boc 1-143 n1 · prospectus. this prospectus has not been registered with any authority within or...

ISSUE OF 30,000,000 UNSECURED SUBORDINATED REDEEMABLE

FIVE YEAR DEBENTURES AT AN ISSUE PRICE OF LKR 100 EACH

(WITH AN OPTION TO ISSUE UPTO A FURTHER 30,000,000 OF THE SAID DEBENTURES IN THE EVENT OF AN OVERSUBSCRIPTION

OF THE INITIAL 30,000,000 DEBENTURES)

TO BE LISTED ON THE MAIN BOARDOF THE DEBT SECURITIES TRADING SYSTEM OF

THE COLOMBO STOCK EXCHANGE

thISSUE OPENS ON 15 November 2012

Managers & Registrars, Bankers, Lawyers to the issue

Bank of CeylonBOC Square

No 01Bank of Ceylon Mawatha

Colombo 01

Tel: 2542167

2448348

2446790-811

THE COLOMBO STOCK EXCHANGE (CSE) HAS TAKEN REASONABLE CARE TO ENSURE FULL AND FAIR DISCLOSURE OF INFORMATION IN THIS

PROSPECTUS. HOWEVER, THE CSE ASSUMES NO RESPONSIBILITY FOR THE ACCURACY OF THE

STATEMENT MADE, OPINIONS EXPRESSED OR

REPORTS INCLUDED IN THE PROSPECTUS.

MOREOVER, THE CSE DOES NOT REGULATE THE

PRICING OF THE DEBENTURE, WHICH IS DECIDED

SOLELY BY THE ISSUER.

PROSPECTUS

thThis Prospectus is dated 24 October 2012

This Prospectus has been prepared by the Bank of Ceylon (hereinafter sometimes referred to as “BOC “or “the Bank”). BOC and its Directors confirm that to the best of our knowledge and belief, the information

contained herein is true and correct in all material respect and that there are no other material facts, the

omission of which would make any statement herein misleading. While BOC has taken reasonable care

to ensure full and fair disclosure, it does not assume responsibility for any investment decision made by

the investors based on the information contained herein. In making investment decisions prospective

investors must rely on their own examination and assessments on BOC and the terms of the Issue,

including the risks associated.

No dealer, sales person or any other person has been authorized to give any information or to make any representation in connection with the Debentures other than the information and representations contained in this Prospectus and if given or made such information or representations must not be relied

upon as having been authorized by BOC.

The Managers and registrars to the Issue, Trustee, Lawyers, Bankers to the Issue and the Rating Agency

have given their written consent for the inclusion of their names and their reports/statements in the

Prospectus.

This Prospectus has not been registered with any authority within or outside Sri Lanka.

The delivery of this Prospectus shall not under any circumstance constitute a representation or create any implication or suggestion that there has been no material

change in the affairs of Bank of Ceylon since the date of this Prospectus.

If you are in any doubt regarding the contents of this document or if you require any

clarification or advice you may consult your Stockbroker, Bank Manager, Lawyer or any

other Professional Advisor in this regard.

All applicants should indicate in the application for debentures, their CDS Account

number.

In the event the name, address or NIC number/Passport number of the applicant

mentioned in the application form differ from the name, address or NIC number/pass

port number as per the CDS records, the name, address and NIC number/Passport

number as per the CDS records shall prevail and be considered as the name, address

and the NIC number/Passport number of such applicant .Therefore applicants are

advised to ensure that the name, address and NIC number/Passport number mentioned in the application form tally with the name address and the NIC

number/passport number given in the CDS account as mentioned in the Application

Form.

As per the Directive of the Securities and Exchange Commission published by Circular

No.08/2010 dated November 22, 2010 and Circular No.13/2010 issued by the Central

Depository System (Private) Limited (CDS) and dated November 30, 2010, all

debentures are required to be directly uploaded to the CDS. To facilitate compliance

with this Directive, all Applicants are also required to indicate their CDS account number.

In line with this Directive, CDS accounts of applicants who have indicated their CDS account details in their application form WILL BE DIRECTLY CREDITED WITH THE

ALLOCATED DEBENTURES.

PLEASE NOTE THAT DEBENTURE CERTIFICATES SHALL NOT BE ISSUED. Debentures will not be allotted to applicants who have not indicated their CDS details in

the application form. Applications which do not carry a CDS account number, which (i.e

CDS account)is not opened at the time of the closure of the subscription list will be

rejected.

Investors who wish to open a CDS account, may do so through any Member / Trading Member of the CSE and Custodian Banks as set out in Annexure V of this ProspectusIf the CDS account number indicated in the application form is found to be inaccurate

/incorrect or there is no CDS number indicated, the application will be rejected and no

allotments will be made.

CORPORATE INFORMATION

Issuer : Bank of Ceylon

Legal Form : A Banking Corporation domiciled in Sri Lanka,

Duly incorporated on 1 August 1939 under the

Bank of Ceylon Ordinance No 53 of 1938.

Registered Office & Head Office : Bank of CeylonBOC Square,

No. 01, Bank of Ceylon Mawatha

Colombo 01

Tel : +94 11 2446790-811

Fax : +94 11 2338741-55

E-mail : [email protected]

Website : http://www.boc.lk

Branch Offices : Refer Annexure 1V

Board of Directors : Dr Gamini Wickramasinghe (Chairman)

Mr.S.R Attygalle

Mr. Raju Sivaraman

Ms. Nalini Abeywardene

Mr. Chandrasiri de Silva

Mr. K.L.Hewage

Mr. V Kanagasabapathy (Alternated Director to

Mr.S R Attygalle)

Secretary to the Board : Mrs. Janaki Senanayake Siriwardane

Lawyers : Mrs. S. H. Ranawaka Chief Legal Officer of Bank of Ceylon and his Subordinates

Auditors/Reporting Accountants : The Auditor General of Sri LankaAuditor General's Department

No 306/72, Polduwa Road,Battaramulla

Trustee to the Issue : Deutsche Bank AG, Colombo Branch

No. 86 Galle Road

Colombo 03

Bankers to the Issue : Bank of CeylonCorporate Branch

BOC Square, No. 01, Bank of Ceylon Mawatha

Colombo 01

Tel: 2471613, 2345428

Rating Agency : Fitch Ratings Lanka Ltd.

No 15-04 East TowerWorld Trade Center

Colombo 01

Tel: 2541900

Managers & Registrars : Bank of Ceylonto the Issue Investment Banking Division

23rd Floor

BOC Square, No. 1, Bank of Ceylon Mawatha

Colombo 01

Tel: 2 542 167 , 2 448 348

2 446 790-811

SALIENT FEATURES AT A GLANCE

Instrument : Unsecured Subordinated Redeemable Five (05) Year

Debentures, categorized as Debentures of Type A, B and C

as described below. These debentures will be listed on the

main board of the Debt System of the Colombo Stock

Exchange .

Type A

Unsecured Subordinated Redeemable Five (05) Year Debentures, of

LKR 100 each bearing nominal interest at a fixed rate Sixteen per cent

(16%) per annum on the Principal sum payable annually (AER 16%)at

the expiry of every One (01) year period from the date of allotment of

the Debentures .

Type B

Unsecured Subordinated Redeemable Five (05) Year

Debentures, of LKR 100 each bearing nominal interest on thePrincipal sum at a floating rate calculated on the basis set out

below, payable bi-annually at the expiry of every Six (06)

month period from the date of allotment of the Debentures.

Type C

Unsecured Subordinated Redeemable Five (05) Year

debentures, of LKR 100 each bearing nominal interest at a

fixed rate of fifteen point two five per cent (15.25%) per

annum (AER 15.83%) on the Principal sum payable

by annually at the expiry of every Six (06) month period from

the date of allotment of the Debentures.

Note: There is no any restriction on the amount or quantity of

subscription from non-residents. We confirm that debentures are in compliance with the required regulatory

requirements

Face value of each Debenture : Types A, B and C – LKR 100

Issue Price : All types of Debentures will be issued at LKR

100 each.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

...................................................................

Amount to be raised : LKR 3.0 Billion with an option to raise up to a Further sum of LKR

3.0 Billion in the event of an full subscription of Rs.3.0 Billion.

Rate of Interest : Type A

A fixed nominal rate of Sixteen per cent ( 16%) per annum

(AER 16%) on the Principal sum payable annually at the

expiry of every One (01) year period from the date of

allotment of the Debentures.

Type BA floating nominal rate of interest equivalent to One

Hundred and Twenty Five ( 1.25%) basis points above the

Weighted Average Six (06) Months Treasury Bill interest

rate (Before Tax) at the Primary Auctions as announced

by the Central Bank of Sri Lanka at the preceding week of

the interest resetting date for each bi-annual period. This

rate will be initially decided on the date of allotment of the

Debentures and be applicable for a period of Six (06) Months

commencing from the date of allotment of the Debentures

and thereafter to be determined/revised bi-annually at the

expiry of every Six (06) Month period from the date of

allotment of the Debentures on the same basis. The interest

rates so established shall be notified by BOC to the CSE and

the Trustee prior to the commencement of each bi-annual

period.

Provided that if such Weighted Average Six (06) Months

Government of Sri Lanka Treasury Bill interest rate has not

been announced at the preceding week of the interest

resetting date for a particular bi-annual period, then BOC

shall in consultation with the Trustee calculate the interest

rate applicable for that bi-annual period based on the

Weighted Average Six (06) Months Treasury Bill interest

rate (before Tax) at the last Primary Auction as

announced/published by the Central Bank of Sri Lanka

before the interest resetting date. The interest rates so

established shall be notified by BOC to the CSE prior to the

commencement of the particular bi-annual period.

Interest payments shall fall due bi-annually at the expiry of

every six (06) month period from the date of allotment of the

Debentures.

Type C

A fixed nominal rate of

(15.25%) per annum (AER 15.83%) on the principal sum bi-

annually at the expiry of every Six (06) month period from


thOpening Date : 15 November 2012

thClosing Date : 6 December 2012 or such earlier date on which the initial

30,000,000 Debentures are over subscribed or the date on

which the entire 60,000,000 Debentures are fully

subscribed or such other earlier date in terms of this

prospectus.

Basis of Allotment : In the event of an over subscription the basis of

allotment will be decided by the General Manager of

BOC within 7 market days from the date of closure of

the issue.

Method of payment of : Principal amount and interest will be paid by cheques,

Principal/interest SLIPS or RTGS

Minimum Subscription : The minimum subscription per application is LKR

10,000 or 100 debentures.

Applications in excess of the minimum Subscription shall

be in multiples of Rupees Ten Thousand (LKR 10,000) or

Hundred (100) Debentures

Date of Maturity : On completion of Five (05) years from the date of

allotment of the Debenture

Rating of the Instrument : The proposed debenture issue has been rated at

AA(lka) by Fitch Rating Lanka Limited.

Fifteen point two five percent

41

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44

44

44

45

68

70

71

71

71

71

71

71

72

73

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74

1. DEFINITIONS / ABBREVIATIONS AND INTERPRETATIONS

In this prospectus the following DEFINITIONS / ABBREVIATIONS and INTERPRETATIONS apply

unless the subject or context otherwise requires.

BOC /THE BANK : Bank of Ceylon

DATE OF ALLOTMENT : The date on which the Debentures will be allotted

to the debenture holders in terms of this prospectus.

DATE OF CLOSURE OF THE ISSUE : The date on which the issue will be closed which thshall be either 6 December 2012 or such earlier date

on which the initial 30,000,000 Debentures are fully subscribed or the date on which the entire

60,000,000 Debentures are fully subscribed or such

other earlier date in terms of this prospectus.

DATE OF MATURITY : On completion of Five (05) years from the date of


DEBENTURE : All types of Unsecured Subordinated redeemable Five

(05) Year Debentures to be issued pursuant to this

Prospectus at an Issue price of LKR 100 each.

DEBENTURE HOLDERS : The holders of the Debentures for the time being whose accounts are deposited with the debentures at the CDS

as at the relevant date.

DUE DATE OF INTEREST : The dates on which the interest payments shall fall due

in respect of the Debentures.

Interest payments shall fall due in respect of Debenture

of,

Type A, annually at the expiry of every One (01) year

period from the date of allotment of the Debentures.

Type B, bi-annually at the expiry of every Six (06) month period from the date of allotment of the

Debentures.

Type C, bi- annually at the expiry of every six (06) month period from the date of allotment of the

Debentures.

BOC DEBENTURE PROSPECTUS -01-

The first of such interest payment shall fall due in respect of

Debentures of Type A on the date of expiry of One (01) year and in

respect of Debentures of Type B and C on the date of expiry of Six

(06) months from the date of allotment of the Debentures, interest

payments shall be made by BOC within Five (05) market days from

the due dates .

The final interest payments in respect of Debentures of Types

A, B and C shall be made with the repayment of the Principal

sum on the date of maturity/redemption of the debentures.

Interest calculation shall be based upon the actual number of days

i n each i n te res t payment per iod (Actua l /Actua l ) .

In order to accommodate the Debenture interest cycles in the

Debt Securities Trading system of the CSE the payment of interest

shall not include Debenture holders holding debentures in the CDS

as at the last day of the payment cycle but one day prior to the due

date of interest (entitlement date). If the entitlement date is a holiday

interest shall be calculated including the entitlement date.

.........................................................

LKR : Sri Lankan Rupees

MN : Million

BN : Billion

AER : Annual Effective Rate

POA : Power of Attorney

REDEMPTION : Repayment of the principal monies on these Debentures

REGISTER : The Register of the Debenture Holders to be kept by BOC

SEC : Securities & Exchange Commission of Sri Lanka

CSE : Colombo Stock Exchange

CDS : Central Depository Systems (Pvt) Limited

DEX : Debt Securities Trading System of the Colombo Stock Exchange


TRUSTEE : Deutsche Bank AG, Colombo branch

TRUST DEED : Trust Deed executed between Bank of Ceylon and the

Deutsche Bank AG, Colombo branch on 24th October

2012 bearing No 02/2012 (Annexure II)

UNSECURED : Repayment of the principal and interest on these Debentures not being secured by any specific asset of

Bank of Ceylon.

WORKING DAY : Any day (other than a Saturday or a Sunday or any

statutory holiday) on which the Banks and Foreign Exchange markets are open for business in Sri Lanka.

MARKET DAY : Any day on which trading takes place at the CSE.

SUBORDINATE : The Claims of the Debenture holders shall in the event of

winding up of BOC, rank after all the claims of the Secured and Unsecured Creditors of BOC and any preferential claims under any Statutes governing BOC but in priority to

and over the claims and rights of the Shareholder of BOC.

TIER II CAPITAL : Supplementary capital representing revaluation

reserves, general provisions and other capital instruments which combine certain characteristics of equity and debt such as hybrid capital instruments and

subordinated term debts.


2. INFORMATION CONCERNING THE ISSUE

2.1 Invitation to Subscribe

The Board of Directors of the Bank of Ceylon (hereinafter referred to either as “BOC” or

“Bank”) by a resolution passed on 13th September 2012 resolved to borrow a sum up to

LKR 6.0 Billion from the public by the issue of Unsecured Subordinated Redeemable Five

Year (5-year) Debentures.

BOC hereby invites the public to make applications for the subscription of 30,000,000 (Thirty

Million) Unsecured Subordinated Redeemable Five Year (5-year) debentures at an issue

price of LKR 100 each payable in full as outlined in this Prospectus, with an option to issue up

to a further 30,000,000 (Thirty Million) Debentures in the event of an over subscription of the

initial 30,000,000 Debentures.

BOC invites applications for three (03) types of Debentures described below, which shall

rank equal and pari passu with each other, without any preference or priority one over the

other except for the interest coupon offered and the frequency at which the interest is paid.

Debenture Types/categories

TYPE A Unsecured Subordinated Redeemable Five Year (5-year) debentures of LKR

100 each bearing interest at a fixed rate of Sixteen per cent (16%) per annum

on the Principal sum payable annually at the expiry of every One (01) year

period from the date of allotment of the Debentures.

TYPE B Unsecured Subordinated Redeemable Five Year (5-year) debentures of LKR

100 each bearing interest on the Principal sum at a floating rate calculated on

the basis set out in Clause 2.4 of this Prospectus, payable bi-annually at the

expiry of every Six (06) month period from the date of allotment of the

Debentures.

TYPE C Unsecured Subordinated Redeemable Five Year (5-year) debentures of LKR

100 each bearing interest at a fixed rate of fifteen point two five per cent

(15.25%) per annum on the Principal sum payable bi-annually at the expiry of

every Six (06) month period from the date of allotment of the Debentures.

The tenure of these Debentures will be five (05) years from the date of allotment of the Debentures.

