Expropriation bill - Effects to Stock market

Nov 06, Colombo: The Sri Lankan government has given the assurance to the business community in the country that the proposed bill titled "Revival of Underperforming Enterprises and Underutilized Assets" is a one-off bill and it would never harm other ventures in the future.

The proposed legislation which is to be tabled in the parliament on November 8th paves the way for the government to take over some 37 businesses that the government says are being mismanaged while receiving many government concessions.

Several Trade Chambers following a discussion with the government had said in a statement that they were promised that it will never be done again, the government media reported.

According to a statement issued by the group of business chambers, representatives of several business organizations have held discussions on Saturday with the President, senior cabinet ministers and senior government officials associated with the subject of economic development to express their concerns over the bill.

During the meeting the government has assured the business representatives that it would be a 'one off bill' and its intention is purely to revive the 37 underperforming enterprises and underutilized assets slated to be taken over.

The government has assured to revive these enterprises or assets through the private sector and to give the present holders of these businesses the opportunity to submit proposals to the government to revive their respective enterprises or assets.

The business chambers have been assured that some of the expropriated assets would be given back to the private sector. The representatives have requested that some companies be removed from the schedule.

"The business chambers will continue to remain engaged with the government on the proposed bill," the statement said.

The government media spokesman, Minister of Mass Media and Information Keheliya Rambukwella defended the government's move on Thursday during the cabinet press briefing.

Without naming any specific company by name, the spokesman accused the management of some of the companies of deliberately mismanaging the institutions by denying benefits to workers, delaying payment of salaries and methodically destroying the assets and machinery.

He denied the opposition's charges that the bill is aimed at taking over businesses owned by opposition party members.

"We are not targeting any individuals, but what we hope to achieve is a people-friendly management that will fully utilise the assets," Rambukwella told media Thursday.

Sun, Nov 6, 2011, 12:19 pm SL Time, ColomboPage News Desk, Sri Lanka.
http://www.colombopage.com/archive_11B/Nov06_1320562190CH.php

Expropriation bill - This will effect badly to our stock market, I feel better to stay away from the market , Member's, Expect you views on this !

why dont you guys elect this family to further 100 years until whole country get wasted.........? :p you guys deserve this kind of behavior

Are you sure?
So many promises were fulfilled on time no?

How many Govt. owned companies/institutions are runing at a profit? Allmost all Govt. institutions are running at a loss.If anybody thinks that govt. can operate the business better than private owners he/she will have to spend few hours and study how much profit govt. earn from state institutions.
And on the otherhand this kind of initiatives would diacourage the private sector investment (Foreign and Domestic both) MY view is this would affect our entire effort to increase investment in general.

Rajaraam wrote:How many Govt. owned companies/institutions are runing at a profit? Allmost all Govt. institutions are running at a loss.If anybody thinks that govt. can operate the business better than private owners he/she will have to spend few hours and study how much profit govt. earn from state institutions.
And on the otherhand this kind of initiatives would diacourage the private sector investment (Foreign and Domestic both) MY view is this would affect our entire effort to increase investment in general.

i am 100% sure maket will be a blood bath in coming weeks .............so sad ..................peoples hard earned money being loosing like nothing due to bad deleted ..........

nkuda wrote:Expropriation bill - This will effect badly to our stock market, I feel better to stay away from the market , Member's, Expect you views on this !

No other option.

Onli few want to eat the cake. No sharing! Power and pride!

