Serendib Hotels PLC Faces Corporate Governance Non-Compliance Post Director Redesignation

Lanka Data

COLOMBO, Sri Lanka – 13 August 2026 – Serendib Hotels PLC (CSE: SHL) has officially informed the Colombo Stock Exchange (CSE) of its non-compliance with several key Corporate Governance rules, effective from 7th August 2026. The announcement, dated 12th August 2026, details the immediate impact of a director’s redesignation on the company’s board and committee compositions.

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 has triggered a series of breaches across various sections of the CSE Listing Rules, particularly concerning the independence and composition of the Board and its crucial sub-committees.

Key Areas of Non-Compliance

According to the official communication to the CSE’s Chief Regulatory Officer, Mrs. Nilupa Perera, Serendib Hotels PLC, which currently has nine directors on its Board, is now in breach of the following rules:

  • Composition of Independent Directors on the Board (Rule 9.8.2 (a)): The company now has only two Independent Directors, falling short of the minimum requirement of at least two Independent Directors or one-third (1/3) of the total number of Directors, whichever is higher. For a nine-member board, this minimum is three Independent Directors.
  • Remuneration Committee (Rules 9.12.6.1 (a) & 9.12.6.2):
    • The committee’s composition now includes only one Independent Director and two Non-Executive Non-Independent Directors, failing the minimum requirement of two Independent Directors.
    • The Chairperson of the Remuneration Committee is no longer an Independent Director, a mandatory requirement.
  • Nominations and Governance Committee (Rules 9.11.4.1 (a) & 9.11.4.2):
    • Similar to the Remuneration Committee, its composition now consists of one Independent Director and two Non-Executive Non-Independent Directors, instead of the minimum two Independent Directors.
    • The Chairperson of this committee also ceases to be an Independent Director, violating the rule.
  • Audit Committee (Rules 9.13.3.1 (a) & 9.13.3.4):
    • The committee’s current makeup of one Independent Director and two Non-Executive Non-Independent Directors falls short of the minimum two Independent Directors or a majority of members being Independent, whichever is higher.
    • The Chairperson of the Audit Committee is no longer an Independent Director, contrary to the Listing Rules.
  • Related Party Transactions Review Committee (Rules 9.14.2 & 9.14.2 (1)):
    • With one Independent Director and three Non-Executive Non-Independent Directors, the committee does not meet the minimum requirement of two Independent Directors.
    • The Chairperson of this committee is also no longer an Independent Director, violating the rule.

Path to Rectification

Serendib Hotels PLC has assured the CSE that it acknowledges these non-compliances and has a plan for rectification. The company proposes to address and rectify all identified breaches at its next Annual General Meeting (AGM), which is scheduled to be held on or before 30th September 2026.

This situation highlights the critical importance of maintaining strict adherence to corporate governance frameworks, particularly the independence requirements for directors and board committees, which are designed to safeguard shareholder interests and promote transparent corporate practices in listed entities on the Colombo Stock Exchange.

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