BOC DEBENTURE PROSPECTUS - 04 -

The repayment of the Principal and Interest on these Debentures are not being secured by

any specific assets of BOC.

These Debentures will be listed on the Main Board of the Debt Trading System of the CSE.

The rights of the Debenture holders for receipt of the Principal Sum and any accrued interest on these Debentures in the event of winding up of BOC would be subordinated to the rights of the Secured and other Unsecured Creditors of BOC and any preferential claims under any

statutes governing BOC. Therefore the claims of these Debenture holders shall in the event of winding up of BOC rank after all the claims of the Secured and other Unsecured Creditors of BOC and any preferential claims under any statutes governing BOC but in priority to and

over the claims and rights of the shareholder of BOC.

2.2 Subscription List

Subject to the provisions contained below, the subscription list for the Debentures will open that 9.30 a.m. on 15 November 2012 and shall remain open for 14 market days until closure at

th 4.30 p.m. on 6 December 2012

In the event of an over-subscription of the 30,000,000 Debentures, the subscription list will

close at 4.30 p.m. on the same day on which it is fully subscribed, with the notification of CSE, unless otherwise decided by the Bank to keep the subscription list open until subscription of

a further 30,000,000 Debentures or part there of as may be decided by the Bank. In such

event the subscription list will close at 4.30 p.m. on the day on which a further 30,000,000

Debentures or part thereof as may be decided by the Bank have been subscribed, with the thnotification of CSE or on 6 December 2012 whichever is earlier.

Applications may be made forthwith. Duly completed applications in the manner set out

under the Procedure for Application in Section 3 on page 12 procedure for application of this

Prospectus will be accepted.

2.3 Objectives of the Issue

a) To increase the Tier II capital of the Bank in order to enhance its Capital Adequacy

Ratio and Single Borrower Limit.

b) To minimize the risk and gap exposure in the Bank's assets/liability portfolios,ie lending for 3-5 years with fund raised through 5 year debentures.

Out of the proceeds Rs 2.0 Billion will be utilized for the retirement of existing

debentures issued at 8.77% p.a. which are maturing in November 2012, and

balance will be utilized for the expansion of loan book, there by reducing the

dependency on short term borrowings.


2.4 InterestInterest payable in respect of Debentures of Types A, B and C shall be as follows:

Type A Interest on these debentures shall be paid at a fixed rate of Sixteen per cent

(16%) per annum on the principal sum annually at the expiry of every One

(01) year period from the date of allotment of the Debentures.

Type B Interest on these Debentures shall be paid on the Principal sum at a floating

rate equivalent to One Hundred and Twenty Five Basis Points (1.25%) above the Weighted Average Six (06) Months Treasury Bill Interest rate

(Before Tax) at the Primary Auctions as announced by the Central Bank of

Sri Lanka at the preceding week of the interest resetting date for each bi-

annual period. This rate will be initially decided on the date of allotment of

the Debentures and be applicable for a period of Six (06) Months commencing from the date of allotment of the Debentures and thereafter to

be determined/revised bi-annually at the expiry of every Six (06) months

period from the date of allotment of the Debentures on the same basis. The interest rates so established shall be notified by BOC to the Colombo Stock

Exchange and the Trustee prior to commencement of each bi-annual period.

Provided that if such Weighted Average Six (06) months Government of Sri Lanka Treasury Bill Interest Rate has not been announced at the preceding

week of the interest resetting date for a particular bi-annual period, then BOC shall in consultation with the Trustee calculate the interest rate

applicable for that bi-annual period based on the Weighted Average Six (06)

months Treasury Bill Interest rate (Before tax) at the last Primary Auction as

announced/published by the Central Bank of Sri Lanka before the interest

resetting date. The interest rates so established shall be notified by BOC to the Colombo Stock Exchange prior to the commencement of the particular

bi-annual period.

Interest payments shall fall due bi-annually at the expiry of every Six (06)


Type C Interest on these debentures shall be paid at a fixed rate of Fifteen point two

five percent (15.25%) per annum on the principal sum bi-annually at the

expiry of every Six (06) month period from the date of allotment of the Debentures

The first of such interest payments shall fall due in respect of Debentures of Type A on the

date of expiry of One (01) year and in respect of Debentures of Type B and C on the date of

expiry of Six (06) months from the date of allotment of the Debentures. Interest payments

shall be made within Five (05) market days from the due dates. The final interest payments in

respect of Debentures of Types A, B and C shall be made with the repayment of the Principal

sum on the date of maturity/redemption of the Debentures.


In order to accommodate the debenture interest cycles in the Debt Security Trading System of the CSE the payment of interest shall not include debenture holders holding Debentures in the CDS as at the last day of the payment cycle but one day prior to the due date of interest

(entitlement date). If the entitlement date is a holiday interest shall be calculated including

the entitlement date.

Interest calculation shall be based upon the actual number of days in each interest payment

period (actual/actual).

2.5 Payment of the Principal Sum and Interest

a) Payment of the principal sum and interest on the Debentures will be made after

deducting any withholding tax and any other taxes and charges thereon (if any) in Sri Lankan Rupees to the Debenture holders registered as at the due date of

interest/Principal sum and will be sent by ordinary post to the addresses of debenture

holders recorded with CDS through the post at the risk of such Debenture holders, by crossed cheques marked “Account Payee Only” or pay to a bank account or otherwise through electronic fund transfer mechanism recognized by banking system as per information available with CDS or provided direct to BOC by the Debenture holders and such payment shall be deemed to be a payment duly made by BOC to the respective

Debenture holders in redemption of the Debentures of such holders.

b) Withholding Tax

As per the prevailing tax legislation in Sri Lanka, interest payments on the Debentures

are subject to 10% withholding tax.

In the case of corporate entities and other persons to whom such interest income constitute as “business income”, a credit for the tax withheld would be available on furnishing the withholding tax certificate.

2.6 Redemption

BOC shall redeem the Debentures of Types A ,B and C at LKR 100 per Debenture and at

the expiry of five (05) years from the date of allotment of the Debentures (i.e. on the date of

maturity) or on such other earlier date on which the Debentures become payable in

accordance with the provision contained in the Trust Deed (Annexure II).

Repayment before the maturity of the Principal Sum of the Debentures or any part thereof

in any circumstance shall be subject to the prior approval of the Debenture holders of 3/4th of the face value of the Debentures outstanding at that time and the prior written consent of the Central Bank of Sri Lanka.


2.7 Trustee to the Issue

Deutsche Bank AG, Colombo branch has agreed in writing to act as the Trustee to this

Debenture Issue and has issued a consent letter to this effect. The Bank and the Trustee

have executed a Trust Deed as per Annexure II. The Debenture holders in their application

for subscription will be required to, irrevocably authorize the Trustee, subject to any

overriding clauses in the Trust Deed to act as their agent in entering into such deeds, writings and instruments with the Bank and to act as the Trustee for the benefit of and Interest of the Debenture holders on the terms and conditions contained in the said Trust

Deed.

The rights and obligations of the Trustee are set out in the Trust Deed, which is

enclosed as Annexure II to this prospectus.

2.8 Rights and Obligations of the debenture holders

a) Debenture holders are entitled to the following:

Receiving the Principal Sum at maturity and interest on the Debentures as

per Section 2.4 of this Prospectus.

Ranking above the shareholder (Government of Sri Lanka) in the event of liquidation

Calling and attending meetings of the Debenture holders as set out in the

Trust Deed.

b) Debenture Holders are not entitled to the following:

Attending and voting at the meetings of the holders of the other Debentures issued by the Bank

Sharing in the profits of the Bank.

Participating in any surplus in the event of liquidation.

c) Holders of other Debt Securities have the same right as above

2.9 Risk factors specifically associated with the Debentures

Subscribers to the Debentures will be exposed to the following risks:

(It is vital to note however that these risks are not unique to BOC Debentures and apply

generally to any unsecured corporate debt security, fixed deposit or any other term or

money deposit)

.................................................................................................................


(i) Interest Rate Risk

The price of a typical Debenture will change in the opposite direction to achange in the market interest rates assuming all other factors are equal.“Market Interest Rate” refers to interest rate expected by the investorsfor investments with similar maturity and risk profile. As market interest rates rise, price of the Debenture may fall and as market interest rates

fall,the price of the Debenture may rise. If an investor sells a Debenture prior to maturity when market interest rate is higher than BOC

Debenture interest rates, the investor may incur a capital loss. Similarly,if an investor sells a Debenture prior to maturity when market interest

rate is lower than the BOC Debenture interest rate, then the investor may

receive a capital gain. This uncertainty is known as interest rate risk.

Further, if the six months Treasury Bill rate plus 125 basis points rise

above the fixed rate of the debentures, the floating rate investor will gain more than the fixed rate investor whilst if the six month Treasury Bill rate

plus 125 basis points fall below the fixed rate of the Debenture,

the floating rate investor would earn an interest below the fixed rate investor.

(ii) Reinvestment Risk

BOC shall pay interest on the Debentures of Type A annually and Type B

and C bi-annually. The investor may decide to reinvest this interest payment and earn interest on interest. Depending on the prevailing market interest rates, the Debenture holder may be able to reinvest the paid interest at a higher or lower interest rate than that is offered by the BOC Debenture. This uncertainty is known as “reinvestment risk “.

(iii) Default Risk

Default risk also known as Credit risk, refers to the risk that the issuer of a

Debenture may default. I.e. the issuer will be unable to pay interest and

principal when due. It is advisable for prospective BOC Debenture investors to take into account past earnings and asset growth

performance of BOC, present financial strengths as reflected in the

Balance Sheet of the Bank, its Risk Management Policies, Fitch Rating of

AA+ stable out look for BOC, and the highly experienced and skilled Directors and Senior Management Team and finally state ownership

when forming an opinion on Default Risk.

(iv) Liquidity Risk

Liquidity Risk refers to the ability to encash the Debenture by selling it since

the initial placement. As the Debenture instrument is listed on the CSE, investors will be able to sell them in the secondary


market at any given point of time and convert them to cash. Hence the BOC Debentures carry low

liquidity risk.

2.10 Benefits of investing in the Debentures

An attractive interest income for a period of five years.

Opportunity to realize capital gain according to interest rate fluctuations in the

financial markets.

Capacity to exit from the investment at any time.

Can be used as collateral to obtain credit facilities from banks and financial

institutions.

2.11 Transfer of the Debentures

a) These Debentures shall be freely transferable and the registration of such transfer

shall not be subject to any restriction, save and except to the extent required for

compliance with statutory requirements.

b) The Debentures shall be transferable and transmittable through the CDS as long as

the Debentures are listed in the CSE. Subject to the provisions contained herein

BOC may register without assuming any liability any transfer of Debentures, which are in accordance with the statutory requirements and rules and regulations in force

for the time being as laid down by the CSE, SEC, and the CDS.

c) In the case of the death of a Debenture holder,

the survivor where the deceased was a joint holder; and

the executors or administrators of the deceased or where the administration

of the estate of the deceased is in law not compulsory, the heirs of thedeceased where such Debenture holder was the sole or only survivingholder; shall be the only persons recognized by BOC as having any title to

his/her Debentures.

d) Any person becoming entitled to any Debenture in consequence of bankruptcy or

winding up of any Debenture holder, upon producing proper evidence that he/she

sustains the character in respect of which he/she proposes to act or his/her title as

the Board of Directors of BOC thinks sufficient, may at the discretion of the Board be substituted and accordingly registered as a Debenture holder in respect of such

Debentures subject to the applicable laws, rules and regulations of BOC, CDS, CSE

and SEC.

e) No change of ownership in contravention to these conditions will be recognized by

BOC.


2.12 Listing

An application has been made to the CSE for permission to deal in and obtain a

listing for these Debentures. Such permission will be granted when the Debentures

are listed on the Main Board of the Debt System of the CSE. However the CSE

assumes no responsibility for the accuracy of the statements made or opinions

expressed or reports included in this prospectus. Admission to the Main Board is not

to be taken as an indication of the merits of BOC or of these debentures.

2.13 Rating of the Instrument

Fitch Ratings Lanka Ltd (FRLL) has assigned an AA (lka) rating to the

Debenture instrument. The Rating report issued by FRLL is set out in

Annexure III.

2.14 Transactions with Directors/Promoters

Bank has not undertaken any special transactions with Directors /promoters except

for arm length transaction done at the ordinary course of business within two

proceeding year of Prospectus. Accordingly this negative confirmation includes all

transactions fall under section 3.2.17 of listing rules.


3. PROCEDURE FOR APPLICATION

3.1 Prospectus and Application Forms.

Copies of the Prospectus and the Application Forms may be obtained free of charge from the

following places/Institutions: -

a) Registered Office/Head Office of the Bank.

b) All Branches of the BOC listed in Annexure IV

c) Member firms and Trading Members of the Colombo Stock Exchange and custodian banks listed in Annexure V.

3.2 Who may apply?

Applications are invited for the subscription of the Debentures from the following categories

of applicants:

a) Individuals who are resident in Sri Lanka and above 18 years of age.

a) Corporate bodies and societies registered / incorporated / established in Sri Lanka

and authorized to invest in Debentures.

c) Approved provident funds, trust funds and contributory pension schemes registered/incorporated / established in Sri Lanka and authorized to invest in

Debentures.

In the case of approved Provident Funds, Trust Funds and approved contributory

Pension Schemes, the applications should be in the name of the Trustee/Board of

Management in order to facilitate the opening of the CDS accounts.

d) Foreign institutional investors, corporate bodies, incorporated out side Sri Lanka

and individuals resident out side Sri Lanka.

Applications will not be accepted from individuals who are under the age of 18

years or in the name of sole proprietorships, partnerships or unincorporated trusts.

“Individuals resident outside Sri Lanka” shall have the same meaning as in the notice

published under the exchange control act in gazette no. 15007 dated 21/04/1972.

3.3 How to Apply

a) Applications should be made on the Applications Forms, issued with the Prospectus.

(Exact size photocopies of the Application Forms too would be accepted.) Care

must be taken to follow the instructions given in the Application Form. Applicants

using photocopies are requested to inspect the Prospectus, which is available for

inspection and also issued free of charge at the collection points listed in Annexure

IV & V.


Applications that do not strictly conform to such instructions and the

other instructions set out below or which are illegible will be rejected.

b) Applications should be made for a minimum of one hundred (100) Debentures (LKR

10,000). Applications exceeding 100 Debentures should be in multiples of 100

Debentures (LKR 10,000). Applications for less than 100 Debentures or for a

number, which is not in multiples of 100 Debentures, will be rejected.

c) Only one type of Debentures should be applied per Application form. Investors may

apply for different types of Debentures on separate application forms using exact

size photocopies If several applications are received under one type of Debenture

from single customer that would be considered as multiple application. The Bank/

Managers to the issue reserve the right to decide on and reject multiple applications

at their discretion

d) If the ownership of the Debentures is desired in the name of one individual, full detail

should be given under the heading SOLE/FIRST APPLICANT in the application

form, in the case of joint applicants, the signatures and particulars in respect of all

applicants must be given under the relevant headings.

e) Applications by Companies, Corporate bodies, Societies, approved Provident

Funds, Trust Funds and approved Contributory Pension Schemes

registered/incorporated/established in Sri Lanka should be made under their

common seal or in any other manner as provided by their Articles of Association or

such other constitutional documents of such applicant or as per the statutes

governing them. In the case of approved Provident Funds, Trust Funds and

approved Contributory Pension Schemes, the applications should be in the name of

the Trustee/Board of Management in order to facilitate the opening of the CDS

accounts.

f) Companies/Corporate entities should state the Company Registration Number in

the application form.

Individuals should state their National Identity Card (NIC) Number in the Debenture

Application Form. Passport Number will be accepted only when the NIC Number is

not available.

g) Any application form, which does not state the NIC, Passport or Company

Registration Number and CDS account number as the case may be, will be rejected.

h) In the case of the applications made under Powers of Attorney (POA) a copy of such

POA, certified by a Notary Public should be attached with the Application Form.

Original POA should not be attached.

.


i) Applicants who wish to apply through their Margin Trading Account should submit

the application in the name of the “Margin Provider / Applicant's Name” signed by the

margin provider. A copy of the Margin Trading Agreement should be attached with

the Application Form. Margin Providers can apply under their own name and such

applications will not be considered as multiple applications.

j) Funds for the investments in debentures and the payment for debentures by the non

resident investors should be made only out of funds received as inward remittances

or available to the credit of “ Securities Investment Account” (SIA) of the foreign

investor opened and maintained in a licensed commercial Bank in Sri Lanka in

accordance with directions given by the Controller of Exchange in that be half to

commercial banks

k) Application forms stating 3rd party CDS Account Numbers, instead of their own CDS

Account Numbers, except in the case of Margin Trading, will be rejected.

l) Application Forms properly filled in accordance with the instructions thereof together

with the remittance for the full amount payable on application should be enclosed in

an envelope marked “BOC DEBENTURE ISSUE” on the top left hand corner in

capital letters and dispatched by post or delivered by hand to the following address.

