Your Board Room Governance Report
Chairman’s Statement

The Board of Directors of Hatton National Bank is strongly committed towards maintaining highest standards in Governance for the creation of long term shareholder value and sustainable growth. The trust we have earned over generations as a reputed financial institution in the country is ample testimony to our stability, integrity and strength, which clearly reflects on our adherence to highest standards in Governance.

The Bank’s Corporate Governance Framework is well structured and primarily based on the doctrine and principles of Accountability, Fairness, and Transparency. We strive to achieve the highest level of standards in Corporate Governance Practices in the industry as well as in the country.

With our zealous intention of encouraging Good Governance within the HNB Group, a fresh Charter titled “Good Governance for the Group’s Subsidiary Companies” was introduced during 2016.

The Board sets the tone at the top by promoting highest Standards in Corporate Values that cascade down to all employees of the Bank. The well codified policies, procedures and processes incorporating effective controls are some of the key mechanisms through which these Standards and Values are upheld across the Bank.

The report below enumerates the approach for maintaining highest standards in Corporate Governance and its compliance status with the Corporate Governance regulations made under the Banking Act Direction No 11 of 2007 (and subsequent amendments thereto) for Licensed Commercial Banks issued by the Central Bank of Sri Lanka. The report also covers Bank’s level of compliance with the Code of Best Practice on Corporate Governance issued jointly by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) in 2013.

As required by the above Code, I hereby confirm that, I am not aware of any material violations of any of the provisions embodied (i) in the Board Charter by the Board of Directors of Bank; or (ii) in the Bank’s Codes of Conduct and Ethics by any member of the Corporate Management team of Hatton National Bank PLC.

Rienzie Arseculeratne
Chairman
Colombo, Sri Lanka

Colombo, Sri Lanka
23rd February 2017



Corporate Governance Initiatives during 2016 at a Glance



Good Corporate Governance Practices are not
just a matter for the Board but are at the heart of
everything we do within the Bank.

Corporate Governance is the system, by which an organisation is directed, controlled and managed. The Corporate Governance Framework guides the Bank and drives towards progress by way of developing and implementing appropriate corporate strategies. In pursuing the corporate objectives, we have committed to the highest level of governance and strive to foster a culture that values and rewards exemplary ethical standards, personal and corporate integrity and mutual respect.

The Bank has formulated a well-structured integrated Governance Framework going beyond minimum regulatory requirements to ensure that the Board of Directors uphold the principles of accountability, fairness, and transparency in all the Bank’s dealings with its stakeholders.

With the view of elevating the level of Corporate Governance practices within the HNB’s subsidiaries and joint ventures, a Group Corporate Governance Policy was formulated during the year 2016.

The Board of Directors, led by the Chairman, is responsible for the governance of the Bank and developing an effective Governance Framework to meet challenges, both short and long term. The Board is committed to reviewing and improving our systems to provide transparency, accountability, and to initiate transformational changes whenever necessary to ensure the adoption of national and international best practice.

We continually review our systems and procedures to provide transparency & accountability whilst updating our Corporate Governance policies to keep in line with the stipulated guidelines.

This report demonstrates the extent of the Bank’s compliance with guidelines prescribed in the Banking Act Direction No 11 of 2007 (as amended) on Corporate Governance for Licensed Commercial Banks in Sri Lanka and the Code of Best Practice on Corporate Governance jointly issued by the Securities and Exchange Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), for the year ended 31st December 2016. The compliance with CSE listing rules on Corporate Governance has not been disclosed as Listed Banks are exempted from complying with the said rules from 2010 onwards. This is because such governance requirements had been adequately covered in the Banking Act Direction No 11 of 2007 (as amended) on Corporate Governance for Licensed Commercial Banks in Sri Lanka.