‘The Finance’ shareholders whose deposits were converted to non-voting shares in 2011 to be compensated

June 09, 2020

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The Finance Company PLC (TFC) yesterday (08) stated that the non-voting shareholders of the company whose deposits have been converted to shares (who were initially deposit holders) in 2011 have been qualified for the payment of Rs.600,000/- maximum limit payment. In a stock exchange filling the Finance Company PLC stated that,” Under the amendment to the Sri Lanka Deposit lnsurance Scheme Regulations, No.01 of 2010_implemented as per the regulations made by the Monetary Board of the Central Bank of Sri Lanka, Non-Voting Shareholders of TFC whose deposits have been converted to shares (who were initially deposit holders) in 2011 qualify for the payment of Rs.600,000/- maximum limit payment.” Further, the company said that the compensation payments are done from the funds in the Sri Lanka Deposit lnsurance Scheme and not from any funds within the TFC and as the funds are from the insurance scheme under its own regulations, TFC’s actions are limited to provision of information to CBSL. Moreover, the company noted that as the funds are coming independently from the lnsurance scheme, this payment is not prejudice to the rights of the other shareholders and any issues in relation to this matter must be discussed with the CBSL. Recently, the Central Bank of Sri Lanka stated it would begin payments to depositors of The Finance Company from Sunday (07 June 2020) and has appointed the People’s Bank as the agent bank to carry out the compensation process. The license issued to The Finance Company PLC (TFC) to carry on finance business was cancelled with effect from 22 May in terms of the provisions of the Finance Business Act No. 42 of 2011. “The Central Bank of Sri Lanka (CBSL) has taken steps to pay compensations up to Rs. 600,000 to all insured depositors as per the Regulations of the Sri Lanka Deposit Insurance and Liquidity Support Scheme. The balance amount, if any, will be settled after liquidation of properties belong to TFC,” the Central Bank said in the statement. Meanwhile, issuing a special statement on Sunday (07 June ) , Central Bank Governor Prof. W.D. Lakshman said cancellation of The Finance Company license had allowed the monetary institution to resolve longstanding legacy issues and provide 93% of depositors with their payments in full. He assured that the remaining 10,000 odd depositors would also have their issues resolved. The Governor recalled that similar steps had been taken earlier with regard to Central Investments and Finance PLC and The Standard Credit Finance Ltd. as well and 95% of payments had already been settled. Compensation payments to TSK Finance depositors had been limited to 26% due to judicial proceedings but the Central Bank expects to settle all dues eventually. “Corrective regulatory action taken in respect of a few institutions does not mean that the entire non-bank financial institutions sector is in trouble. We indeed observe that some licensed finance companies are on par with small or mid-sized banking institutions. Therefore, I would like to urge the general public not to be distracted or misled by baseless comments and malicious speculations expressing doubt about the health of our non-bank financial institutions sector as a whole,” he added. Photo caption: List of 10 Major Shareholders – Non Voting Ordinary Shares- as at 30 September 2019