Managers & Registrars to the Issue

Bank Of Ceylon

Investment Banking Division

23rd Floor,

Head Office,

BOC Square,

No 1, Bank of Ceylon Mawatha

Colombo 01

In the alternative Application forms may also be delivered by hand to the head office or to any

branch of the Bank of Ceylon listed in Annexure IV or to any member firm or trading member

of the CSE listed in Annexure V.

Applications sent by post or delivered to any places mentioned in Annexure IV and V should

reach the office of the Managers and Registrars to the Issue at least by 4.30 p.m. on the third

working day immediately upon the closure of the subscription list. Applications received after

the said period will be rejected even though they have been delivered to any of the said

places prior to the closing date or carry a postmark dated prior to the closing date.

Applications delivered by hand to the managers & registrars to the issue after the

closure of the issue will also be rejected.


3.4 Mode of Payment

1. Payment should be made separately in respect of each application only by way of

cheques, bank draft or bank guarantee, as the case may be. Each Application

Form should be accompanied by no more than one cheque, bank draft or bank

guarantee. Application with two or more cheques, bank drafts, or bank guarantees

will be rejected. Application Forms accompanied by cash will not be accepted.

2. Cheques or Bank Drafts should be drawn upon any commercial bank in Sri Lanka

and crossed “Account Payee Only” and made payable to “BOC Debenture Issue

Account ”. The bank guarantee valid up to minimum of 14 days from the closing date

of issue should be in a manner acceptable to BOC and should be issued by a

commercial bank in Sri Lanka and payable on demand to“BOC Debenture Issue

Account”

3. Payments for applications for values above and inclusive of Sri Lankan Rupees One

Hundred Million (LKR 100,000,000) should be supported by a Bank Guarantee

issued by licensed commercial banks. Cheques and Bank Drafts will not be

accepted for values above and inclusive of Sri Lankan Rupees One Hundred Million

(LKR 100,000,000) Applicants are advised to ensure that sufficient funds are

available in order to honour the bank guarantees, inclusive of charges when called

upon to do so by the Managers/registrars to the Issue. It is advisable that the

applicants discuss with their respective bankers the matters with regard to the

issuance of bank guarantees and all charges involved. All expenses inclusive of

charges relating to Real Time Gross Settlements (RTGS) should be borne by the

applicants.

4. The amount payable should be calculated by multiplying the number of debentures

applied for by the issue price of LKR 100 per debenture. If there is discrepancy in the

amount payable and the amount specified in the cheque/bank draft or bank

guarantee, the application will be rejected.

5. In the event that cheques are not realised prior to the date of deciding the basis of

allotment, the monies will be refunded and no allotment of Debentures will be made.

Cheques must be honoured on first presentation for the application to be valid.

6. All cheques/bank drafts received in respect of the applications will be banked

immediately after the closure of the subscription list.


3.5 Rejection of Applications

1. Application Forms and the accompanying cheques/bank drafts or bank guarantees,

which are illegible or incomplete in any way and/or not in accordance with the terms,

conditions and instructions, set out in this Prospectus will be rejected at the sole

discretion of BOC.

2. Applications from Persons/ Applicants under the age of 18 years or in the names of

sole proprietorships, partnerships, unincorporated trusts will also be rejected.

3. Any application form, which does not state the NIC, Passport or Company

Registration Number as the case may be, will be rejected. Applications which do not

carry the CDS account number, which is not opened at the time of closure of the

subscription list or which indicate an incorrect/ inaccurate CDS account number shall

be rejected, and no allotment will be made.

4. Applications delivered by hand to the managers and registrars to the issue after the

subscription list is closed will be rejected. Applications received by post after 4.30 p.m.

on the third working day immediately following the date of closure of the subscription

list, will also be rejected even if they carry a post mark dated prior to the closing date of

the subscription list.

Applications delivered to any places mentioned in Annexure IV & V should also reach the

office of the Managers/Registrars to the Issue at least by 4.30 p.m. on the third working day

immediately upon the closure of the Subscription List. Applications received after the said

duration will be rejected even though they have been delivered to any of the said places prior

to the closing date.

3.6 Allotment of Debentures

The basis of Allotment will be decided by the Genaral Manager of BOC before the expiry of

seven (07) market days from the closure of the Issue in the event of an over subscription.

Applicants will be notified the respective allotments of the Debentures within 10 market days

from the closure of the subscription list.

No preferential allotments will be made by BOC with regard to any specific individual or entity.

The allotments will be made in a fair manner.

The directors of BOC reserve the right to refuse any application or to accept any application

in part only, without assigning any reason therefore.


3.7 Unsuccessful Application

BOC shall refund payment due on applications fully or partly unallotted within Ten (10)

market days excluding the date of closure of the issue. Applicants shall be entitled to receive

interest at the rate of last quoted average weighted Prime lending rate (AWPLR) published

by the Central Bank of Sri Lanka plus 5% for the delayed period on any refunds not made

within this period.

3.8 Refunds

1. Where an application is not accepted, subsequent to the cheque being realised the applicant's money in full or where an application is accepted only in part, the balance of the applicant's money will be refunded. If the applicant has provided accurate and complete details of his bank account in the application, the bank shall make such refund payments to the bank account specified by the applicant, through Sri Lanka Inter bank payment system (SLIPS) and payment advice will be sent. In the event of refunds over Rupees Five Million (Rs.5,000,000/-) or If the applicant has not provided accurate and correct details of his bank account in the application, the bank shall make such refund payment to the applicant by way of a cheque and sent by post at the risk of the applicants. In the case of joint applications, the cheques will be drawn in favour of the applicant's name appearing first on the application form. Refund cheques on Debentures, which have not been allotted, will be posted before the expiry of Ten (10) market days excluding the date of closure of the subscription list. Applicants would be entitled to receive interest at the rate of last quoted average weighted prime lending rate (AWPLR) published by the Central Bank of Sri Lanka plus 5% for the delayed period on any refunds not made within this period.

2. Debentures allotted will be directly uploaded to the respective CDS accounts given in the application before the expiry of eighteen (18) market days, from the date of closure of the subscription list. A written confirmation of the credit will be sent to the applicant within two market days of crediting the CDS account, by ordinary post to the address provided by each applicant in his or her respective applications.

3. The BOC will submit to the CSE a 'Declaration' on direct upload to CDS on the market day immediately following the day on which the investor's CDS accounts are credited with the securities.


4. OVERVIEW OF THE BANK

Vision of the Bank“Bankers to the Nation”

MissionCustomers:

“Foster mutually rewarding relationships with all our customers, exceeding their

expectations”.

Staff:

“Give all our staff, the recognition and rewards to be the best team of achievers in service

excellence”.

Owners:

“Be a profitable catalyst for equitable development covering urban and rural areas“.

Society:

“Provide world-class banking services across the nation as a beacon for progress and

growth”.

4.1 Overview

Founded in 1939, the Bank is the leading commercial bank in Sri Lanka in terms of total asset size, branch and ATM network size and total revenues. The Bank was established as Sri Lanka's first locally-owned bank. The Bank has been wholly-owned since 1961 by the Government and has a significant role in providing credit for the economic development of Sri Lanka. The Bank has the largest market share in loans and advances to customers, customer deposits, inward remittances and treasury operations.

As of September 30, 2012 the Bank's domestic network included 320 branches, 269 extension offices and 435 ATMs. Internationally, the Bank is represented by an overseas subsidiary in the United Kingdom, a branch in Chennai, India and Malé, Maldives, and representative offices in 25 countries around the world.

The Bank is firmly entrenched as Sri Lanka's premier financial services organization offering a broad range of services consists of commercial banking, trade finance, development financing, mortgage financing, leasing financing, investment banking, corporate financing, dealing in government securities, pawn brokering, credit card facilities, off-shore banking, foreign currency operations, islamic banking and other financial services to consumers, corporate customers and the Government of Sri Lanka.

M/s Fitch Rating Lanka Ltd has upgraded the bank's national long term rating to AA+ (lka) stable outlook from AA (lka) positive outlook, on 14th October 2011 reflecting bank's strong financial profile in terms of capital base, profitability and assets quality. With this rating the bank is now the highest rated domestic commercial bank.


BOC is the market leader or holds significant market shares in Loans & Advances, Deposits,

NRFC Accounts, Inward foreign exchange remittances, Off- shore banking, Treasury

products and Micro-banking.

BOC also has thirteen Subsidiaries including Bank of Ceylon UK limited and five Associate

Companies in the areas of property development, merchant banking, leasing & finance,

hotels, travel, unit trust and stock brokering.

Indicating its dominance of the Sri Lankan economy, BOC has the largest asset base

approximating LKR 835 Billion by year ended 2011, which represented approximately 24%

of the total assets held by the commercial banks in the country. The capital base of the Bank

as at 31 December 2011 was LKR 40 billion enabling the highest single borrower exposure

up to LKR 10 billion. These are key aspects to note about the Bank. Among other significant

features are that by 30 June 2012, BOC held 21% market share of domestic deposits, 21% of

advances.

Bank continues to maintain its leadership position in the area of foreign currency remittances

having a market share of over 43% in the year 2011.To facilitate customers, a web based

electronic fund transfer system named “ BOC E-cash” was introduced. The Bank also

introduced “X Press Money”, a network of speedier, low cost money transfer facility in Middle

East.

Bank's procedures and protocols are driven through good corporate governance and

transparency by complying with all regulatory requirements and best practices in the

industry. It is committed to follow good corporate citizenship by actively involving in

Corporate Social Responsibility activities by providing specific budgetary allocation for vital

and justifiable social welfare projects and utilizing such expenses for the intended purpose.


Competitive Strengths

The Bank believes that the following competitive strengths can be leveraged to allow the Bank to further enhance its position in Sri Lanka.

Strong Banking Franchise and Leading Market Position in Sri Lanka

Disciplined Risk Management Culture, Diversified Financial Profile and Good Asset Quality

Sustainable Profitable Growth backed by Rising Income

Sound Capital Base

Leading Innovator of New Products, Services and Technology in Sri Lanka

Strong Governmental Support and Professional Management

History

The Bank was established as Sri Lanka's first state-owned commercial bank and Sri Lanka's

first locally-owned bank in 1939. The Bank opened its first branch in Kandy in 1941. In 1949,

the Bank opened its first overseas branch in London. The Bank was nationalized in 1961

under the Finance Act No. 65 of 1961.

In 1972, the Government passed the Agricultural Productivity Law to encourage credit

growth to Sri Lankan farmers and, as a result, the Bank expanded its branch network across

the country by opening agrarian service centers. In 1979, following the liberalization of the

Sri Lankan exchange control regulations, the Bank established the first foreign currency

banking unit in Sri Lanka.

In 1980, the Bank was the first commercial bank in Sri Lanka to introduce computer systems

to automate its accounting functions. In 1988, the Bank became the first domestic bank to

establish an ATM network and, in 1989, was the first domestic bank to offer credit card

services in collaboration with Visa. In 2005, the Bank implemented a core banking system

which fully automated the branch banking operations.

In the 1980s, the Bank entered into other business areas through subsidiaries and

associates. In 1982, the Bank established the Merchant Bank of Sri Lanka Limited (“MBSL”),

the first merchant bank in Sri Lanka. In 1987, the Bank established Property Development

Limited (“PDL”) to construct its 32-story head office in Colombo. In 2010, the Bank converted

its London branch into a wholly-owned subsidiary, Bank of Ceylon (UK) Limited. The Bank

intends to use the Bank of Ceylon (UK) Limited as a platform for growth and expansion into

Europe.



DGMInternational, Treasury & Investments

And the following awards

- Best Presented Accounts Awards Competition 2009 Organised by South Asian Federation of

Accountants (SAFA), Award: Gold Public Sector Entities - Co-Winner

- Annual Report Awards Competition 2010, Organised by The Institute of Chartered Accountants of

Sri Lanka Award: Certificate of Compliance

- ARC Awards for the Annual Report 2009 International ARC Awards 2010,organised by

Mercomm, Inc. USA

- Interior Design in the Banks: National Commercial category – Gold

- Illustration : National Commercial category - Silver

- Financial Data – Honours

- Photography –Honours

- Winner of the National Business Excellence Awards for the Banking Sector the National

Chamber of Commerce of Sri Lanka 2011.

- The Bank was ranked 17th strongest bank in Asia Pacific out of fivehundred banks as rank by

Asian Banker Magazine

- Received the Brand rating AA+ award from the Brand Finance PLC

Organized by League of

American Communications

Professional (LACP)

Overall Silver Award for

Annual Report.

Best Sri Lankan Trade Bank

for 2010 in a Competition

Organized by Trade Finance

the Globle Magazine for exporta

And commodity finance

Awards Received By Bank of Ceylon

Vision Awards 2009Award for Excellence

in Trade Finance


Business Highlights

Highest ranked Sri Lankan bank in the Bankers Almanac

Bank of Ceylon's National Long - Term Rating has been upgraded to ÁA +

(lka)'stable out look Fitch ratings Lanka limited.

Wider customer base over 10 million accounts

Leading the treasury operations of the local foreign exchange market with over 50%

market share.

Expanded the banks operations to 970 service points and Worldwide networ

reaching over 840 foreign correspondents

Leader in inward foreign remittances with over 43% market share

Representing largest off-shore banking operations with the highest market share of

assets

The first State Bank to commence 24 hour service point

The London branch of the bank was converted as an independent fully-owned

Subsidiary, operating in United Kingdom

Single borrower exposure capacity in excess of Rs. 13 billion

Bank achieved a remarkable volume of advances crossing Rs.500 billion milestone.

Increased penetration in branchless banking by introduction of internet banking and

mobile banking

Bank successfully raised Rs. 5 billion for the third time by issuing subordinated 5 year

debentures listed on the Colombo Stock Exchange

Bank of Ceylon introduced new business lines by adding an investment arm and Islamic

banking into its banking stream.

BOC Premier Centre' was established to provide personal banking services for high net

worth individuals.

The bank moves a further step forward with introduction of on – line leasing system

covering branch network.

Bank of Ceylon Historic USD 500 Mn. Five year bond was snapped up with 7.7 times

oversubscription, drawn bids worth USD 3.86 billion.

( Source – BOC Annual Report - 2011)


Deposits

Debentures

Others

Borrowings

Equity

Composition of Assets

Funding

(Source - BOC Annual Report 2011)


BOC recorded the highest turnover and Profit before tax for 2012 Q2.

BOC was the first ever commercial bank or business entity in sri Lanka to achieve a Rs 1

Trillion asset base in its balance sheet in May 2012.

BOC has improved its Profit per Employee by 77.9% or Rs.597,681 compared with the

same period of last year.

( Source – Research Division Analysis- Bank of Ceylon)

4.2 Principal activities

The Bank provides a comprehensive range of services covering all sectors of the business

community as well as the Government. Listed below are the products and services provided.


Future Strategies and Risk attached to the Bank

Future Strategies

The bank aims to enhance its position as the leading commercial bank in Sri Lanka. The Bank plans

to achieve this goal through the following strategies.

The banks Core-banking business operations remains the essential part of its business. The bank

intends to grow its banking operations by increasing its product offerings services and solutions.

Among other things the bank plans to diversify its retail business to improve the products currently

offered to the customers.

The bank intends to continue to focus on corporate and SME customers who are believed to be the

critical components of the bank's long term growth. As SME expand and go their life cycle their

financial requirements will be supported and serviced by the bank's different business units. The

bank will seek to diversify its services and funding sources and to further expand and develop

relationship with large corporate and SME customers.

The bank intends to continue its network expansion by opening new branches and extension offices

in the year 2013 primarily in the regions of Sri Lanka experiencing strong economic growth and

having sufficient concentration of large corporate and SME customers. The bank will also to

continue its network expansion in the Northern and Eastern Provinces of Sri Lanka.

The bank has employed number of strategies to increase fee and services based income which have

been reflected in the growth of its fee and service based income over past few years. The bank

intends to continue leveraging its strong and broad client base in each of its corporate , retail and

development banking units to further grow fee and service based income through targeted cross-

selling.

In addition bank also plans to grow its Islamic Banking Unit by introducing new sharia'ah compliant

products in Sri Lanka such as Agricultural Finance, Manufacturing Finance and Bonds.

The bank has leveraged its scale of operations to increase revenue and reduce costs through

greater operation efficiency. The bank has achieved economies of scale through effective use of

information Technology and exploiting its widespread branch network. The bank's economies of

scale are demonstrated by the growth in the fee and service based income and its ability to handle an

increasing amount of business within the same level of human resources. Given the size of its

operations the bank will continue seeking opportunities to reduce cost through leveraging.

