Editors note: Hotel Developers (Lanka) Plc, a CSE listed company that owns the Colombo Hilton hotel was named in a controversial new bill, rushed through Parliament in secret, not unlike the outrageous 18th Amendment.

  1. The Bill appears to have been certified by the Cabinet on the 20th October 2011 as an Urgent Bill and was presented to and reviewed by the Supreme Court during the last week.
  2. The Bill has reached the Media and Citizens only towards the end of last week ie. after the review by the Supreme Court and possibly after its verdict had reached the Speaker of Parliament
  3. The need for this bill to be deemed an Urgent Bill needs to be properly justified by the Executive and unless so justified it appears to be so classified with mala fidei interests to by pass democratic good governance expectations of society
  4. The secrecy surrounding the bill and its reported compilation outside the purview of the usual drafting sources adds further grounds to the belief outlined in 3 above
  5. The selective criteria as defined for the application of the classification of Under performing Enterprises and Under Utilized Assets being capable of application to many other listed and unlisted private sector entities whose enterprise names and assets can easily be added in the future as a part of the schedule by simple majority approved new enactments raises amber lights in the eyes of investors, entrepreneurs and business decision makers locally and overseas and will lead to lower ranking of Sri Lanka as a attractive destination for investment, do business and operate in
  6. This bill will raise significant risks linked signals and country profiles in the minds of business leaders, decision makers and entrepreneurs, both local and foreign of the much feared Business Acquisition Act applied viciously in the past till it was removed from the statute books
  7. The specified businesses and assets and asset owning entities listed in the schedules and impacted by the provisions not being the only such business enterprises and asset owning enterprises that can be so classified raises amber lights and significant potential risks in the eyes of investors, entrepreneurs and business decision makers locally and overseas and will lead to lower ranking of Sri Lanka as a attractive destination for investment, do business and operate in
  8. Investors, entrepreneurs and business decision makers locally and overseas will fear to invest in new businesses in Sri Lanka after this experience , especially start up businesses, green field operations and long gestation period investment businesses and businesses subject to and impacted by global economic factors, seasonality factors, commodity price fluctuation linked business , business with high  risks and businesses even with more than moderate risks
  9. Investors, entrepreneurs and business decision makers locally and overseas will question as to why this type of legislation was given priority when a long felt need pressed on by investors and businessesin the form of a Chapter 11 type restructure provisions were left out of the statute books including at the time the Company Law was reformed .
  10. Unless all stakeholders including the Executive, Business Chambers, Professional Associations, Media and Civil Society Watchdog institutes begin immediately an earnest intellectual debate on the need for this bill, the associated secrecy and urgency, the rationale for the selectivity, risks associated and seen by investors and business decision makers, other options and risk mitigation strategies analysis, sustainable national economic benefits,in the longer term interests,the Nation, business and people may eventually be sorry that this bill was adopted in haste.

Revival of Underperforming Enterprises and Under Utilised Assets Act

  • m

    I agree with Mr. Jayaratne on the Chapter 11 provisions. I have sat through many seminars/workshops where speaker after speaker requests it, gives ideas for similar provisions, but those handling the legal side, just ignore their pleas.

    I expected things to improve with this government, given the fact that present central bank governor Nivard Cabraal is fond of telling people that he was a “business restructure consultant” before taking up the governor’s job. No one remembers any company that he has magically turned around, but at least he understands the concepts on restructuring.

  • Pingo

    Thank you Mr Jayaratne.

    There is an issue that I would like clarification on:

    The schedule carries a list of landholdings owned by various entities. What happens to any debt that has been secured on this land?

    Although the bill specifies that the shares of the entity will vest with the GoSL, the schedule appears to indicate that only the land will vest with the GoSL so what happens to the liabilities?

    Why is it necessary to include state owned entities (Eg Colombo Commercial, Cashew Corporation) in this list? Again, is it to acquire only the assets, sans any liabilities?

  • justitia

    COPE is to release the latest report next month with a list of 200 corrupt public entities in sri lanka.

    This bill envisages a “appointing a competent authority” under this bill to each underperforming enterprise and underutilised asset.

    Is it not imperative fistly to ‘rehabilitate/restructure’ the aforementioned 200 public entities, by removing the managers of same,identifying corruption & taking legal action against those responsible for same,and bring them up to good performance?
    All ‘top managers’ are now managing above 200 entities.
    Is the government going to ‘import’ competent incorruptible managers from abroad?
    Actually, this would be the correct solution.

    This “bill” I suspect is to monetarily gain by taking over the socalled “underperforming/underutilised” entities to prop up the national budget.
    Are there competent persons to identify these “underperforming enterprises & underutilised assets”, as all/most of them are already “managing” the 200 corrupt public entities?

  • Dessert Fox

    So who seems to be correct? von Hayek or Polanyi?

    Friedrich von Hayek wrote ‘The Road to Serfdom’ in which he “warned of the danger of tyranny that inevitably results from government control of economic decision-making through central planning’

    Contrary to Hayek, Karl Polanyi argued that ‘unfettered markets had undermined the social order and that economic breakdown had paved the way for the emergence of dictatorship’

  • Vino Gamage

    Thank you, Mr Jayaratne. and the two commentators.

    This jigsaw piece fits very well into the bigger picture of all what this government has been doing within the country and with its neighbouring countries(South Asia) and with the wider world such as the Commonwealth and the UN.

    What a government does inside its country and outside it reinforce each other.

    Most of us missed on:

    ‘Big And Small’ Brothers Gang Up Against People’s Rights, 30 October 2011
    ”…. In end April 2010, these same government leaders as Heads of States shot down another proposal to have a regional Human Rights Mechanism, not so much from an intruder, but from a SAARC Head of State. At the 16th Summit of SAARC Heads of States in Bhutan, the Maldivian President Mohamed Nasheed addressing the Summit for the first time, said: “…we all face challenges consolidating democracy and strengthening human rights. I believe SAARC should consider establishing a regional human rights mechanism, similar to the one being developed for the ASEAN region. This mechanism could help States promote and protect rights and freedoms in their jurisdiction. It could ensure that international human rights laws are observed and implemented by SAARC members. And such a mechanism could help people in our region develop a common understanding of universal human rights issues and perspectives.”
    This proposal on democracy and human rights, was not only ignored by the major players at the SAARC Summit, but was not even taken seriously by any media. …..
    This whole region is beset, not with a people’s will to live a democratic life respecting human rights and rule of law, but crooked and warped regimes using procedural democracies to reign over its people. These regimes collaborate across borders and their intelligence agencies work in tandem, on the pretext they work to eradicate ‘insurgency’ or ‘terrorism.’ For all such cross border co-ordination and collaboration in restricting functional democracies and erecting growing military regimes, they raise two huge hoardings that read as “eradication of global terrorism after New York 9/11 and Mumbai 26/11.” While regimes gang up across borders against their own people, the civil society platforms and forums have failed to take up the cue and rally regional people’s power. They have to date failed to recognise the necessity in giving President Nasheed’s suggestion to have a regional mechanism to monitor human rights in the region and they are yet to give heed to the Commonwealth proposal for a monitoring mechanism on human rights, democracy and rule of law. Civil society leaders restricting themselves to local and sectoral issues, have also failed the people in the region. They have allowed sinister regimes to dictate over people’s lives and that’s how we live today. “Tomorrow” is left to be discussed.”

    With this ‘general’ at the back of our head, let’s tackle the ‘particular’ Jayaratne exposes – each and every ‘particular’ needs to be tackled asap(as soon as possible) and amap(as much as possible).