A fundamental rights violation petition was filed before the Supreme Court challenging the Bill that is proposed to be passed in Parliament to acquire underperforming enterprises and unutilised assets.
Ven. Thiniyawala Palitha Thero who is the Chief Incumbent of Nalandaramaya Nugegoda as well as the Chennai Maha Bodhi Society of Sri Lanka, filed his petition against the Bill titled “An Act to provide for the vesting in the State identified Underperforming Enterprises and Underutilised Assets.”
He cited P. B. Jayasudnera who is the Secretary of Finance Ministry as well as the Treasury and the Members of the Cabinet of Ministers and the Attorney General as Respondents.
In the Petition filed through Paul Ratnayake Associates, he states that the owners of such assets have not been given an opportunity of placing their case prior to deciding that such assets as Underperforming Enterprises and/or Under Utilised Assets.
He states he believes the said Bill was drafted by a private firm of lawyers contrary to the norm where Bills are drafted by the Legal Draftsman’s Department.
He filed this application in order to protect the sovereignty of the people, rule of law, the basic foundation of the fabric of law in this country and the fundamental rights of the citizens of this country.
He pleads there has been a violation and/or an imminent violation of the Petitioner’s fundamental rights and those of other citizens of this country.
He pleads he is unable to obtain the Sinhala copy of the Bill which has been forwarded to the Supreme Court under and in terms of Article 122 of the Constitution with the following notation at the bottom whereas there has however been no urgency whatever and he contends it has been wrongly referred to the Supreme Court under and in terms of Article 122 of the Constitution.
He states he is unaware whether the Sinhala or Tamil copy of the Bill was before the Supreme Court at the time of the reference and at the time of the determination.
He says he is reliably given to understand that the Supreme Court made a determination and forward it as required in terms of the Constitution and that he is unaware of the determination.
He states that by forwarding a Bill in terms of Article 122 of the Constitution, his rights and the rights of the other citizens in terms of Article 121[1] has been purportedly taken away.
He further states that he has the right in terms of Article 121[1] of the Constitution, in that the Bill has been wrongly referred to the Supreme Court in terms of Article 122 of the Constitution.
He maintains the inclusion of the schedules one and two to the Bill is in violation of the rights of the sovereignty of this country, is violation of the rule of law and the fundamental rights of the citizens as well as of his.
He states material facts have not been placed before the Supreme Court and as such, the Supreme Court has been prevented from making an informed decision.
The Minister of Finance and the Cabinet of Ministers acting under the misdirection and/or misrepresentation of facts by the first Respondent has deemed it lawful to take over the Enterprises and Assets morefully listed in the Schedules to the Bill on a purported unilateral decision; without prior notice or warning and/or fair reasoning and/or
fair hearing and in violation of the principles of Natural Justice, the enterprises and assets that the first Respondent alleges to be underperforming enterprises and underutilised assets, he states.
If the question of underperformance or underutilisation be kept open to be decided after a fair hearing then representations could be made to the contrary in as much as some of the companies and their assets referred to in the said second schedule, do not under any circumstances, fall under the definition of ‘underutilised assets’ referred to in the same proposed Bill, he states.
The owners of such assets have not been given an opportunity of placing their case prior to deciding that such assets as Underperforming Enterprises and/or Under Utilised Assets; there has been a breach of the rules of natural justice in determining that the schedule contains Underperforming Enterprises and/or Under Utilised Assets, he said.
It is against the basic rule of law and the fundamental rights of the people that there should be included in a schedule predetermined Underperforming Enterprises and/or Under Utilised Assets will vest in the Secretary to the Treasury upon passing of the Bill.
He states that in accordance with the due process, a proper inquiry must be made prior to decisions taken to acquire assets owned by persons/citizens of this country.
He laments the listing out and/or singling out of identified persons and/or entities in an Act of Parliament is contrary to the basic principles of law and against good governance.
He bemoans that taking over assets of this nature could be targeted malice and/or action to take over targeted assets and that the Cabinet of Ministers have been misinformed that the Bill is urgent and the Cabinet of Ministers have acted on inadequate advice.
The government has taken extraordinary measures to prevent the Bill from being accessed by anybody before the 24-hour deadline for the Supreme Court determination lapsed, he alleges.
The lack of transparency and the lack of availability of an opportunity to be informed regarding same effectively prevented any party the raising of any objections against the proposed legislation, he blames.
He pleads that by an amendment to the schedule any other asset of any other citizen could vest in the government without due process of law.
The Bill proposed to be passed, deals with not only the taking over of underperforming enterprises and underutilised assets based on a defined criteria (underperforming and underutilised assets being defined) but also has gone to unilaterally evaluate the identified companies and assets, he alleges.
In the event this Bill is passed it will amount to Parliament not only deciding on policy and applicability of the laws to a identified and/or particular class of persons but also proceeding to deal with the evaluation process of who should be included under the said criteria, he points out.
This Bill would empower the Government to take over any entity that it deems underperforming and/or underutilised without adhering to the basic principles of law and in violation of the fundamental rights of the citizens of the country, he aggrieves.
He alleges the Bill is in violation of the sovereignty of the people, the rule of law, basic grundanoram upon which the laws of this country is based and/or is in violation of the fundamental rights.

By S. S. Selvanayagam
http://www.ft.lk/2011/11/07/fr-petition-filed-in-sc-challenging-expropriation-bill/

Submits proposals; Secures several assurances at meeting with President and team
Govt. remains firms on Bill

The country’s private sector in a welcome united move, has succeeded in securing some assurances over the upcoming Expropriation Bill from the Government, which however remains stubborn in not withdrawing the contentious new piece of legislation.

Leading chambers of commerce and trade, which met early last week at an emergency session in a rare yet urgent unity, got an audience from President Mahinda Rajapaksa and the Government on Saturday to vent their serious reservations over the Revival Of Underperforming Enterprises and Underutilised Assets Bill.
At the near two hour forum with the President, private sector leaders had said that the Government could go ahead with the Bill if it wishes to, but had expressed serious concern over inclusion of assets for takeover of entities which are going concerns such as Pelwatte Sugar Industries and Sevenagala Sugar Industries. The Chambers had also wanted some amendments including the changing of certain wording and an assurance that the Bill not take over private land.

