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.
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.