The SEC directed Kalpitiya Beach Resort on 20 March 2015 to call an EGM to apprise the shareholders on its delay in utilization funds raised by an initial public offering (IPO) in 2011. Kalpitiya Beach Resort called an EGM to be held on o8 May 2015 to pass a resolution regarding the company’s future development plans.
The SEC in a media release on 27 April 2015 said its directive to postpone the EGM was to give the company more time to come up with a specific explanation on how to secure the shareholder interest and the future for the funds raised from the public. “This was to enable the Company to come up with a precise direction on the future course of action on how the Company proposes to safeguard the minority shareholder interests prejudiced by the delays caused in constructing the resort hotel, Citrus Kalpitiya,” Securities and Exchange Commission said.
“The SEC made this request from the company after perusing the circular issued to the shareholders of Kalpitiya Beach Resort PLC, in consequence of the above said Directive of the SEC as the SEC was of the opinion that the alternate courses of action stated in the circular to the shareholders lacked specific direction with regard to providing adequate recourse to the minority shareholders in respect of their investment.”
In 2011, Kalpitiya Beach Resort raised 283.5 million rupees from an initial public offering stating that the funds will be utilized partly to finance a construction of a resort hotel in Kalpitiya within the stipulated period of twenty four to thirty months. The Company gave this undertaking in the Prospectus issued to the public in December 2011.
The Company issuing a statement earlier this month,said it has decided to await the new Government’s vision and intent to implement the development plans for Kalpitiya with clear time lines so that the Company may review the appropriate time to commence the project.
The company has been requested by the SEC that in the event the company is unable to rectify the issues in respect of the construction of the hotel, that it is required to propose a viable alternate scheme to redress the shareholders who have been prejudiced by the failure of the company to carry out its objectives as stated in the Prospectus.