECKCLR©!MKKGRRCC©RM©?QQCQQ©RFCGP©?BCOS?AW©?LB©CDžCARGTCLCQQ©GL©levels ?BBPCQQGLE©QNCAGdžA©PGQIQ©?LB©K?L?EGLE©RFC©Q?KC©UGRFGL©RFC©OS?LRGR?RGTC©?LB© qualitative risk limits set by the Committee.©$PCOSCLAW©MD© TC 2FC©!MKKGRRCC©R?ICQ©NPMKNR©AMPPCARGTC©?ARGML©RM©KGRGE?RC©RFC©CDžCARQ©MD©meetings QNCAGdžA©PGQIQ©GL©RFC©A?QC©QSAF©PGQIQ©?PC©?R©JCTCJQ©@CWMLB©RFC©NPSBCLR©JCTCJQ© decided by the Committee on the basis of the Bank’s policies and regulatory© ARGMLQ©?E?GLQR© TD and supervisory requirements. The key risk indicators designed by theMLjACPQ©PCQNMLQG@JC© TE Committee will be approved by the Committee and the Board.for failure to identify The Committee has regular meetings and schedules additional meetingsQNCAGdžA©PGQIQ©MP© when required. The agenda covers matters assessing all aspects of riskimplement corrective management including updated business continuity plans.action R©RFC© ?LI©QNCAGdžA©PGQIQ©?LB©RFC©JGKGRQ©?PC©GBCLRGdžCB©@W©PCJCT?LR©!MKKGRRCCQ© QSAF©?Q© *!-©!PCBGR©!MKKGRRCC©?LB©'LTCQRKCLR©!MKKGRRCC©?LB©?Q©QSAF©©0GQI©?QQCQQKCLR© decisions are taken collectively.report to Board ©BCR?GJCB©PCNMPR©MD©RFC©KCCRGLE©GQ©QS@KGRRCB©RM©RFC© M?PB©?NJCP©C?AF© Committee meeting by the Secretary of the Committee for their information, TGCUQ©AMLASPPCLAC©MP©QNCAGdžA©BGPCARGMLQ
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