The Government was also presented with written proposals from the private sector comprising from the Federation of Chambers of Commerce and Industry of Sri Lanka (FCCISL), National Chamber of Commerce of Sri Lanka (NCCSL), National Chamber of Exporters (NCE), Chamber Of Young Lankan Entrepreneurs (COYLE), Joint Apparel Association Forum (JAAF), Free Trade Zone Manufacturers Association (FTZMA) and the Ceylon Chamber of Commerce (CCC). “The business chambers will continue to remain engaged with the government on the proposed bill,” the collective private sector said in a a joint communiqué issued yesterday after the meeting.

The statement said: “At this meeting the chambers appraised the President of the impact of the proposed bill, suggested some amendments and requested that some companies be removed from the schedule.The chambers were given the following assurances;
1. That this is a one off bill
2. The intention of this one off bill is purely to revive the 37 underperforming enterprises and underutilised assets listed in schedules 1 and 2.
3. The bill is not meant to target privately owned land.
4. The government proposes to revive these enterprises or assets through the private sector.
5. The present holders of these enterprises or assets will be given the opportunity to submit proposals to the government to revive their respective enterprises or assets.”

The Daily FT learns that the private sector had suggested the Bill/Act to be renamed as revival of state lands in addition to confining the scope of the Bill/Act to the listed enterprises/assets.

It had been emphasised that the post-war challenge for Sri Lanka was to aggressively stimulate investments both from the local and foreign private sector which is critical to achieve the desired high economic growth.
The proposal to give the existing investors/owners the first right of refusal in the restructuring was refused but the Government had agreed they will be requested to submit proposals.

Economic Development Minister Basil Rajapaksa had said that the Bill was necessary to put idling or underutilised assets in to productive use as well as achieve the originally intended purposes of the enterprises.

With regard to sugar companies it was disclosed that despite their existence the country’s sugar production hasn’t increased whilst the two entities were more focused on producing molasses.

President was joined by senior cabinet ministers and senior government officials associated with the subject of economic development. Some of them were Senior Minister Dr. Sarath Amunugama, Ministers Rajapaksa, Prof. G.L. Peiris, Anura Priyadarshana Yapa, Dinesh Gunawardena, Wimal Weerawansa, Keheliya Rambukwella, Geethanjana Gunwardene and advisor Milinda Moragoda.

Secretary to the President Lalith Weeratunga, Secretary to Ministries of Finance and Economic Development Dr. P.B. Jayasundera and legal advisor to Cabinet Mohan Peiris were among officials present.
Private sector leaders included FCCISL President Kumar Mallimaratchi, Former FCCISL President Kosala Wickramanayake, Ceylon Chamber of Commerce Chairman Susantha Ratnayake, Ashroff Omar, A. Sukumaran from JAAF, Neil Umagiliya from Free Trade Zone Manufacturers Association, National Chamber of Commerce Secretary General E. M. Wijetilleke, National Chamber of Exporters Vice President Mangala Yapa, W. K. H. Wegapitiya from Chamber Of Young Lankan Entrepreneurs.

http://www.ft.lk/2011/11/07/private-sector-unites-warns-against-expropriation-bill/

රජය suga එක ගන්න යන්නෙ කවද ඉදන් කවද වෙනකන් profit/loss බලලද???????
කාට හරි කියන්න පුලුවන්ද,එහෙම ගත්තම share holderslaට මොකද වෙන්නෙ කියල???

Out of list of 37 companies , SUGA is listed at CSE. Best to montior was it going to happen before making huge investments on SUGA.

I cannot comment about all companies on the list as I do not know but the 2 sugar company acquisitions does not make any logical sense to me. They are efficient and profit making substantially compared to government owned entities.

One counter argument I can think on sugar companies from goverment is to say " though these companies earn profit the sugar supply situation in Lanka market has not improved". But is it to right to say that?


I think government needs to be very carefull with some of these companies as it can give very bad signals to foreigner and even local invesgtors.

Supreme court says Assets Acquisition bill is consistent with the Constitution


-From Adaderana.

නඩුත් හමුදුරුවන්ගෙ බඩුත් හමුදුරුවන්ගෙ නෙ මචන්

Cn any body list the proposed firms that Govt targeting

As i kwn
Pelwatta Sugar
Sewanagala
Celestail (Ceylinco Luxuries project which on HOLD)

I feel wt will be the reaction HJ Recently bought SUGA for more than 1Bn (Pls Correct if im wrong)

http://forum.srilankaequity.com/t12156-suga-the-expropriation-law?highlight=expropriation+bill
See the links in this thread.
(This is the link:- http://www.dailymirror.lk/news/14490-36-companies-to-be-acquired-through-new-bill.html)

Rajaraam wrote:

nkuda wrote:Expropriation bill - This will effect badly to our stock market, I feel better to stay away from the market , Member's, Expect you views on this !