Although the banks co-strategy lies in the Sri Lankan domestic market, the bank plans to grow its

International Operations as part of its overall growth strategy. The bank plans to leverage its

presence in the United Kingdom and India for International expansion with the goal of providing

additional banking services and support to Sri Lankan businesses with operations outside Sri Lanka

as well as to the overseas Sri Lankan community.

.


The bank continuously strives to be a pioneer in introducing information technology advances to the

Sri Lankan banking sector. The bank has invested intensively in upgrading its network infrastructure,

core banking system and disaster recover infrastructure, so as to provide the bank with the required

technological platform to expand its operations. The bank plans to continue its information

technology development projects including implementing a new assets liability management system,

anti money laundering system, risk management system, Islamic banking system, pension fund management and lease financing system among others

Risk attached to the Future Strategies

The following risk involve in implementing the future strategies to the Bank.

- Changes to the government policy directions

- Unexpected external shocks

- Risk of political instability

- Systemic threat on asset quality

- Natural disasters

Risk Management

The bank will continue to emphasize its conservative Risk Management policies, and strive to

ensure that its understands, measures and monitors the various risk that arise in the business, and

that the bank adheres strictly to the policies and procedures established to address these risk.

The bank will continue to analyse major risk factors which could affect its financial operations, and

adjust its organizational structure and risk managements processes, as necessary, to ensure

adequate risk management systems are in place. The bank recently has undertaken a number of initiatives to ensure that its Risk management systems are in line with International standards that are in accordance with the guide lines under the principles of Basel II. These include plans to select an international firm to implement Basel II risk management and asset liability management system that will be fully integrated into the bank's core banking systems. The bank has introduced ISO certified standards to improve operational risk exposure and adopted risk and control self – assessment techniques that identify key risk indicators in several of its operational units. The Bank will continue to further refine these risk management practices to ensure that it is able to monitor and

manage credit, market, capital management and operational risks in the most effective way possible.


4.3 Stated capital and Borrowings etc

a) The detailed breakdown of the share capital of BOC is given below as at

31st August 2012

LKR'000

Authorized Capital 50,000,000 ordinary shares of LKR 1000 each 50,000,000

Issued and fully paid 5,000,000

The entire (100%) issued capital of BOC is held by the Secretary to the Treasury on

behalf of the Government of Sri Lanka.

b) Particulars of Loans, other Borrowings, Liabilities and indebtedness

as at 31st August 2012 LKR '000

(i) Long term borrowings

Debenture Issued (Note 1 below) 40,586,505

Term Borrowings from banks abroad 116,419,000

Term Borrowings from banks & other institutions in SL 265,000

Refinance borrowings 5,853 ,000

(ii) Short term Borrowings

Securities sold under re-purchase agreements 59,612,000


Note 01- Details of Debentures


II. Unlisted USD Debenture as at 31st August 2012

III. Listed Rupee Debentures as at 31st August 2012


at of One (01) Year Period from the

allotment of the Debentures

to

b

a W

to

b

a W

F

Annually at the expiry of

every six (06) month period from the

date of allotment of the Debentures


as at 31st August 2012

as at 31st August 2012

(iii) Contingencies and Commitments


4.4 Patents, Brands & Trademarks


4.5 Key Customers and suppliers

BOC adheres to prudential requirements set out by the Central Bank of Sri Lanka, by virtue of

which exposure to any one Group of companies, any one company, and any individual

borrower is regularly monitored. As such BOC is not overly dependent on any customer or

any one sector for income at any given time. BOC is also not significantly dependent on any

single supplier for its requirements.

4.6 Research and Development

BOC has spent a sum of LKR 28.0 million on research and development activities

over the last two years.


Subsidiaries


5. THE BOARD OF DIRECTORS

5.1 The details of the Board of Directors

A brief profile of each member of the Bank's Board is set forth below.

Dr. Gamini Wickramasinghe is the Chairman of the Board. He was appointed as the Chairman of the

Board in May 2007, re-appointed in May 2010 and serves as an Independent Non-Executive

Director. Dr. Wickramasinghe has extensive experience in both domestic and international markets.

He served as the Chairman of the Securities & Exchange Commission of Sri Lanka from 2006 to

2009 and the Insurance Board of Sri Lanka from 2006 to 2008. He is the Chairman of Informatics

Group of Companies, one of the largest software development houses in the country. He is also the

Chairman of Bank of Ceylon (UK) Limited, Property Development PLC,

Ceybank Holiday Homes (Private) Limited, Koladeniya Hydropower (Private) Limited and a Director

of Mireka Capital Land (Private) Limited and The Lanka Hospitals Corporation PLC. Dr.

Wickramasinghe has a Master's Degree in Systems Analysis from University of Aston, Birmingham,

United Kingdom, and a Doctorate in Business Administration from Manchester Metropolitan

University, United Kingdom. Dr. Wickramasinghe is a Fellow of the Chartered Management

Institute (FCMI), United Kingdom, the British Computer Society (FBCS) and the Institute of Bankers

of Sri Lanka (IBSL).

Mr. S. R. Attygalle is the Ex-officio Director. He was appointed as a Director to the Board in June

2010 and serves as the Non-Executive Ex-officio Director. He was a Senior Economist of the

Central Bank of


Sri Lanka for a number of years and also served as a Director and Acting Chairman of

National Savings Bank and a Director of Shell Gas Lanka Limited. He served as the Director

General of the Department of Public Enterprises of the Ministry of Finance & Planning

through the end of 2011. He is currently a Deputy Secretary to the Treasury. He is also a

Director of the Sri Lanka Ports Authority, a member on The Board of Postgraduate Institute

of Science, University of Peradeniya and an observer on the Board of Investments of Sri

Lanka. Mr. Attygalle has a Bachelor of Science Degree in Mathematics from the University of

Colombo, Sri Lanka, and a Master's Degree in Economics from Warwick University, United

Kingdom.

Mr. Raju Sivaraman , Director was appointed to the Board in January 2006 and

subsequently re-appointed in June 2007 and May 2010, and serves as an Independent Non-

Executive Director. With more than 30 years of experience in architecture and management,

Mr. Sivaraman brings to the Board business experience in public and private sectors. He

served as a Director of Merchant Bank of Sri Lanka PLC, Road Development Authority,

Design Centre, Mireka Capital Land (Private) Limited and Property Development PLC. He is

the Associate Consultant of Plan 3 Architects, India, and serves as Managing Director of

Arch-Triad Consultants (Private) Limited, an architectural consultancy firm, since 1980. Mr.

Sivaraman is the Chairman of Ceylease Financial Services Ltd and also serves as Director

of Merchant Credit of Sri Lanka Limited and Milco (Private) Limited. He is the Managing

Director of Ram Developers (Private) Limited. He served as a Member of the National

Police Commission from 2006 to 2009 and was reappointed to the National Police

Commission in 2012. He was also a Council Member and Treasurer of the Sri Lanka Institute

of Architects. Mr. Sivaraman is a Chartered Architect holding a Master's Degree in

Architecture from The University of Moratuwa, Sri Lanka and a Fellow Member of the Sri

Lanka Institute of Architects (F.I.A.).

Ms. Nalini Abeywardene , Director was appointed to the Board in May 2010 and serves as a

Non-Executive Director. Ms. Abeywardene brings to the Board extensive experience in the

field of commercial law and more than 25 years of management experience in the private

sector tea industry. She formerly practiced with a leading legal firm in Sri Lanka. She served

as a Commissioner of the Human Rights Commission of Sri Lanka from 2006 to 2009. She is

a member of the Board of Management of the Galle Heritage Foundation of the Ministry of

National Heritage and Cultural Affairs and a Director of Hotels Colombo (1963) Limited, BOC

Travels (Private) Limited and Mussendapotta Estates (Private) Limited. Ms. Abeywardene is

an Attorney-at-Law, qualified from Sri Lanka Law College, the professional body awarding

this qualification in Sri Lanka.

Mr. Chandrasiri de Silva , Director was appointed to the Board in May 2010 and serves as a

Non-Executive Director. As a practicing lawyer, Mr. de Silva brings to the Board extensive

experience in law and in business and insurances sectors. He previously served as Director

of People's Bank, People's Merchant Bank PLC and People's Insurance Company Limited

and also a former Chairman of People's Travels Limited. He is the Chairman of BOC Travels

(Private) Limited and a Director of Hotels Colombo


(1963) Limited. Mr. de Silva is an Attorney-at-Law and holds a Master's Degree in

International Trade Law from the University of Wales, United Kingdom.

Mr. K. L. Hewage ,Director was appointed to the Board in June 2010 and serves as an

Independent Non-Executive Director. Mr. Hewage brings to the Board more than 40 years

of experience in various fields, including consultancy, management, training, project

finance, marketing and agriculture development. Mr. Hewage served as the Chairman of

People's Merchant Bank PLC, the Chairman and Chief Executive Officer of Janatha

Fertilizer Enterprises Limited, Sri Lanka State Plantations Corporation, Sri Lanka State

Printing Corporation and Provincial Road Development Authority (Western Province). He

also served as a Member of the Board of Directors of People's Bank, Janatha Estates

Development Board and as the General Manager of Sri Lanka Institute of Co-operative

Management. He is the Chairman of Ceybank Asset Management Limited. He also serves

as a Member of the Governing Council of the University of Visual and Performing Arts. He

holds a Bachelor of Science Degree in Bio-Science from the University of Kelaniya, Sri

Lanka, and Master of Science Degree in Agricultural Extension from the University of

Reading, United Kingdom.

Mr. V. Kanagasabapathy was appointed as the Alternate Director to Mr. S.R. Attygalle, the

Ex-officio Director, from July 2010 and serves as a Non-Executive Alternate Director to the

Ex-officio Director on the Board. He has also served as the Alternate Director to former Ex-

officio Directors since March 2006. Mr. Kanagasabapathy brings to the Board more than 40

years of experience in the public sector, having served in several senior positions including

Director /Additional Director General of Public Finance, Director General of Public

Enterprises and Financial Management Reform Coordinator and Financial Management

Advisor of the Ministry of Finance & Planning. He also served as a Director of People's Bank,

State Mortgage & Investment Bank and Merchant Credit of Sri Lanka Limited. He currently

serves as the Senior Financial Consultant of the Academy of Financial Studies, which is the

training arm of the Ministry of Finance & Planning. He is a Director on the Boards of Merchant

Bank of Sri Lanka PLC, Lanka Hydraulic Institute Limited, Hotel Developers Lanka PLC and

De La Rue Lanka Currency and Security Print (Private) Limited. He is also the Chairman of

the Distance Learning Centre, Council Member of the Institute of Chartered Accountants of

Sri Lanka and the Institute of Public Finance and Development Accountancy. He is a

Member of the National Salaries and Cadres Commission. Mr. Kanagasabapathy is a

Chartered Accountant and holds a Master's Degree in Public Administration from Harvard

University, U.S.A. He is a Fellow Member of the Institute of Chartered Accountants of Sri

Lanka, the Institute of Public Finance and Development Accountancy, the Institute of

Certified Management Accountants of Sri Lanka and the Association of Accounting

Technicians of Sri Lanka.

No Director of BOC or a person nominated to become a director is or was:

a) Involved in a petition under any bankruptcy laws filed against such person or any

partnership in which he was a partner or any corporation of which he was an

executive officer;


b) Involved in a conviction for fraud, misappropriation or breach of trust or any

other similar offence which the CSE consider as a disqualification; or

c) The subject of any order, judgement or ruling of any court of competent jurisdiction

temporarily enjoining him from acting as an investment advisor, dealer in securities,

director or employee of a financial institution and engaging in any type of business

practice or activity.

5.2 Directors' shareholding

BOC is a 100% state owned commercial bank. Hence no directors are holding any shares of

the Bank.

5.3 Directors' Interest

The Directors of the BOC have no interest in any assets acquired, disposed or leased by the

BOC during the past two years and do not propose to acquire, dispose or lease any assets

during the two years succeeding the Debenture Issue.

Directors' interests in contracts with the Bank both direct and indirect are disclosed under

Annexure X and Note No. 49 Financial Statements in summarised form. There is no any

material change in director's interest in contract from the period 31st December 2011 to

date.

5.4 Directors' Remuneration

The allowances/fees payable to the Board of Directors are made in terms of the

provisions/contents in the Public Enterprises Circular Nos PED 58 dated 29th April 2011,

PF/PE/23 dated 19th July 2002 letter dated 24th March 2008 all issued by the Department of

Public Enterprises of the Ministry of Finance & Planning and Bank of Ceylon Ordinance No.

53 of 1938 and its amendments.

The aggregate emoluments paid to the Directors during the financial year ended 31

December 2011 was LKR 2.7 million. Estimate for the year 2012 is Rs. 3.0 million.


6. EXTRACTS FROM THE CORPORATE GOVERNANCE PRACTICES

The Bank of Ceylon Continues with its strategy of being in line with best practices in respect

of corporate governance as a vital element in enhancing the Bank's financial growth,

competitiveness and implementing its sustainability framework. It firmly believes that a

sound system of governance is also fundamental in attracting and maintaining public

confidence in the Bank especially because, the Government owns it and the pivotal and

dominant role the Bank plays in the Sri Lanka economy, carrying substantial influence and

leadership over many matters of policy and practice.

Conscious of the above, the Nomination and Corporate Governance Committee, which is a

subcommittee of the Board primarily focuses on the implementation of the applicable

governance rules and best practices and continuously monitors the progress.

The Bank is bound by the Banking Act Direction No. 11 of 2007 on Corporate Governance for

Licensed Commercial Banks issued by the Central bank of Sri Lanka. The Bank has taken

steps to the best of its ability to comply with the said Direction to the extent that they are not

inconsistent with the Bank of Ceylon Ordinance No. 53 of 1938 and its amendments, the

statute governing the Bank, as provided for the said Direction.

The governance in the Bank covers many stakeholders, the relationships between them and

the strategic vision of the Bank. The stakeholders comprise the single shareholder,

depositors, customers, the Board of Directors, management, employees, International

Banks, suppliers, regulators, investors (in debentures issued by the Bank) and society at

large. All parties mentioned have either a direct or an indirect interest in corporate

governance as it helps in the effective performance of the Bank. The Bank has adopted a

Communication Policy Covering all its stakeholders.

The Board is committed to following very high ethical standards. This enables the Board to

set values and standards for the Bank and its staff on par with best practices, while creating

trust and transparency and ensuring that its obligations to all its stakeholders are understood

and met.

In its search for continuous improvement it follows an incremental approach in embedding

governance into its value addition process and is making conscious efforts to continually

improve the governance framework and the processes beyond the applicable rules and

regulations.

As a guideline for best practices in corporate governance, the Bank uses the Code of Best

Practices on Corporate Governance issued jointly by the Securities and Exchange

Commission of Sri Lanka and the Institute of Chartered Accountants of Sri Lanka. Since the

Bank is complying with direction laid down in the above mentioned Banking Act Direction No.

11 of 2007, the Colombo Stock Exchange exempted the Bank from complying with the

directions stipulated in Section 7.10 of the Continuing Listing Requirements on Corporate

Governance.


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BOC DEBENTURE PROSPECTUS - -- 55 -

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2010

Detemining the Human Resource Policy and Organisational Structure of the Bank.


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BOC DEBENTURE PROSPECTUS

8. PROPERTIES

Details of the Properties of the Bank (Freehold Properties and Leasehold Properties) are given in the Annexure VI


Declaration by the Directors

We the undersigned being the Directors of Bank of Ceylon, hereby declare and confirm that the

Prospectus has been seen and approved by us and we collectively and individually accept full

responsibility for the accuracy of the information given and confirm that, the provisions of the

Colombo Stock Exchange listing rules have been complied with and after making all reasonable

enquiries and to the best of our knowledge and belief, there are no other facts the omission of which

would make any statement herein misleading or inaccurate. Where representations regarding the

future performance of the entity have been given in the Prospectus, such representations have been

made after due and careful inquiry of the information available to the entity and making assumptions

that are considered to be reasonable at the present point in time and according to our best judgment.

Dr. G. Wickramasinghe (Sgd) on ……… 2012

Mr. S. R. Attygalle (Sgd) on ……… 2012

Mr. R. Sivaraman (Sgd) on ……… 2012

Ms N. Abeywardene (Sgd) on ……… 2012

Mr. C. De Silva (Sgd) on ……… 2012

Mr. K. L. Hewage (Sgd) on ……… 2012


Declaration by the Bank

An application has been made to the Colombo Stock Exchange for permission to deal in and obtain a

listing for the Debentures to be issued by the Bank pursuant to this Prospectus. Such permission will

be granted when the Debentures are listed on the Main Board of the Debt System of the Colombo

Stock Exchange. The Colombo Stock Exchange assumes no responsibility for the accuracy of the

statements made or opinions expressed or reports included in this prospectus. Listing on the

Colombo Stock Exchange is not to be taken as an indication of the merits of the Bank or of these

Debentures.

