Panelists at a recent Federation of Information Technology Industry Sri Lanka webinar said that they do not see any legislation preventing companies from holding digitally-enabled annual general meetings. The webinar was held on May 23. The electronics transactions act facilitates the use of digital methods to comply with the companies act.
Director BOI Dr. Harsha Cabral said, “I understand there will be teething problems at the outset. Anytime you introduce a new thing there are teething problems, but this should not be a stumbling block. The future is going to be this. If you have foreign shareholders, this is ideal.”
Sri Lanka’s electronic transaction act was recently updated to be in line with the UN Electronic Communications Convention in 2016. Sri Lanka is the first country in South Asia and only 2nd to Singapore in APEC in signing the convention in 2006. Director CERT Jayantha Fernando said, “We are in line with many developed countries viz a viz digital transactions regime.”
The Electronic Transaction Act exists to recognize and facilitate the formation of contracts. Fernando said, “Many of your manual documentation can be transposed into the digital medium. For example, is an SMS legally valid? If you look at the definition of data messages you will see that the entire gamut or the transactional element of an SMS is covered under the definition of data messages and based on a recent commercial high court case it was consolidated that the information contained in an SMS will have legal validity.”
Fernando urged on the public to download and study the Electronics Transactions Act. The Electronic Transactions Act has an overriding legal effect. Certain acts have been excluded from the Electronics Transactions Act but not the Companies Act. Fernando said, “there is nothing to prevent you’ll from issuing digital notices in place of written notification, maintaining records digitally, and conducting all your board meetings and transposing the requirements in the Companies Act into the provisions of the Electronic Act and doing things digitally. I encourage you to make use of this opportunity.”
The Colombo Stock Exchange (CSE) does not have rules for the date of the AGM. The CSE has issued a document on March 3 giving guidelines for listed companies to host annual general meetings detailing digital or hybrid (digital and physical) meetings. Renuke Wijayawardhana said that currently 70 percent of US S&P 500 companies are having digital meetings and the CSE looks to emulate such high digital facilitation of meetings. Questions at Annual General Meetings are to be accepted beforehand and screened to facilitate better functioning of the meeting. Sections 133 to 147 of the Companies Act deal with the holding of meetings. Members of FITIS are working on providing digital systems for AGM facilitation. Companies may still have to hold physical AGMs in line with their own articles of association..
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