Colombo, 13 August 2026 – Hotel Sigiriya PLC (CSE: HOTE) has announced its non-compliance with several key corporate governance requirements stipulated by the Colombo Stock Exchange (CSE) Listing Rules. The disclosure, made on 12th August 2026, details deficiencies in the composition and chairmanships of its crucial board committees, effective from 7th August 2026.
Root Cause: Director Redesignation Triggers Non-Compliance
The non-compliance stems from the redesignation of Mr. T. Dharmarajah from an “Independent Director” to a “Non-Executive Director” on 7th August 2026. This change significantly impacted the independence quotient of the company’s board committees, leading to breaches across multiple fronts. Hotel Sigiriya PLC’s Board of Directors currently comprises six members.
Key Areas of Non-Compliance
The official announcement to the CSE highlights specific violations concerning the independence of directors within four vital committees. These include:
- Remuneration Committee (Rule 9.12.6.1 (a) & 9.12.6.2): The committee currently includes only one Independent Director, falling short of the minimum requirement of two. Consequently, the Chairperson of the Remuneration Committee is no longer an Independent Director, as mandated by the rules.
- Nominations and Governance Committee (Rule 9.11.4.1 (a) & 9.11.4.2): Similar to the Remuneration Committee, this committee also lacks the minimum two Independent Directors, and its Chairperson no longer meets the independence criteria.
- Audit Committee (Rule 9.13.3.1 (a) & 9.13.3.4): The Audit Committee currently has only one Independent Director, failing to meet the requirement of a minimum of two or a majority, whichever is higher. The Chairperson’s independence has also been compromised as a result.
- Related Party Transactions Review Committee (Rule 9.14.2 & 9.14.2 (1)): This committee also has only one Independent Director, falling short of the required two. Furthermore, its Chairperson is no longer an Independent Director.
Commitment to Rectification
Hotel Sigiriya PLC has proactively declared these non-compliances and outlined its plan for rectification. The company states that all identified breaches are proposed to be addressed and rectified at the next Annual General Meeting (AGM), which is scheduled to be held on or before 30th September 2026. Until then, the company acknowledges its temporary non-compliance with CSE Listing Rules 9.12.6.1 (a), 9.12.6.2, 9.11.4.1 (a), 9.11.4.2, 9.13.3.1 (a), 9.13.3.4, 9.14.2, and 9.14.2(1).
Importance of Corporate Governance
Corporate governance standards, particularly the independence of directors on key committees, are crucial for investor confidence and market integrity. They ensure robust oversight, transparency, and accountability in a listed entity’s operations, especially in areas such as executive remuneration, board nominations, financial reporting, and transactions with related parties. The CSE’s rules are designed to protect shareholder interests and maintain a fair and efficient market.
The market will be closely watching Hotel Sigiriya PLC’s progress in restoring full compliance with these vital regulations at its upcoming AGM, reinforcing its commitment to best corporate governance practices.
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