Mr. P. A. Lionel Mr.H.S. Jayawardana

Deputy General Manager Assistant General Manager

(International Treasury & Investment) (Investment Operations)

Declaration by the Managers to the Issue

We, Investment Banking Division of Bank of Ceylon, 23rd Floor,”BOC Square”, No. 01, Bank of

Ceylon Mawatha, Colombo 01 being the Managers, Sponsors and Registrars to this Debenture

issue, hereby declare and confirm that to the best of our knowledge and belief the prospectus

constitutes full and true disclosure of all material facts about the issue and the BOC.

Mr. P. A. Lionel Mr.H.S. Jayawardana

Deputy General Manager Assistant General Manager

(International Treasury & Investment) (Investment Operations)


Annexure I

EXTRACTS FROM THE BANK OF CEYLON ORDINANCE

Board of Directors 6. (1) The Management and administration of the affairs of the

of the Bank Bank shall be vested in a Board, consisting of six directors

appointed by the Minster, one of whom shall be a

representative of the Ministry charged with the subject of

Finance (hereinafter referred to as the “ex officio director ”)

(2) The Board may exercise, discharge or perform the powers,

functions or duties of the bank for the purpose of carrying on

the business, and administering the affairs of the bank.

(3) No act or proceeding of the Board shall be invalid by reason

only of the existence of any vacancy among the Directors or

any defect in the appointment of a Director or authorization

by the ex officio director under subsection (8)

(4) A Member of Parliament shall not be qualified to be a

Director.

(5) The Minister shall appoint one of the appointed Directors as

the Chairman of the Board.

(6) Every appointed Director shall hold office for a period of

three years, unless he is earlier removed from office or

vacates his office.

(7) If any appointed Director is temporarily unable to discharge

the duties of his office on account of ill health, or absence

from Sri Lanka, or any other cause, the Minister may appoint

some other person to act as a Director in his place.

(8) If the ex officio Director is unable to attend any meeting of

the Board, he may authorize any other officer to be present

on his behalf at such meeting; and the officer so authorised

shall be deemed for the purpose of such meeting to be a

member of the Board.

(9) An appointed Director may resign his office by letter

addressed to the Minister.


(10) The Minster may, if he thinks it expedient to do so, remove an

appointed Director from office.

(11) A Director who vacates office by resignation or effluxion of time shall

be eligible for re-appointment.

(12) The ex officio Director shall have all the same rights and

privileges as the appointed Director.

(13) The provisions of subsections (1), (2) and (3) shall be deemed to

have come into operation on October 12, 1961.

Disclosure of 11 A Director who or whose spouse or dependent child or a firm or

Interest by a company in which such Director, his spouse or dependent child

Director has a substantial interest is directly or indirectly interested in any

business transacted or proposed to be transacted by the Bank shall

disclose the nature of such interest at the meeting of the Board.

where such business is discussed. The disclosure shall be recorded

in the minutes of the Board and such Director shall not take part in

any deliberation or decision of the Board with regard to that business

and shall withdraw from such meeting whilst such deliberation is in

progress or decision is being made.

Business which 71 Subject to the provisions of this Ordinance the business which the

the Bank may bank is authorized to carry on and transact shall be the several

transact kinds of business specified in Part 1 of the First Schedule subject to

the limitations mentioned in Part II thereof.

FIRST SCHEDULE PART I

Business which 1 The Bank is authorized to carry on and

the bank is transact the several kinds of business hereinafter

authorised to carry specified, namely:-

on and transact

To carry on (a) To establish, carry on, develop and extend in Sri Lanka

business of and elsewhere the business of banking in all its branches

banking and


departments and in particular and without prejudice to the generality of the foregoing to exercise, perform and do all or

Any of the following powers, acts and things subject nevertheless to the restrictions and conditions set out in Part II of this Schedule.

To open accounts (b) (i) To open, maintain and manage current deposit, saving and other accounts;

To discount bills (ii) To discount, buy, sell and deal in bills of exchange, promissory notes, hoondies, poorjas, coupons, drafts, bills of lading, warrants, debentures, certificates, scrip and other instruments and securities, whether transferable or negotiable or not:

To issue letter of (iii) To grant and issue letters of credit and circular notes:credit

To deal in bullion and (iv) To buy, sell and deal in bullion and specie and engage in

specie operations in exchange.

To negotiate loans (v) To negotiate loans and advances, to receive money Securities

and valuables on deposit, or for safe custody, or otherwise

To collect money (vi) To collect and transmit money and securities.

To transact agency (c) To manage property and transact all kinds of agency business

business commonly transacted by bankers.

To borrow or raise (d) To borrow or raise money in such manner as the bank shall think Money fit money and to secure the repayment of any money borrowed,

raised or owing by mortgage, charge or lien upon the whole or any part of the bank's property or assets whether present or future including its uncalled capital and also by a similar mortgage, charge or lien to secure and guarantee the performance by the bank of any obligation or liability it may undertake.

To lend and (e) To lend and advance money securities and property or give credit

advance money to such persons, firms or companies and on such terms as may seem expedient and either with or without security and if with security upon such security and with such conditions as may from time to time be deemed to be advisable.

To buy and sell (f) To buy, sell, invest, underwrite, deal in and dispose of stocks,stocksstocks and shares stocks, shares


debentures, mortgages, bonds, or securities issued or guaranteed by the Government of Sri Lanka or by the Government of any other country or by any company or corporation

Provided, however, that the bank shall not enter into any transaction affecting the stocks, shares, debentures, mortgages, bonds or securities issued or guaranteed by any other country or by any such company or corporation except with the approval of not less than four Directors of the bank given after considering the written observations of the General Manager of the Bank, and with the written consent of the Minister.

To acquire any other business (g) To acquire and undertake the whole or any part of the banking and

discount business of any person or company carrying on business which the bank is authorized to carry on;

Provided, however, that the power contained in this paragraph shall only be exercised with the approval of not less than four Directors of the Bank given after considering the written observations of the General Manager of the Bank, and with the written consent of the Minister.

To acquire property (h) To purchase, take on lease or in exchange, hire or otherwise acquire, any immovable or movable property and any rights or privileges.

To enter into (i) To enter into any arrangement for sharing profits, union of interest,arrangement for co-operation, joint ventures, reciprocal concession or otherwiseprofit sharing with profit sharing any person or company carrying on or engaged

in or about to carry on or engaged in any business or transaction.

To act as trustees, (j) To undertake and execute any trusts the undertaking whereof may

executors, etc. seem desirable, and also to undertake the office of executor, administrator, receiver, treasurer, or registrar, and to keep for any company, Government, authority, or body, any register relating to any stocks, funds, shares or securities, or to undertake any duties in relation to the registration of transfers, the issue of certificates, or otherwise.

To provide for (k) To establish and support or aid in the establishment and support of

employees employees associations, institutions, trusts, schemes for the providing of pensions and of guarantee and other funds, and conveniences calculated to benefit employees or ex-employees, of the bank or the dependants or connexions of such persons and to grant pensions and allowances, and to make payments towards insurance,


and to subscribe or guarantee money for charitable or benevolent objects or for any exhibition or for any public, general, or useful object.

To sell undertaking (l) To sell or dispose of the entire undertaking of the bank, or any part thereof, for such consideration as the bank may think fit, and in particular for shares, debentures or securities of any other bank or to amalgamate the bank's business with that of any other bank.

Provided, however, that the powers contained in this paragraph shall only be exercised with the approval of at least four directors of the bank given after considering the written observations of the General Manager of the Bank, and with the written consent of the Minister.

To deal with the (m) To construct buildings on or improve or develop any land belongingproperty of the bank to or taken on lease or possessed or occupied by the bank and to

bank manage, exchange, lease, mortgage, dispose of, sell, turn to account or otherwise deal with all or any part of the property and rights of the bank.

To exercise it's (n) To do all or any of the above things in any part of the world and as

powers in any part principals, agents, contractors, trustees or otherwise and by or

of the world through trustees, agents or otherwise and either alone or in conjunction with others.

To support the (o) To take or concur in taking all such steps and proceedings as maycredit of the bank seem best calculated to uphold and support the credit of the bank

and to obtain and justify public confidence and to avert and minimize f inancial disturbances , which might affect the bank .

To procure (p) To procure the bank to be registered or recognized in any foreign

recognition of the country or place.bank

To obtain (q) To give any guarantee or indemnity and to enter into concessions arrangement with any Government or any local authority in order t o o b t a i n any rights, concessions and privileges.

To do hire-purchase (r ) To do hire-purchase business and receive discounts, commissions

business business and other remuneration.

To form (s) To form any company for carrying on any business, to acquire and


companies undertake the business of, purchase any interest in, or acquire or hold shares or stock in, any company carrying on any business.

To carry on any (t) To carry on such other trade or business or engage in such other

trade or business activity, which can in the opinion of the bank be advantageously carried on or engaged in by the bank.

General (u) To do all things incidental or conducive to the attainment of theabove objects or the exercise of the above powers.

Interpretation of 2. The objects set forth in any paragraph of clause 1 of this schedule

objects shall not, except where the context expressly so requires, be in any wise limited or restricted by reference to or inference from the terms of any other paragraph or the objects therein specified, and the powers thereby conferred shall not be deemed merely subsidiary or auxiliary to the objects mentioned in the first paragraph of clause 1 of this Schedule but the bank shall, except when the context expressly requires otherwise, have full power to exercise all or any of the powers conferred by any part of clause 1 of this schedule in any part of the world.

PART II

Restrictions and 3. The business of the bank shall be carried on subject toqualifications the following restrictions and qualifications:

Loans, Overdrafts, (a) No loan, overdraft, advance or other accommodation shall be granted by the bank to any person unless the Board is satisfied that he is worthy of credit up to the amount of such advance, loan or other accommodation or that such amount is secured by adequate security, or that the project or scheme to which suchamount is to be applied is financially sound;

Provided that the bank may grant any loan, overdraft, advanceo

other accommodation to any Government department, corporation, statutory body, local authority, co-operative society, approved society or unincorporated body of persons which is unable to satisfy the board as to the requirement contained in the preceding provisions of this paragraph if the grant of such loan, overdraft, advance or other accommodation is approved by the Minister in consultation with the Minister in charge of the subject of Finance and if the Minister in charge

advances, and other accommodationto be granted onlyin certaincircumstances


of the subject of Finance guarantees under section 10 the repayment of such advance, loan or other accommodation.

Loans to directorsand companies (b) (i) Where prior to the date of his appointment as a director no sum has been

granted by way of loan, overdraft, advance or other accommodation to such director or any company or firm in which he has a substantial interest, then, no loan, overdraft, advance, or other accommodation shall be granted to any such company or firm, but a sum not exceeding fifty thousand rupees in the aggregate may be granted to such director by way of loans, overdrafts, advances and other accommodation.

(II) Where prior to the date of his appointment as a director any sum has been granted by way of loan, overdraft, advance or other accommodation to such director or any company or firm in which he has a substantial interest, then such director, company or firm may be granted by way of loans, overdrafts, advances or other accommodation a sum which does not exceed the aggregate of the sums granted to such director, company or firm prior to the date of such appointment, less any sum remaining unpaid.

Provided that where any sum so granted to a director prior to his appointment as a director is a sum not exceeding fifty thousand rupees such director may be granted by way of loans, advances, overdrafts and other accommodation a sum not exceeding fifty thousand rupees in the aggregate, in addition to any sum remaining unpaid.

(iii) No loan, overdraft, advance or other accommodation shall be granted to a director for the time being of the bank or a firm, or company in which he has a substantial interest unless security approved by the bank is given and the loan, overdraft, advance or other accommodation is sanctioned at a meeting of the board by not less than four other directors.

Restriction on *(e) No advance, loan or accommodation shall be granted granting of loans to any General Manager, Assistant General Manager, or Branch

Manager, or any officer, clerk, or servant of the bank exceeding the sum of five hundred rupees except against appropriate banking security; any loans exceeding five hundred rupees to such persons shall only be granted with the previous approval of the board.

Guarantee by (f) No loan, overdraft, advance or other accommodation employees shall be granted by the bank on the guarantee of an employee of the

bank other than to another employee of the bank.


How may powers 4. All the powers contained in clauses 1 and 2 of this be construed schedule shall be read and construed subject to the

restrictions and qualifications in clause 3 of this Schedule and

in case of conflict or inconsistency the provisions of clause 3 of

this Schedule shall prevail.

SECOND SCHEDULE

PART 1 Proceedings of Directors

Meetings of

Directors 1. The Directors may meet together for the dispatch of

business, adjourn and otherwise regulate their meetings as thethink fit and may determine the quorum necessary for the

transaction of business. Until otherwise fixed the quorum shall be

t h r e e .

Who may preside

at meetings 2. The Board shall be presided over by the Chairman if

present, or in his absence, by the deputy Chairman, if

any, but if neither a Chairman nor a Deputy Chairman shall

have been appointed, or if neither the Chairman nor the Deputy Chairman be present at the time fixed for holding the

meeting of the Board, the directors present shall choose one of

their number to preside.

How questions at 3. Any questions which shall arise at any meeting of theBoard meetings Board shall be decided by a majority of votes of those

decided present, and in the case of an equality of votes the Director

presiding at the meeting shall have a second or casting vote.

Acts to be valid 4. All acts done by the Board or by a committee of Directors or by a

Not withstanding person acting as Director , whether solely or as a

defects in appointments member of the Board or of a committee, shall, notwithstanding thatit be after wards discovered that there was a defect in the

appointment of the Board, Committee, or person actings Director, or

that such person was not qualified to be a Director, be as valid as ifthere had been no such defect and the person acting as Director had

been duly qualified. .

Meetings of 5. The meetings and proceedings of any committee shall

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

...................................................


committees be governed by the provisions of this Schedule for regulating the

meetings and proceedings of Directors, so far as the same are

applicable thereto, and are not superseded by the express terms of

the appointment of the committee. In any matter in which noprovisions are made by the Board or by this Schedule a Committee

may conduct its business in such manner as it thinks fit.

Minutes of 6. (1) The Board shall cause minutes to be made in books

proceedings of provided for the purpose of the following matters,

Directors to be namely,

kept.

(a) All appointments of officers and committees made by the Board;

(b) The names of the Directors present at every meeting of the Board, and at every meeting of a committee;

(c) The proceedings and resolutions of all meetings of the board and

Committees.

(2) Such minutes if signed by some person purporting to be the Chairman of the meeting or of the Board or Committee to which it

refers, or by any two directors present thereat, or by the Chairman of

the next succeeding meeting, shall be receivable in evidence without further proof of the matters therein contained or any other

proof.

Custody and use

of common seal 7. (1) The Board shall provide a common seal for the purpose of the bankand may from time to time change the same; and such seal may bekept by such person and in such manner as the board from time t

time may determine, but shall not be used except by the authority of

the board and in the presence of at least two Directors, or of oneDirector and the General Manager or other officer appointed for that

purpose by the Board, who shall sign the document to which the sea

is aff ixed.

(2) The Board shall have full power to use the common seal in the

execution of all or any of the powers hereby vested in them, or otherwise in relation to the affairs and business of the Bank as they in

their discretion see fit.

Directors may 8. No Director shall be disqualified by his office from with bank contracting with the bank nor shall any such contract entered into by or on behalf of the Bank in which any Director shall be in any way

interested, be voided, nor shall any Director so contracting or being interested be liable to account to the bank for any profit realized by or arising out of any such contract but the fact of his being interested and the nature of his interest shall be disclosed by him at the

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


meeting of the directors at which the contract is considered if

his interest then exists, or in any other case at the first meeting

of the Directors after the acquisition of his interest.

A general notice that a Director is a member of a specified firm

or company, and is to be regarded as interested in any

subsequent transactions with such firm or company, shall be

sufficient disclosure under this by-law, and after such generanotice it shall not be necessary to give any special noticerelating to any particulars transaction with such firm or

company.

When Director 9. No Director shall as a Director vote in respect of any may not vote contract in which he is so interested as aforesaid and he shall

withdraw from the meeting of the Directors while any suchcontract is under consideration and the vote thereon is bein

taken. If any Director does so vote, his vote shall not be

counted.

Exception from 10. Nothing in by-law 9 shall apply to any contract made by Provisions of or on behalf of the Bank to give to the Directors or any

by Law 9 of them any security for advances or by way of indemnity.

