A shareholder has successfully relied on Sections 210 and 211 of the Companies Act, which are commonly used to protect minority shareholders against oppression and mismanagement, to take over control of a company in which it was the majority shareholder.
MTN Networks (Pvt) Ltd carries on business under the name Dialog GSM in the Sri Lankan mobile phone service market. MTN filed suit against an individual, alleging that his use of the word 'Dualog' infringed its rights in the trademark DIALOG. The court issued an enjoining order against the defendant and was due to hear his objections and responses on June 22, but by then the parties had settled the case.
The Sri Lankan government which came into power in April 2004 does not intend to privatize strategic public institutions, given that these significantly affect the day-to-day lives of ordinary Sri Lankans. Instead of privatization, the government hopes to improve management and achieve private sector efficiency.
The Commercial High Court has ruled in Shell’s favour in Shell v Mundogas, holding, among other things, that Mundogas threatened to use cylinders purchased, imported and owned by Shell and on which Shell trademarks were fixed, along with the pecten logo. The act infringed Shell's IP rights and amounted to unfair competition.
A judge has ruled that the controller of exchange was justified in refusing to allow a company to accept a foreign exchange loan at a time of low liquidity, even though he had allowed the company to accept a previous loan. The judgment reiterated that it is a public duty to maintain checks and controls on foreign borrowings.
To facilitate the development of finance lease securitization in Sri Lanka, a commercial bank with activities that include undertaking and executing trusts was recently registered as a finance leasing establishment under the Finance Leasing Act. The recent rating of financing against the security of receivables should also help to boost finance lease securitization.
The Supreme Court has ruled that the Inland Revenue (Special Provisions) Act is inconsistent with the Constitution and grants immunities and indemnities to persons who have contravened the law and defrauded public revenue, causing extensive revenue losses. The ruling was delivered following a reference on the legality of the act made by the president to the court.
An injunction has been granted to prevent a liquid petroleum gas company from using Shell gas cylinders until a dispute between the two companies has been settled. The judge ruled that because the cylinders bear Shell's trademark, there exists a likelihood of consumer confusion as to the origin of the gas and the relationship between the companies.
The Supreme Court has overturned a Court of Appeal ruling and granted interim relief to Shell in its action against the Consumer Affairs Authority. The dispute concerns a direction permitting the cross-filling of Shell’s liquid petroleum gas cylinders, which Shell alleges is in breach of the Code of Intellectual Property Act.
The attorney general recently advised that the mandatory offer provisions in the Takeovers and Mergers Code did not apply to a transaction through which two shareholders each increased their stake to 30%. The attorney general found that the two shareholders acted in concert on ownership and management from the company’s inception, thus ruling out the need to make a mandatory offer.
In a recent case the plaintiff alleged that the defendant's use of a trademark and logo was deceptively similar to the plaintiff's trademark. However, the court held that under Section 118 of the Code of Intellectual Property Act the owner of a registered trademark has no right to prevent the use of the same trademark on lawfully imported goods.
The Commercial High Court granted Shell an injunction preventing a competitor from using its liquified petroleum gas (LPG) cylinders. However, the Consumer Affairs Authority subsequently issued a direction ordering all LPG traders to refill any empty cylinders presented to them. Shell has challenged the direction on the basis that it breaches both national law and international obligations.
The Department of the Registrar of Companies has established a website which contains all the information required by parties wishing to incorporate a company. The necessary statutory forms may also be submitted electronically via the website. The site aims to expedite the incorporation procedure in order to boost foreign investment.
Businesses in Sri Lanka are awaiting the enactment of a new Company Act. The draft act incorporates certain aspects of modern company law that are conspicuously absent from existing legislation. Among other things it includes provisions allowing companies to purchase their own shares and takes into account the need for tougher penalties for offenders who flout the law.
A recent case has highlighted that courts are unsympathetic to companies acting ultra vires, that is beyond the scope of their powers, in order to disclaim liability for their own actions.
New legislation will enable the state to more closely monitor the activities of companies engaged in insurance or leasing. This update outlines some of the changes the new legislation will bring.
In a recent case the Supreme Court clarified the role of the Securities and Exchange Commission of Sri Lanka. This case serves as a warning to companies who mislead their shareholders and then seek refuge in red tape.
In a recent case brought by local residents a US company was found guilty of environmentally unfriendly activities that were affecting local communities.
Including: Colonial Ties; New Companies Act; Investment Law; Other Relevant Developments
A new Companies Act, which should come into force next year, will fundamentally alter corporate law in Sri Lanka. As well as abandoning outdated doctrines, it will introduce new practices such as no-par value shares and single shareholder companies.