Business tycoon Harry Jayawardena and five other Directors of Melstacorp Limited were released on a personal bail of 2 million rupees each for violation of Section 51 (2) of the Securities and Exchange Commissions act

At a previous occasion, Magistrate Kanishka Wijeratne had directed the Court Registrar to issue summons on nine directors of Melstacorp Limited to appear in Court on charges of having violated Section 52 (1) (2) (3) of the SEC Act.

However, when the case came up before the Court yesterday, only six directors of Melstacorp Limited including Harry Jayawardena appeared in Court and they were ordered to be released on a personal bail of Rs.2 million, each.

The Securities and Exchange Commission (SEC) had filed a case before the Colombo Fort Magistrate against ten defendants including Melstacorp Limited over non-compliance in connection with the transfer of shares in Lanka Milk Foods PLC (LMF) to Melstacorp.    

The SEC alleged the defendant company together with Milford Exports (Ceylon) Limited and Distilleries Company of Sri Lanka PLC failed to declare a mandatory offer after they had purchased 36.27 percent of voting rights of Lanka Milk Foods Company PLC (LMF) on or around September 13, 2011, violating the SEC Takeovers and Mergers Code.

The SEC further alleged that Melstacorp bought another parcel of voting shares of LMF, each share at Rs.99, without having made a mandatory offer at Rs.105 per share to the remaining shareholders of the LMF within 35 days of having triggered the Code in September, 2011.

Senior Counsel S.L. Gunasekara appearing on behalf of the defendants informed the Court that the defendant company would come for a settlement.
Meanwhile, Senior State Counsel Damith Thotawatta appearing for the SEC informed the Court that defendants had made an application for settlement to the SEC and the said matter was under consideration by the SEC. Having considered the submissions, the Magistrate fixed the case for inquiry or settlement on September 21.  

According to a public notice issued by the SEC yesterday evening, Melstacorp through a letter dated June 28, had made an application to the SEC seeking settlement agreeing to unconditionally follow the determinations of the SEC dated March 5, 2012 and to withdraw Writ application filed by them in the Court of Appeal against the SEC, if the SEC would consider withdrawing the action filed in the Magistrate Court against Melstacorp and its directors.
In its letter dated March 5, 2012, the SEC ordered Melstacorp and parties acting in concert to make a mandatory offer at Rs.105 per share and to pay the balance to any LMF shareholder who had disposed his/her shares during the period from September 13, 2011 to February 15, 2012, at prices below that of Rs.105.
However, in response, Melstacorp filed a Writ of Certiorari to quash the determination by the SEC before the Court of Appeal.

According to yesterday’s public notice by the SEC, the Commission Members of the Securities and Exchange Commission (SEC) now have agreed to withdraw the case against business tycoon Harry Jayawardena, his company Melstacorp Limited and its directors for violating the SEC’s Mergers and Acquisitions Code subject to the unconditional withdrawal of the Writ application Melstacorp filed against the SEC at the Appeal Court and implementation of the determinations by the SEC, dated March 5, 2012.

In this case, Melstacorp Limited had been named as the first defendant. The other defendants were, Don Harold Stassen Jayawardena, Rajpal Kumar Obayasekara, Cedric R. Jansz, Krishantha Francis Fernando, Adriyan Naoyomal Balasuriya, Kolitha Jagath, Niranjan Silva, Wijeyanthimala Jayatilleke (alternative director), Lintotage Udaya Damien Fernando. (LS)