Delegation of 11. (1) The Board may delegate any of its powers, other than

functions of the power to appoint the General Manager, to committees

consisting of two or more Directors, or to a Director, or to the General Manager or to any other officer of the bank select by the Board; and may fro time to time revoke any such delegation

either wholly or in part and either as to persons or purposes.

Every such committee, Director, Genera Manager or other

officer shall, in the exercise of the powers delegated to it or him,

conform to all such regulations as are prescribed by the Board.

(2) The General Manager may, with the consent of the Board, in writing delegate to any of the officers of the Bank selected by him any of the powers delegated to him under paragraph (1) Every such officer shall in the exercise of the powers delegated to him under this paragraph conform to all such regulations as are prescribed by the Board and the General

Manager.

(3) All acts done by any such committee, Director, General Manager or other officer in conformity with such regulations and in fulf i lment of the purposes of


its or his appointment, but not otherwise, shall have the like

force and effect as if done by the Board.

PART II

Powers and Duties of Directors

Credits and loans 12. No loan, overdraft, advance or other accommodation Shal l be sanct ioned by the Board wi thout the

recommendation of the General Manager unless such loan,

overdraft, advance or other accommodation is approved by

all the Directors for the time being of the Bank, after considering

the written observations of the General Manager of the Bank.

Resolution without 13. (1) A resolution signed by all the Directors of the Bank forBoard meeting the time being shall be as valid and effectual as if it had

valid been passed at a meeting of the Board.

(2) Any such resolution shall be recorded in the minutes Book containing the proceedings of the Board as if it

had been passed at a meeting of the Board.

PART III Remuneration of Directors

Remuneration of 14. A Director may be remunerated out of the funds of the Bank in Directors such manner and at such rates as the Minister May

determine.

Deduction for 15. A sum of fifty rupees shall be deducted from the remuneration of absence from the Chairman or any Director in respect of each meeting of

meeting. the Board, which he fails to attend.

Remuneration 16. A Director in whose place a person has been appointed to act shall of acting Director not receive t he remuneration attached to his office during

the cont inuance o f such ac t ing appo in tment , but such remuneration shall be paid to the Person acting in his

place

.

Remuneration of 17. Where any Director is entrusted with any special mission of function

Directors for or by

.......................................

request performs special


Special Services Services on behalf of the bank, the Board may grant him such

additional remuneration as it thinks fit. The Directors may by

repaid by the Bank all such reasonable travelling, hotel and

incidental expenses as they may incur in attending meetings of

the Board or of Committees of the Board or which they may

otherwise incur in or about the business of the Bank.

Remuneration of 18. All remuneration to which Directors who are public officers

public officers who entitled shall be paid to the Consolidated Fund.

are directors to be

paid to Consolidated

Fund

PART IVDividends and Reserve

Half-yearly 19. The Board may-

Dividends (i) on the report of the General Manager that the profits

earned by the Bank during any half-year justifies the

p a y m e n t o f a h a l f - y e a r l y d i v i d e n d ; a n d

(i) with the approval of the Minister declare a half-yearly

div idend.

Investment of 20. Any amounts standing to the credit of any reserve

Reserve fund funds and also any other funds of the Bank not for the

time being employed in or required for the purposes of the

business of the bank shall be invested with the approval of

the Minister in stock, shares, debentures, bonds or

securities:-

(a) recommended in writing by the General Manager and

approved at a meeting of the Board by a majority of not less

than two Directors; or

(b) unanimously approved by all the Directors for the time being

of the bank after considering the written observations of the

general Manager of the Bank.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


Annexure II

Trust Deed

Trust Deed for the Issue of up to Sixty Million (60,000,000) Unsecured Subordinated

Redeemable Five Year Debentures at an issue price of LKR 100/- each by Bank of Ceylon

No: 022012

This Trust Deed is made and entered into at Colombo in the Democratic Socialist Republic of Sri Lanka on this Twenty Fourth (24) Day of October in the Year Two Thousand and Twelve

(02/2012 )

By and between

Bank of Ceylon a Banking Corporation established under the Bank of Ceylon Ordinance (Cap. 397)and having its Head Office at “BOC Square”, No. 01, Bank of Ceylon Mawatha, Colombo 1 (hereinafter referred to as “BOC “which term or expression as herein used shall where the context so requires or admits mean and include the said Bank of Ceylon its successors and assigns) of the ONE PART

And

Deutsche Bank AG, Colombo Branch a banking corporation duly incorporated in the Federal

Republic of Germany and having its Head Office at No. 12, Taunusanlage, Frankfurt am Main,

Federal Republic of Germany and a Branch Office at No. 86, Galle Road, Colombo 3 in the

Democratic Socialist Republic of Sri Lanka (hereinafter sometimes called and referred to as the “Trustee” which term or expression as herein used shall where the context so requires or admits

mean and include the said Deutsche Bank AG, Colombo Branch its successors and any additional or new trustee or trustees appointed under this Deed whether in substitution or in addition

and holding office of Trustee for the time being of this Deed and their successors) of the OTHER PART.

WHEREAS:

a. BOC being duly empowered in that behalf has by a Resolution passed on 13th September,2012

by its Board of Directors, resolved to raise a sum upto Sri Lankan Rupees Six Billion (LKR

6,000,000,000) by the issue of Unsecured Subordinated Redeemable Five Year

Debentures of BOC.

b. The said Debentures shall be constituted in the manner and upon the terms and conditions

hereinafter contained.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


c. The Trustee has agreed to accept the office of Trustee and act under the provisions of this Deed

as Trustee for the benefit of and in the interests of the Debenture holders on the terms and

conditions hereinafter contained.

NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED AND DECLARED AS FOLLOWS:

1.

(a) In these presents unless the subject or context otherwise requires the following

expressions shall have the respective meanings given below:

1. “BANKING ACT” means the Banking Act No. 30 of 1988 of Sri Lanka as

amended from time to time.

2. “ CENTRAL DEPOSITORY or CDS” means the Central Depository

Systems (Pvt) Limited.

3. “COLOMBO STOCK EXCHANGE or CSE ” means the Colombo Stock

Exchange within the meaning of the Securities and Exchange Commission

of Sri Lanka Act No. 36 of 1987 as amended from time to time.

4. “ BOC's CERTIFICATE” means a bi-annual certificate issued by BOC

and signed by a Deputy General Manager (International Treasury &

Investment) and Assistant General Manager (Investment

Operations) or Assistant General Manager (Treasury) of BOC.

5. “DEBENTURE HOLDERS” means the holders of the Debentures for the

time being whose accounts are deposited with the Debentures at the CDS

as at the relevant date.

6. “ DEBENTURES” shall mean the Unsecured Subordinated

Redeemable Five Year Debentures to be issued and allotted by BOC in

terms of the Prospectus to be issued in this connection at an issue price of

Sri Lankan Rupees One Hundred (LKR 100/-) per Debenture to raise a

sum up to the aggregate value of Sri Lankan Rupees Six Billion (LKR

6,000,000,000) and categorized as Types A, B and C morefully described

below. These Debentures shall rank equal and pari passu with each other

without any preference or priority one over another except for the interest rates

and the frequency at which the interest is paid. These Debentures will be listed

on the Main Board of the Debt system of the Colombo Stock Exchange.

DEFINITIONS


Types/Categories of the Debentures:

Type A - Unsecured Subordinated Redeemable Five (05) Year Debentures

of LKR 100 each bearing nominal interest at a fixed rate of Sixteen

per cent (16%) on the Principal sum, payable annually (AER 16%) at

the expiry of every One (01) year period from the date of allotment of

the Debentures.

Type B - Unsecured Subordinated Redeemable Five (05) Year Debentures

of LKR 100 each bearing nominal interest on the Principal sum at a

floating rate calculated on the basis set out in Clause 1 (a) 11 below,

payable bi-annually at the expiry of every six (06) month period from


Type C- Unsecured Subordinated Redeemable Five (05) Year Debentures

of LKR 100 each bearing nominal interest at a fixed rate of fifteen

point two five per cent (15.25%) per annum (AER 15.83 %) on the

Principal sum, payable bi-annually at the expiry of every Six (06)


7. “ DUE DATE OF INTEREST” means the dates on which the interest

payments shall fall due in respect of the Debentures.

Interest payments shall fall due in respect of Debentures of,

Type A, annually at the expiry of every One (01) year period from the date of


Type B, bi-annually at the expiry of every Six (06) month period from the

date of allotment of the Debentures.

Type C, bi-annually at the expiry of every Six (06) month period from the

date of allotment of the Debentures

The first of such interest payment shall fall due in respect of Debentures of Type

A on the date of expiry of One (01) year and in respect of Debentures of Type B

and Type C on the date of expiry of Six (06) months from the date of allotment of

the Debentures. Interest payments shall be made by BOC within Five (05)

market days from the due dates.

The final interest payments in respect of Debentures of Types A, B and C shall

be made with the repayment of the Principal sum on the date of maturity

/redemption of the Debentures.

Interest calculation shall be based upon the actual number of days in each

interest payment period.


In order to accommodate the Debenture interest cycles in the Debt Securities

Trading System (DEX) the payment of interest shall not include Debenture

holders holding Debentures in the DEX as at the last day of the payment cycle

but one day prior to the due date of interest (entitlement date). If the entitlement

date is a holiday interest shall be calculated including the entitlement date.

8. means any event set out in Clause 12.

9. “ MARKET DAY” means a day on which trading takes place at the Colombo

Stock Exchange,

10. “LISTED” means tradable on the Colombo Stock Exchange.

11. “RATE OF INTEREST” means in respect of Debentures of,

Type A- A fixed rate of Sixteen per cent (16%) per annum on the

Principal sum, payable annually at the expiry of every One

(01) year period from the date of allotment of the Debentures.

Type B- A floating rate of interest equivalent to One Hundred and

Twenty Five (1.25%) above the Weighted Average Six

(06) Months Treasury Bill interest rate ( before tax) at

the Primary Auctions as announced by the Central bank of

Sri Lanka at the preceding week of the interest resetting

date for each bi-annual period. This rate will be initially

decided on the date of allotment of the debentures and be

applicable for a period of Six (06) months commencing from

the date of allotment of the Debentures and thereafter to be

determined/revised bi-annually at the expiry of every Six

(06) month period from the date of allotment of the

Debentures on the same basis. The interest rates so

established shall be notified by BOC to the Colombo Stock

Exchange and the Trustee prior to the commencement of

each bi-annual period.

Provided that if such Weighted Average Six (06) month Government of Sri Lanka Treasury Bill

Interest Rate has not been announced at the preceding week of the interest resetting date for a

particular bi-annual period, then BOC shall in consultation with the Trustee calculate the interest rate

applicable for that bi-annual period based on the Weighted Average Six (06) Month Treasury Bill

interest rate (before tax) at the last Primary Auction as announced/published by the Central Bank of

Sri Lanka before the interest resetting date. The rate so established shall be notified by BOC to the

Colombo Stock Exchange prior to the commencement of the particular bi-annual period.

“ EVENT OF DEFAULT”


Interest is payable at the expiry of every Six

(06) month period from the date of allotment of the

Debentures.

A fixed rate of fifteen point two five per cent

annum on the Principal sum, payable bi-annually at the

expiry of every Six (06) month period from the date of allotment of the Debentures

12. “RESOLUTION” means a Resolution passed by the Debenture holders in

terms of Clause 21 unless otherwise provided for.

13. “SRI LANKAN RUPEES” and the sign “LKR” mean the lawful currency of the Republic of Sri Lanka.

14. “SUBORDINATE” in relation to the Debentures means that the Claims of

the Debenture holders shall in the event of winding up of BOC, rank after all the claims of Secured and other Unsecured Creditors of BOC and any preferential claims under any Statutes governing BOC but in priority to and

over the claims and rights of the Shareholder/s of BOC.

15. “REGISTERED ADDRESS” when used in relation to a Debenture holder

means the respective address provided by the Debenture holder to the CDS.

16. “THE DATE OF ALLOTMENT” means the date on which the Debentures will

be allotted to the Debenture holders under the Prospectus.

17. “THE DATE OF MATURITY” means the date on which the period of Five

(05) years from the date of allotment expires.

18. “THE DATE OF REDEMPTION” means the date of Maturity of the Debentures or such earlier date on which the Debentures become payable

in terms of these presents.

19. “THE REGISTER” means the register of the Debenture holders hereinafter

covenanted to be kept by BOC.

bi-annually

Type C - (15.25%) Per


20. means Investment Banking Division of Bank of Ceylon or such other person or persons to be appointed as the Registrars for the purpose of these presents by BOC.

21. “THESE PRESENTS'' means this Trust Deed as from time to time modified in accordance with the provisions herein contained and/or according to law and shall include any Supplementary Trust Deed executed in accordance with the provisions hereof.

22. “WORKING DAY “ means any day (other than a Saturday or Sunday or any statutory holiday) on which Banks and Foreign Exchange Markets are open for business in Sri Lanka.

23. “TRUST DEED” means these presents including the Schedules hereto as from time to time modified in accordance with the provisions herein contained and/or according to law and shall include any Supplementary Trust Deed executed in accordance with the provisions hereof.

24. “TRUSTEE” means the trustee above named and any additional or new Trustee or Trustees appointed under this Deed whether in substitution or in addition and holding office of Trustee for the time being of this Deed.

(b) Words denoting or importing the singular number shall include the plural number and vice versa and words denoting or importing the masculine gender only shall include the feminine gender and shall include corporate and unincorporated bodies of persons.

(c) In these presents references to:

(i) Any provision of any statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made there under or under such modifications or re-enactment.

(ii) Principal and/or interest in respect of the Debentures or to any monies payable by BOC under these presents or under the Debentures shall be deemed also to include references to any additional amounts which may be payable under these presents.

(iii) Costs, charges or expenses shall include (but not be limited to) the Value Added Tax, Turnover Tax or similar tax charged or chargeable in respect thereof.

“THE REGISTRARS”


(d) References in this Trust Deed to clauses, sub-clauses, paragraphs and sub-

paragraphs shall be construed as references to the clauses, sub clauses,

paragraphs and sub-paragraphs of this Trust Deed respectively.

(e) The headings are inserted herein only for conveniences and shall not affect the

construction of these presents.

2. APPOINTMENT OF THE TRUSTEE

The Trustee is hereby appointed as Trustee for the purposes of the Debentures and for the benefit of and in the interests of the Debenture holders as provided herein and the Trustee accordingly accepts the appointment upon the terms and conditions contained herein and

agrees to act under the provisions of this Deed as the Trustee.

3. AMOUNT OF THE DEBENTURE ISSUE

Debentures will be issued by BOC to raise a sum up to Sri Lankan Rupees Six Billion (LKR

6,000,000,000/-)

4. COVENANTS TO REPAY THE PRINCIPAL SUM AND INTEREST

(a) BOC hereby covenants with the Trustee for the benefit of the Debenture holders that

it will,

(i) As an when Debentures ought to be redeemed in accordance with the provisions of these presents pay to the Debenture holders registered as at end of trading on the market day prior to the date of redemption / maturity by cross cheque marked “ account payee only” sent by ordinary mail to the address of Debenture holder recorded with CDS or pay to a Bank account or otherwise through electronic fund transfer mechanism recognized by banking systems as per information available with CDS or provided direct to

BOC by the Debenture holders. The principal sum of the Debentures which

ought to be redeemed and interest (if any) remaining unpaid up to the date of

maturity / redemption of the Debentures.

(ii) Pay to the Debenture holders registered as at the due date of interest by crossed cheque marked “Account payee only” sent by Ordinary mail to the Address recorded with CDS or pay to a bank account or otherwise through electronic fund transfer mechanism recognized by banking systems as perinformation available with CDS or provided direct to BOC by the

Debenture holders, interest on the principal sum of the Debentures for the


time being outstanding at the said rate of interest in accordance with the

provisions of these presents.

Interest payments shall fall due in respect of Debentures of

Type A, annually at the expiry of every One (01) year period from the date of


Type B, bi-annually at the expiry of every Six (06) month period from the

date of allotment of the Debentures.

Type C, bi-annually at the expiry of every Six(06) month period from the date

of allotment of the Debentures

The first of such interest payment shall fall due in respect of Debentures of

type A on the date of expiry of One (01) year and in respect of Debentures of

Type B and Type C on the date of expiry of Six (06) months from the date of

allotment of the Debentures, interest payments shall be made by BOC within

Five (05) market days from the due dates.

The final interest payments in respect of Debentures of Types A, B and C

shall be made with the repayment of the Principal sum on the date of

maturity/redemption of the Debentures.

Interest calculation shall be based upon the actual number of days in each

interest payment period. (Actual/Actual)

Payment of the Principal sum and interest shall be made in Sri Lankan

Rupees after deducting any Withholding Tax and/or such other taxes and

charges thereon, if applicable.

