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SEC files motion to Touchwood case
Friday, 20 September 2013 16:01
Daily Mirror E paper
The capital market regulator, Securities and Exchange Commission (SEC) has filed a motion in the Commercial High Court Colombo that’s hearing the winding up application of agro-forestry investment firm Touchwood Investment PLC filed by a creditor of the company, Mirror Business learns.
The SEC in its motion has inter-alia informed the court on the steps it has taken in connection to Touchwood Investments and the motion will be supported on October 3, 2013, the same day the winding up petition will be taken up for hearing.
Touchwood in a stock exchange disclosure said it had already filed an affidavit of opposition to the said winding up application and would take all further steps to defend and oppose this action.
In the meantime the SEC announced that it had launched a fully-fledged investigation into the business affairs of Touchwood Investments to ascertain whether any securities law has been violated by the company and also imposed a freeze on its non-current assets.
The regulator is believed to have launched the investigation upon the findings of a preliminary investigation conducted into the company on receiving several allegations against the Chairman, CEO and the board of directors of Touchwood Investments.
The SEC also imposed a 6-day trading ban on the company’s shares which lapsed last Wednesday. However, an SEC official who talked to Mirror Business on the grounds of anonymity said neither the freeze of the non-current assets nor the ongoing investigation had not prohibited the company to carry out its day-to-day operational activities.
Meanwhile, touchwood also has an ongoing legal battle with the SEC and Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) in the Supreme Court with regard to its accounting methods.
In the financial years 2004/2005 and 2005/2006 Touchwood Investments PLC adopted the fair value method as explained in International Accounting Standard 41 for the preparation of its accounts. However, a decision was made by SLAASMB that the fair value method adopted by the Company was “unreliable”.
The company challenged this decision of the SLAASMB in a writ application (case No.CA (Writ) 323/2007) in the Appeal Court and on January 25, 2010.
The Appeal Court quashed the decision of the SLAASMB along with the SEC directive issued to the company dated 9 March 2007 through which the company was directed to prepare financial statements for the years ended 31 March 2005 and 2006 on a cost basis in terms of IAS 41. The SLAASMB has appealed to the Supreme Court against the Court of Appeal judgment and the matter is pending before the Supreme Court.
As a result, the order prevailing in the case No.CA (Writ) 323/2007 which was given against SEC has been extended by the Supreme Court until determination of the Appeal case No.SC/ Appeal/100/2011.The case involving SLAASMB has been postponed until 11 December 2013 for arguments.
Touchwood Investments, according to its 2012/13 annual report, has over Rs.8 billion assets, an increase from 6.8 billion in the previous financial year. However the group liabilities stood at Rs.4.68 billion as at end of 2013/13, up from 3.76 billion in the corresponding year.
Friday, 20 September 2013 16:01
Daily Mirror E paper
The capital market regulator, Securities and Exchange Commission (SEC) has filed a motion in the Commercial High Court Colombo that’s hearing the winding up application of agro-forestry investment firm Touchwood Investment PLC filed by a creditor of the company, Mirror Business learns.
The SEC in its motion has inter-alia informed the court on the steps it has taken in connection to Touchwood Investments and the motion will be supported on October 3, 2013, the same day the winding up petition will be taken up for hearing.
Touchwood in a stock exchange disclosure said it had already filed an affidavit of opposition to the said winding up application and would take all further steps to defend and oppose this action.
In the meantime the SEC announced that it had launched a fully-fledged investigation into the business affairs of Touchwood Investments to ascertain whether any securities law has been violated by the company and also imposed a freeze on its non-current assets.
The regulator is believed to have launched the investigation upon the findings of a preliminary investigation conducted into the company on receiving several allegations against the Chairman, CEO and the board of directors of Touchwood Investments.
The SEC also imposed a 6-day trading ban on the company’s shares which lapsed last Wednesday. However, an SEC official who talked to Mirror Business on the grounds of anonymity said neither the freeze of the non-current assets nor the ongoing investigation had not prohibited the company to carry out its day-to-day operational activities.
Meanwhile, touchwood also has an ongoing legal battle with the SEC and Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) in the Supreme Court with regard to its accounting methods.
In the financial years 2004/2005 and 2005/2006 Touchwood Investments PLC adopted the fair value method as explained in International Accounting Standard 41 for the preparation of its accounts. However, a decision was made by SLAASMB that the fair value method adopted by the Company was “unreliable”.
The company challenged this decision of the SLAASMB in a writ application (case No.CA (Writ) 323/2007) in the Appeal Court and on January 25, 2010.
The Appeal Court quashed the decision of the SLAASMB along with the SEC directive issued to the company dated 9 March 2007 through which the company was directed to prepare financial statements for the years ended 31 March 2005 and 2006 on a cost basis in terms of IAS 41. The SLAASMB has appealed to the Supreme Court against the Court of Appeal judgment and the matter is pending before the Supreme Court.
As a result, the order prevailing in the case No.CA (Writ) 323/2007 which was given against SEC has been extended by the Supreme Court until determination of the Appeal case No.SC/ Appeal/100/2011.The case involving SLAASMB has been postponed until 11 December 2013 for arguments.
Touchwood Investments, according to its 2012/13 annual report, has over Rs.8 billion assets, an increase from 6.8 billion in the previous financial year. However the group liabilities stood at Rs.4.68 billion as at end of 2013/13, up from 3.76 billion in the corresponding year.