No other option.

I feel so sorry for Malic Cader. Poor chap paid the price.

"Okkoma kunu bengala bokka ta lu"

Bill was passed in parliament with 122 for and 46 against.

-Adaderana.

Nov 09, 2011 (LBO) - Sri Lanka passed a law to expropriate assets of dozens of enterprises despite protests from trade chambers, and religious and opposition groups who warned investors would be scared away at a time when the island is looking to rebuild after a war.

The expropriation bill was passed in parliament where the ruling party has a majority with 122 votes in favour and 46 against, an LBO reporter who was present said.
The government had insisted that the bill would be a one-off and it would not expropriate firms in the future.

Hasty Move

Despite the assurance Sri Lanka's main trade chambers in a statement on Tuesday asked the government to halt the bill saying it will hurt investor sentiment at a time when the country is seeking 1.5 billion US dollars a year in foreign direct investment.

A 30-year war ended in 2009, but expected foreign direct investment had not materialized.

"[W]e believe that the proposed Bill may impact investor sentiment negatively and will thus be counter-productive...," the key chambers said in a joint statement.

"Further, the expeditious manner in which the legislation is being enacted is likely to heighten such negative sentiments."

The bill was rushed to parliament as an 'urgent bill' with a Supreme Court nod being received within 48 hours with no chance for citizens or the affected to protest or have their views heard.


Shibly Aziz, the President of Sri Lanka's Bar Association, which represents the island's lawyers called for the bill to withdrawn saying there was no need for an 'urgent bill' to take-over firms, some of which had been in the same state for years.
He also said there was no opportunity for people to make representations to Court.

In Sri Lanka a law that is passed in parliament cannot be referred to the Supreme Court again for review.

Expropriation Risk

The law seems to be in conflict with a pre-existing constitutional guarantee involving bi-lateral investment protection treaties which has been touted by the island's Board of Investment as a key draw.
http://www.lbo.lk/fullstory.php?nid=1103249724

rijayasooriya wrote:Bill was passed in parliament with 122 for and 46 against.

-Adaderana.

It means, market will go down further?

Sri Lanka passed a law to expropriate assets of dozens of enterprises despite protests from trade chambers, religious and opposition groups who warned that it will scare off investors.

Ministers said the law was needed to take back land from enterprises that were not fully utilizing what was given or were not using resources as agreed upon. For example one sugar mill listed for take-over was producing spirits and not making enough sugar.
"When state land was given for chena cultivation it was given on a license," economic development minister Basil Rajapaksa told parliament.

"Later they were allowed to build a house, but if even a shop was built they were taken back.

"These lands belong to the people. So the condition that applies to the poor farmer will also be applied in the same way to the capitalist."

The administration had insisted that the expropriate law would be a one-off and it would not nationalize other firms in the future.

Despite the assurance Sri Lanka's main trade chambers in a statement on Tuesday asked the government to halt the bill saying it will hurt investor sentiment at a time when the country is seeking 1.5 billion US dollars a year in foreign direct investment.

A 30-year war ended in 2009, but expected foreign direct investment had not materialized.
"[W]e believe that the proposed Bill may impact investor sentiment negatively and will thus be counter-productive...," the key chambers said in a joint statement.

"Further, the expeditious manner in which the legislation is being enacted is likely to heighten such negative sentiments."

The bill was rushed to parliament as an 'urgent bill' with a Supreme Court nod being received within 48 hours with no chance for citizens or the affected to protest or have their views heard.

Shibly Aziz, the President of Sri Lanka's Bar Association, which represents the island's lawyers called for the bill to withdrawn saying there was no need for an 'urgent bill' to take-over firms, some of which had been in the same state for years.

He also said there was no opportunity for people to make representations to Court.

In Sri Lanka a law that is passed in parliament cannot be referred to the Supreme Court again for review.

http://www.lbo.lk/fullstory.php?nid=1103249724

Well I don't believe that gov can bring any of these companies to profitable levels. I was actually interestingly watching SUGA when Hari steped in. Remember he turned around the insurance co. Gov took that also away from him after all his hard work to make it profitable.

I think Hari might have known that this kind of a bill is coming up. That's why he showed over 1billion stocks in financial reports of SUGA. Certainly there was not much time to take the company into profitable level, therefore at least with the massive stock the valuation of the company boost instantly. So when gov pay the compensation for shareholders, gov will have to spend much more

This is just my observation

death of stock market lead to death of the government

KALAKALADE PALAPALE DE..........

I have lot of work on Friday. Thanks government for closing the stock market at least for 30 mins in Friday Morning

When ? What's happening ?