(iii) The debentures shall be redeemed in accordance with the provisions

contained in these presents on the date of maturity or on such earlier date in

the event of default together with interest (if any) remaining unpaid therefore.

(iv) If any cheques for redemption or interest payment sent by post to the

Debenture holders are returned to BOC undel ivered or

payments made through electronic fund transfer systems are

rejected by the receiving end, the amounts represented by each of such

returns or rejections shall be transferred by BOC to a suspense account and

retained therein for aqperiod of Six (06) years from the date of maturity of the

Debentures. Such monies will be repaid to the Debenture holders if the

same is claimed in writing by such


Debenture holder within the said Six (06) years period. No person shall be

entitled to claim any such redemption and interest payment after the

completion of six years from the date of maturity and all unclaimed monies

shall cease to be owed and payable by BOC to any Debenture holder after

the said period of Six (06) years.

(v) BOC shall always act on the information furnished by the CDS and it shall be

the responsibility of each such Debenture holder to keep all the information

in respect of such Debenture holder updated. Each debenture holder shall

absolve BOC from any responsibility or liability in respect of any error or

absence of necessary changes in the information recorded with the CDS.

(vi) BOC shall be entitled to make payment on redemption of all such

Debentures on the date of maturity to such Debenture holders without any

request for claim from such Debenture holders and BOC shall accordingly send the crossed cheques marked “ Account payee only” for such payments to the addresses (as furnished by the CDS) of such Debenture holders recorded with CDS or pay to a bank account or otherwise through electronic

fund transfer mechanism recognized by banking system as per information

available with CDS or provided direct to BOC by the Debenture holders and

such payment shall be deemed to be a payment duly made by BOC to the

respective Debenture holders in redemption of the Debentures of such

Holders.

In order to accommodate the Debenture interest cycles in the Debt

Securities Trading System (DEX) the payment of interest shall not include

Debenture holders holding Debentures in the DEX as at the last day of the

payment cycle but one day prior to the due date of interest (entitlement date).

If the entitlement date is a holiday interest shall be calculated including the

entitlement date

(b) If the date of redemption/maturity falls on a non working day on which the

Banks are closed for business in Sri Lanka, then the Debentures will be

redeemed without any additional interest on the next working day when the

Banks are open for business in Sri Lanka.

5. DEPOSIT OF DEBENTURES INTO CDS ACCOUNTS

BOC shall within 18 market days from the date of closing of the issue deposit the

Debentures into CDS accounts of the Debenture holders in accordance with the Rules of the

CDS/ CSE as provided in the debenture application, with intimation to the debenture holders

to this effect.


6. STAMP DUTY & OTHER CHARGES (IF ANY)

BOC shall pay all charges, stamp duties and other similar duties or taxes (if any) payable on

or in connection with (I) the issue of the Debentures and (II) the execution of these presents.

7. ELIGIBILITY FOR DEBENTURES

The debentures may be issued to:

(a) Residents in Sri Lanka

(i) Individuals who are resident in Sri Lanka and above 18 years of age.

(ii) Corporate bodies and societies registered/ incorporated/established in Sri

Lanka and authorized to invest in the Debentures.

(iii) Approved Provident Funds, Trust Funds and Contributory Pension Schemes

registered/established in Sri Lanka and authorized to invest in the

Debentures.

In the case of Approved Provident Funds, Trust Funds and Contributory Pension schemes the Application should be in the name of the Board of

Management/Trustee of such Approved Provident Funds, Trust Funds and Contributory Pension Schemes in order to facilitate the opening of the CDS

Accounts.

(b) Non- residents investors

(i) Foreign institutional investors, corporate bodies incorporated outside Sri Lanka

(ii) Individuals above 18 years of age resident outside Sri Lanka

“Individuals resident outside Sri Lanka” shall have the same meaning as in the notice published under the Exchange Control Act in gazette No. 15007 dated 21/04/1972.

8. The Conditions attached to Debentures

(a) The Debentures as part of a series of Unsecured Subordinated Redeemable five

year Debentures issued by Bank of Ceylon at an issue price of LKR 100 per debenture and rank pari passu with each other and without any preference or priority one over another except for interest rates and the frequency at which the interest is

paid. These debentures will be listed on the main Board of the Debt Securities

Trading System of the Colombo Stock Exchange (CSE).

(b) BOC shall keep a Register of Debentures and enter therein particulars of the issue and all changes of ownership of the Debentures as provided for in the said Trust

Deed.


(c) BOC shall recognize and treat the registered Debenture holder(s) as the owner hereof and as alone being entitled to receive and give effectual discharges for the monies hereby covered.

(d) The Principal sum and interest (if any) under this Debenture shall be paid by crossed cheque sent by post to the registered address of the Debenture holder or pay to a bank account or otherwise through electronic fund transfer mechanism recognized by banking systems as per information available with CDS or provided direct to BOC by the

Debenture holders. In the case of joint debenture holders to the Registered address of one of the said joint Debenture holders who is named first on the Register of Debenture

holders.

(e) Subject to the provisions contained in clause 11 below these Debentures shall become

immediately payable in any of the events described under clause 12 occurs.

(f) Repayment before maturity of the principal sum on the Debentures or any part thereof in

any circumstance shall be subject to the prior approval of the Debenture holders of 3/4th of the face value of the Debenture outstanding at that time and the prior written consent of the Central Bank of Sri Lanka.

9. TRANSFER OF DEBENTURES

(a) These debentures shall be freely transferable and the registration of such transfer shall

not be subject to any restriction, save and except to the extent required for compliance

with statutory requirements.

(b) The Debentures shall be transferable and transmittable through the CDS as long as the

Debentures are listed in the CSE. Subject to the provisions contained herein BOC may

register without assuming any liability any transfer of debentures, which are in accordance with the statutory requirements and rules and regulations in force for the

time being as laid down by the CSE, SEC and the CDS.

(c) In the case of death of a Debenture holder

The survivor where the deceased was a joint holder; and

The executors or administrators of the deceased or where the administration of the estate of the deceased is in law not compulsory the heirs of the deceased where such Debenture holder was the sole or only surviving holder; shall be the only

persons recognized by BOC as having any title to his/her Debentures

(d) Any person becoming entitled to any Debenture in consequence of bankruptcy or

winding up of any Debenture holder, upon producing proper evidence that he/she sustains the character in


respect of which he/she proposes to act or his/her title as the Board of Directors of BOC thinks sufficient may in the discretion of the Board be substituted and accordingly registered as a Debenture holder in respect of such Debentures subject to the applicable

laws rules and regulations of BOC, CDS, CSE and SEC.

(e) No change of ownership in contravention to these conditions will be recognized by BOC.

.

10. COVENANT TO OBSERVE PROVISIONS OF THE TRUST DEED AND SCHEDULES.

BOC hereby covenants with the Trustee to comply with the provisions contained herein and to

perform and observe the same. It is expressly agreed between BOC and the Trustee that the

Trustee shall not be liable for any loss or damage however caused by non-observance or non-

compliance with the covenants contained in Clause 11 by BOC.

11. COVENANTS BY BOC

BOC hereby covenants with the Trustee for the benefit of the Debenture holders that, so long as any of the Debentures remain outstanding

(a) BOC shall at all times carry on and conduct its affairs in a proper and appropriate manner.

(b) BOC shall at all times keep such books of accounts as it is obliged to keep under the

applicable laws and (to the extent not prohibited by law or otherwise by virtue of any duty

of confidentiality) at any time after an event of Default shall have occurred or the Trustee

shall have reasonable cause to substantiate that an Event of Default will occur, allow a reputed Audit Firm appointed by the Trustee in consultation with BOC free access to the same at all times during working hours and to discuss the same with the Directors and

Officers of BOC, PROVIDED however that the Trustee and the Audit Firm shall, to the

extent legally permitted, maintain confidentiality in respect of all the matters relating to BOC and its business and shall not use any information they acquire pursuant to these

provisions for any other purpose.

(c) BOC shall give a Certificate in writing to the Trustee within 30 days from the date of expiry

of every bi-annual period commencing from the date of allotment of the Debentures,

signed by a Deputy General Manager and an Assistant General Manager of BOC, certifying that the interest on the Debentures has been paid to the Debenture holders in

terms of the Clause above. In the event BOC defaults in submitting such Certificate the

Trustee shall treat it as an Event of Default as set out in Clause 12(a) hereof.


(d) BOC shall at all times keep a correct Register of Debenture holders showing:

(i) The names and addresses (which shall be the Registered Addresses of the

Debenture holders) of all Debenture holders.

(ii) The number, type, value and the date of issue of the Debentures held by each

Debenture holder.

(iii) The date on which each Debenture holder became registered as the holder of

any Debentures and the date on which such holder ceased to be so registered.

Provided however, BOC may treat the records maintained by the CDS as an

accurate record of the details required herein above.

(e) BOC shall permit the,

(i) Trustee at all reasonable times without payment of any fee to inspect the

Register of Debenture holders and to take copies thereof.

(ii) Debenture holders at all reasonable times without payment of any fee to inspect the Register of Debenture holders pertaining to such Debenture holder and to take copies there of.

(f) BOC shall forthwith upon BOC becoming aware of the happening of any and every such

event as in mentioned in Clause 12(a) hereof give notice thereof in writing to the Trustee

PROVIDED that BOC shall in any event issue a certificate to the Trustee within 30 days from the end of every bi-annual period commencing from the date of allotment of the Debentures signed by a Deputy General Manager and an Assistant General

Manager, of BOC certifying that no event mentioned in paragraphs (iii) and (iv) of Clause

12(a) hereof has occurred during the previous Six (06) month period which would have

resulted in the Debentures becoming payable in terms of the said Clause 12(a) . In the event BOC defaults in issuing such Certificates the Trustee shall treat it as an Event of

Default as set out in Clause 12(a) hereof.

(g) BOC shall issue to the Trustee such certificates as the Trustee may require to carry out its obligations in terms of these presents PROVIDED such certificates can be issued by

BOC without committing any breach of its duty of confidentiality to any person or entity.

(h) BOC shall reproduce the Trust Deed in full in the prospectus relating to the issue of these

Debentures, and shall make available to any Debenture holder on request a certified

copy of the Trust Deed upon payment of a fee of LKR 500/-.


(i) BOC shall send to the Colombo Stock Exchange an Interim Financial Statement

prepared on a quarterly basis, no later than forty five days from the end of the first,

second and third quarters and two months from the end of the fourth quarter.

(j) BOC shall send the Trustee all published financial information, which is normally

provided to ordinary shareholders at the same time that it is sent to the shareholders.

(k) BOC shall not without the prior written approval of the Trustee which approval shall not

be unreasonably with held declare or pay any dividend to its shareholders during any

financial year unless it has paid all the dues to the Debenture holders upon the date on

which the dividend is proposed to be declared or paid or has made satisfactory

provisions therefor.

(l) BOC shall reimburse all reasonable expenses incurred by the Debenture

holders/Trustee after an Event of Default has occurred in connection with:

(i) Preservation of BOC's assets (whether then or thereafter existing)

(ii) Collection of amounts due under this Deed.

All such sums shall be reimbursed by BOC within 30 days from the date of

notice of demand from the Debenture holders or the Trustee. Provided in any

event that BOC shall give the Trustee immediate notice upon it being aware of

the occurrence of an Event of Default and/or if BOC becomes aware that any

condition of the Trust Deed cannot be fulfilled and in any such event, to forward

to the Trustee, as and when required by the Trustee, a confirmation that no

Event of Default has occurred or is continuing.

(m) BOC shall submit to the Trustee a certificate in writing that the principal amount has been

paid to the Debenture Holders in accordance with the terms or conditions of the

Debentures and provisions of the Trust Deed, immediately upon such payments become

due.

(n) BOC shall immediately notify the Trustee in the event that BOC becomes aware of the

occurrence of any of the following events that has caused or could cause:

(i) Any amount secured or payable under the Debenture to become immediately

payable.

(ii) Any event in the opinion of BOC that may lead to the acceleration of either the

payment of interest or redemption.

(iii) Any other right or remedy under the terms and conditions of the Debentures or

the provisions or covenants of the Trust Deed to become immediately

enforceable.


(o) BOC shall submit to the Trustee within one month after the end of every quarter, a

certificate that BOC has complied with each and all of the covenants. In the event

BOC defaults in submitting such Certificate the Trustee shall treat it as an Event of

Default as set out in Clause 12(a) hereof.

The certificate should include:

(i) Whether or not the BOC has observed and performed all the covenants and

obligations binding upon BOC respectively pursuant to the Trust Deed

(ii) Whether or not any limitation of liabilities or borrowing as prescribed by the

BOC ordinance has been exceeded

(iii) whether any material trading or capital loss has been sustained by BOC

(iv) Whether or not any circumstances materially affecting BOC has occurred

which adversely affect the Debentures.

(v) Whether any contingent liabilities which will materially affect the Bank to

meet the obligations under the Debentures have occurred and if so, the

extent of such liabilities and whether or not any contingent liability has

matured or is likely to mature within the next twelve months, which will

materially affect the ability of the BOC to repay the Debentures,

(vi) Whether or not there has been any change in any accounting method or

method of valuation of assets or liabilities of BOC.

(vii) Whether or not any circumstances have arisen which render adherence to

the existing method of valuation of assets or liabilities of BOC is

Inappropriate.

(viii) Any substantial change in the nature of BOC's business since the issue of

the Debentures

(ix) Whether the BOC has assumed a liability of a related body Corporate during

the quarter and details of the extent of the liability assumed during the

quarter and the liability at the end of the quarter.

(x) The Certificate shall be made by a Deputy General Manager and an

Assistant General Manager of BOC and specify the date on which the

certificate was made and in the event the BOC fails to deliver the certificate

to the Trustee the Trustee shall inform the Debenture holders of that fact.

(p) In the event that BOC creates a charge, BOC shall submit to the Trustee the

written details of the charge within 21 days after it is created. If the amount to

be advanced on the security of the charge is indeterminate, BOC shall

submit to the Trustee the written details of the amount of each claim, within 5

market days from the date the claim is made.


(q) BOC shall at all times maintain records of all its published information and make

them available for inspection by the Trustee and Debenture Holders

(r) the trustee shall be entitled to reimbursement of all reasonable costs,

charges and expenses which the Trustee may incur in relation to the

exercise of its duties hereunder from and out of the funds lying to the credit

of the Trust hereby created.

12. EVENTS OF DEFAULT

(a) Subject to the provisions of Clause 12(b) below, the Debentures shall become

immediately payable in any of the following events:

(i) If BOC defaults the payment of principal sum or any interest due on the

whole or any part of the Debentures in accordance with the provisions

contained in these presents.

(ii) If the Debentures cease to be listed in the Colombo Stock Exchange at any

time between the time of issue and the date of Maturity, due to any default on

the part of BOC.

(iii) If BOC stops or threatens to stop payment of its debts or ceases to carry on

its business, which may lead to the winding up of BOC.

(iv) If any liquidation, bankruptcy, insolvency, receivership or similar action or

proceeding is commenced against the BOC or an order shall be made or an

effective Resolution shall be passed for the winding up of BOC.

(v) If BOC does not submit a Certificate to the Trustee as set out in Clause 11 (c)

above certifying that the interest has been paid to the Debenture holders in

terms of the Trust Deed.

(vi) If BOC does not submit a Certificate to the Trustee as set out in Clause 11 (f)

above certifying that no event mentioned in paragraphs (iii) and (iv) of this

clause hereof has occurred during the previous Six (06) month period, which

would have resulted in the Debentures becoming payable in terms of this

Clause.

(vii) If BOC does not submit a Certificate to the Trustee as set out in Clause 11 (o)

above certifying that all of the covenants set out in clause 11 of the Trust

Deed have been fully complied with.

(viii) If BOC commits a breach of any of the other covenants or provisions herein

contained and on its part to be observed and performed provided however

that the Trustee shall give BOC up to 30 days notice before declaring such

breach to be an event of default.


(ix) Where any other indebtedness of BOC becomes due and payable prior to its

stated maturity or where security created for any other indebtedness

becomes enforceable.

(x) Where there is revocation, withholding or modification of a license,

authorization or approval that impairs or prejudices BOC's ability to comply

with the terms and conditions of the Debentures or the provisions of the

Trust Deed or any other document relating to the issue, offer or invitation in

respect of the Debentures.

(xi) Where any mortgage, charge, pledge, lien or any other encumbrance,

present or future is created or assumed by BOC contrary to the terms or

conditions of the Debentures and the provisions of the Trust Deed.

(xii) In any of the events above, the Trustee at its discretion may, and if so

requested in writing by the Debenture holders of at least one fifth in nominal

value of the Debenture outstanding or if so directed by a Special Resolution

of the holders, shall give notice to the BOC that the Debentures become

immediately due and payable at their principal amount, together with

accrued interest as provided in the Trust Deed.

(b) Repayment before the maturity of the principal sum on the Debentures or any part

thereof in any circumstance shall be subject to the prior approval of the Debenture

holders of 3/4th of the face value of the Debentures outstanding at that time and the prior

written consent of the Central Bank of Sri Lanka.

13. ENFORCEMENT OF OBLIGATIONS

At any time after the Debentures shall have become repayable on maturity or otherwise under

any provision of these Presents, the trustee may at its discretion, or upon the request in writing of

the Debenture holders of at least one fifth (1/5) of the face value of the Debentures outstanding,

and in the event that there is no Trustee, the Debenture holder s pursuant to an Extra Ordinary

Resolution and without any further notice, may institute such proceedings as they think fit to

enforce repayment obligations of BOC under these Presents.

Provided that nothing in these Presents shall preclude a Debenture holder from initiating legal

action on his own right.


14. APPLICATION OF MONIES RECEIVED BY THE TRUSTEE

In the event of the Trustee recovering or receiving any monies from BOC consequent to any

action taken by the Trustee against BOC the Trustee shall apply such monies,

(a) In the first place in paying or providing for the payment or satisfaction of the costs charges expenses and liabilities incurred in or about the execution of the trust constituted by

these presents (including remuneration of the Trustee)

(b) Secondly, in or towards payment to the Debenture holders of all arrears of interest

remaining unpaid on the Debentures held by them respectively.

(c) Thirdly in or towards payment to the Debenture holders of all principal monies due in respect of the Debentures held by them respectively and

(d) Finally, the Trustee shall pay the surplus (if any) of such monies to BOC or its assigns, PROVIDED that at the discretion of the Trustee payments may be made on account of principal monies before any part of the interest or the whole of the interest on the Debentures have been paid but such alteration in the order of payment of the principal monies and interest shall not prejudice the right of the Debenture holder to receive the full amount to which they would have been entitled if the ordinary order of payment had been

observed. Any payment to the Debenture holders under this clause shall be made pari

passu in proportion to the Debentures held by them respectively.

15. MANNER OF PAYMENT & ENFORCEMENT OF DEBENTURES

Any payment to be made in respect of the Debentures by BOC or the Trustee may be made in the manner provided in this trust Deed and any payments so made shall be good discharge pro tanto

to BOC or the Trustee, as the case may be. Any payment of interest in respect of a Debenture shall extinguish any claim which may arise directly or indirectly in respect of such interest from a

Debenture holder.

Upon any payment under the provisions of Clause 14 the Debentures in respect of which such payment is made in full shall be produced to the Trustee through whom such payment is made and BOC shall call such Debentures to be cancelled and shall certify or procure the certification of

such cancellation.

16. REMUNERATION OF THE TRUSTEE

BOC shall pay the Trustee during the continuation of these presents a sum of Sri Lankan Rupees

Two Hundred and Fifty Thousand (LKR 250,000/-) per annum plus the applicable Government

Taxes on account of remuneration for the Trustee for its services under these presents. The said

fee shall be paid at the expiry of every one (01) year period commencing from the date of



Further, the trustee shall be entitled to reimbursement of all reasonable costs, charges and expenses which the Trustee may incur in relation to the exercise of its duties hereunder from and out of the funds lying to the credit of the Trust hereby created.

17. POWERS AND DUTIES OF THE TRUSTEE

Without prejudice to the powers and reliefs conferred on Trustees by general law by these presents or by the laws relating to the Trusts the trustee shall have the following powers:-

(a) The Trustee is duly qualified to act as the Trustee

(b) The Trustee may in relation to these presents act on the opinion or advice of or a certificate or any information obtained from any lawyer, banker, valuer, surveyor, broker, auctioneer, auditor, accountant or other expert (whether obtained by the Trustee or BOC) and shall not be responsible for any loss occasioned by acting on any such opinion, advice, certificate or information and that the Trustee shall not be liable for acting on any opinion, advice, certificate or information purporting to be so conveyed although the same shall contain some error as long as the Trustee has acted in good faith, if it has reasonable grounds for believing that such auditor of officer was competent to give or make such certificate, report or statement.

(c) The Trustee shall as regards all the trusts, powers authorities and discretion vested in it by these presents or by operation of law, have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and the Trustee shall not be responsible for any loss, costs, damages, expenses or inconvenience that may result from the exercise or non exercise thereof but whether the Trustee is under the provisions of these presents bound to act at the request or direction of the Debenture holders the Trustee shall nevertheless not be bound unless first indemnified to its satisfaction against all actions, proceedings, claims and demands to which it may render itself liable and all costs, charges, damages, expenses and liabilities which it may incur by so doing. However nothing in this Clause shall preclude a Debenture holder from filing action on his own if he so wishes;

(d) To summon any meeting of the Debenture holders in accordance with the provisions of Clause 21 hereof.

(e) Where an event of default has occurred and is continuing to occur, the Trustee shall exercise such right and powers vested in it by the Trust Deed and use a reasonable degree of skill and diligence in exercising such powers

(f) In case of default by BOC, the Trustee may but shall not be bound unless directed either by an instrument in writing signed by the Debenture holders of at least Seventy Five per centum (75%)


of the face value of the Debentures for the time being outstanding or in accordance with a

Resolution passed by the Debenture holders in accordance with Clause 21 of these

presents, to waive such terms and conditions as they shall deem expedient any of the covenants and provisions contained in these the part of BOC to be performed and

observed.

(g) The Trustee as between itself and the Debenture holders shall have full power to determine all questions and doubts arising in relation to any of the provisions of these

presents and every such determination, whether made upon a question actually raised

or implied in the acts or proceedings of the Trustee. If a Debenture holder is not satisfied with the said determination provided by the Trustee then the Debenture holder may

challenge such determination in a court of law.

PROVIDED

Such debenture holder has the written consent of the Debenture holders of a t least Ten

per centum (10%) of the face value of Debentures for the time being utstanding.

Such application to Court of law is instituted within Thirty (30) days of notification of

such determination to the Debenture holders.

(h) Trustee is not liable for anything done or omitted to be done in accordance with a direction given to the Trustee by the Debenture holders at any meeting called.

(i) The Trustee may, in the conduct of the trusts of these presents, instead of acting through

its staff, employ and pay a professional person, to transact or conduct, or concur in

transacting or conducting, any business and to do or concur in doing all acts required to

be done by the Trustee.

(j) The Trustee shall not be liable to BOC or any Debenture holder by reason of having recognized or treated as a Debenture holder any person subsequently found not to be so

entitled to be recognized or treated:

(k) Whenever in these presents the Trustee is required in connection with any exercise of its

powers, trusts, authorities or discretions to have regard to the interests of the Debenture

holders, it shall have regard to the interests of the Debenture holders as a class and in

particular, but without prejudice to the generality of the foregoing, shall not be obliged to have regard to the consequences of such exercise for any individual Debenture holders

resulting from his or its being for any purpose domiciled or resident in, or otherwise

connected with, or subject to the jurisdiction of, any particular territory, and

(l) The Trustee may, accept a certificate signed by a Deputy General Manager and an Assistant General Manager of BOC certifying that all Debentures have been

redeemed or relating to any other matter primarily in the knowledge of BOC as

sufficient evidence thereof and such Certificate shall be a complete protection to the

Trustee who acts thereon.

Special

.................................................................


(m) The Trustee shall give notice in writing to the Debenture holders as and when the Trustee

is notified by BOC of any occurrence mentioned in Clause 12(a) or any condition of the

Trust Deed which cannot be fulfilled.

PROVIDED nevertheless that none of the provisions of these presents shall in any case

in which the Trustee has failed to show the degree of care and diligence required by it,

having regard to the provisions of these presents, conferring on the Trustee the powers,

authorities or discretions, relieve or indemnify the Trustee against any liabilities which by

virtue of any rule of law would otherwise attach to it in respect of any negligence , default ,

breach of duty or breach of trust of which it may be guilty in relation to its duties under

these presents.

PROVIDED FURTHER that it shall exercise reasonable diligence to ascertain whether

the BOC has committed any breach of the terms and conditions of the Debentures or

provisions of the Trust Deed or whether an event of default has occurred or is continuing

to occur, on perusal of the documents submitted in terms of the covenants set out in the

Trust Deed.

The Trustee's role shall be passive prior to the Trustee being notified of any occurrence

of an Event of Default and the Trustee shall not have any other duty apart from those

expressly stated herein.

For the avoidance of doubt, the Trustee shall not be considered, nor have any

responsibility or liability, as a lender or borrower. The obligation to repay any debts owing

to Debenture holders shall remain with the BOC and the Trustee shall not be liable nor

responsible for any act, omission or default of the BOC nor any other party. The Trustee

shall also not be liable for any loss due to any cause beyond its control, nor to take any

action in relation to any event of default, which it is not aware of, nor for consequential or

indirect loss, nor for market loss, risk or movement affecting any investments. The BOC

shall fully indemnify the Trustee for any liability, claim, expense, damage or loss that the

Trustee may incur in connection with this Trust Deed, save where such liability or loss is

due solely to the negligence or willful misconduct of the Trustee. The Trustee shall be

entitled to rely and act on any document or instrument which it has received from BOC

and to treat it as authentic and authorized unless the Trustee has actual notice otherwise.

In performing its duties, the Trustee shall maintain the confidentiality of confidential

information received by it, but the Trustee may disclose any such information to a branch,

head office, subsidiary or agent of the Trustee on a need to know basis in connection with

this Trust Deed, to any government body or court and/or to any party in accordance with

the requirement of a law, regulatory directive or regulation.


(n) The Trustee shall ensure that all documents required to be submitted by BOC in terms of

the covenants set out in the Trust Deed are forwarded in a timely manner.

EXEMPTIONS AND INDEMNIFICATIONS OF TRUSTEE FROM LIABILITY

Terms and conditions of the Debentures and provisons in the Trust Deed or a term of a

contract with the Debenture Holdsers secured by the Trust Deed, shall be void in so far as the

term or provision would have the effect of indemnifying the Trustee against that liablility,

unless the term or provision:

Releases the Trustee from liability for something done or omitted to be

done before the release is given; or

Enables a meeting of debenture holders to approve the release of the Trustee from

liability for something done or omitted to be done before the release is given.

Such release will be effective when approved by Debenture holders if

the Debenture holders who vote for the resolution represent 75% of the

nominal value of the Debentures

18 APPOINTMENT AND REMOVAL OF THE TRUSTEE

(a) Subject to the provisions of this Trust Deed, the power of appointing new

trustees shall be vested in BOC, provided further that BOC shall obtain the

approval of Debenture Holders holding not less than ten per centum (10%) of the

nominal value of the Debentures for the time being outstanding prior to the

appointment of the new trustee. Notice of such appointment shall be given to the

Debenture Holders within thirty (30) days of such appointment by an

advertisement published in national newspapers in all three languages (Sinhala,

Tamil and English) of BOC's choice circulating in Sri Lanka.

(b) In the event BOC does not or cannot exercise its powers to appoint a new

trustee and there being no new trustee appointed as of thirty (30) days

before the removal/retirement of the Trustee taking effect in accordance with

the terms hereof, the Debenture Holders of not less than Twenty percent 20% of

the nominal value of the Debentures in issue may convene a meeting to appoint

a new trustee by an ordinary resolution.

(c) Any removal of a Trustee and the subsequent appointment of a replacement

Trustee by the BOC shall be with the consent 75% of majority of Debenture

Holders.


(d) In the event of the Debenture Holders not being satisfied with the Trustee, they have the right to remove the Trustee by way of a special resolution passed at a General Meeting

convened under Clause 21 hereof.

(e) BOC shall be notified of any removal of the Trustee and subsequent appointment of a

replacement Trustee by the Debenture holders.

(f) BOC shall take reasonable steps to replace the Trustee as soon as possible after

becoming aware that:

(i) The Trustee has ceased to exist

(ii) The Trustee is in the situation of conflict of interests

(iii) The Trustee has ceased to perform its function as a Trustee

(iv) The Trustee is in the situation of unsuitability and does not eliminate such situation

within 90 days, after them ascertaining or of them been informed that the Trustee has

such situation.

(g) In the event the Trustee discovers that it is not eligible to be appointed or act as Trustee,

the Trustee shall give notice in writing to BOC regarding the same.

19 COMPLIANCE OF MAJORITY OF TRUSTEES

If there be more than one Trustee under these presents the Trustees shall with majority consent exercise all or any of the trust's powers and discretions vested in the Trustees generally under any Clause of these presents.

20 RETIREMENT OF TRUSTEE

In the event of the Trustee, in its sole and absolute discretion, desiring to retire, the Trustee shall

give not less than 90 days notice to BOC in writing to that effect, and BOC shall thereupon appoint

a new Trustee in accordance with Clause 18 of these presents. The Trustee shall continue in its

capacity as Trustee until such time a new Trustee is appointed.

In the event of such a retirement, the Trustee at its cost shall publish a notice to this effect in

Newspapers in all three languages (Sinhala, Tamil and English) of its choice circulating in Sri Lanka and such notice shall be deemed to be sufficient notice to the Debenture holders

notwithstanding anything to the contrary herein contained.


21 MEETINGS OF DEBENTURE HOLDERS

(a) The Trustee shall call a meeting/cause a meeting to be called of Debenture holders with notice to BOC and all Debenture holders on a requisition being received in writing signed

by the Debenture holder (s) of at least 1/5th of the face value of the Debentures for the

time being outstanding or if requested by BOC.

Furthermore, BOC is entitled to convene a meeting with the consent of at least one-tenth

in nominal value of the Debentures outstanding.

(b) Not less than 21 days notice shall be given of a meeting for the purpose of passing a

Resolution.

(c) The quorum for the meeting (other than adjourned meeting) for the purpose of passing a

Special Resolution shall be the Debenture holders representing 10% of the face value of

the Debentures for the time being outstanding, provided however, that the quorum for passing an Extraordinary Resolution should be the holders of a clear majority in face

value of the outstanding Debentures present in person or by proxy or by attorney.

(d) If such a quorum cannot be obtained, such meeting shall be adjourned for not less than

fourteen (14) days in which event notice of adjourned meeting shall be sent to every Debenture holder and shall state in such notice that if a quorum as above defined shall not be present at the adjourned meeting the Debenture holders then present shall form a

quorum.

(e) The necessary majority for passing a Special Resolution shall not be less than 3/4ths of the persons voting thereat on a show of hands and if a poll is demanded then not less

than 3/4ths of the votes given on such poll.

(f) On a poll, each Debenture holder will be entitled to one vote for each unit of Debenture

held by such person.

(g) A proxy need not be a holder of the Debentures.

(h) The Trustee shall be the chairman of any meeting of the Debenture holders and shall appoint a person or body to act as a Secretary of such meeting and a copy of a resolution certified by the Trustee and such Secretary shall deem to be conclusive evidence that

such Resolution has been duly adopted.

(i) In the event BOC fails to remedy any breach of terms and conditions of the Debentures

or the provisions/covenants of the Trust Deed, the Trustee shall:


Call a meeting of the Debenture Holders with notice to BOC

Inform the Debenture Holders of the failure at the meeting; and

Submit proposals for the protection of the Debenture holder's interests or call for proposals from the Debenture Holders at the meeting, as the Trustee considers necessary or appropriate and obtain the directions

22 MODIFICATION OF THE TRUST DEED

The Trustee and BOC may modify by mutual agreement to these presents provided such

modifications are of a routine nature and not detrimental to the interests of the Debenture holders. Provided however that any modification to these presents shall only be made with the consent of

the Debenture holders of at least 3/4ths of the face value of the Debentures for the time being

outstanding.

23 NOTICES

Any notice or demand to BOC, Debenture holder(s) or the Trustee required to be given, made or

served for any purpose hereof shall be given, made or served by sending the same by prepaid registered post in the case of BOC or Trustee and by prepaid ordinary mail in the case of

Debenture holder(s), telegrams, cablegrams, telex or by facsimile transmission or by delivering it

by hand to BOC. Debenture holders or the Trustee as the case may be, in the case of BOC or the

Trustee at the address shown in this Deed and in the case of Debenture holder(s) to the address

which is recorded in CDS for the purpose of this Clause, and any notice sent by post as provided

in this Clause shall be deemed to have been given, made or served 72 hours after dispatch and

any notice sent by telegrams, cablegrams, telex or by facsimile transmission as provided in the

clause shall be deemed to have been given, made or served at the time of dispatch and in proving

the giving, making or service of the same it shall be sufficient to prove, in the case of a letter, that

such letter was properly stamped, addressed and placed in the post and, in the case of a

telegrams, cablegrams, telex or by facsimile transmission that such telegrams, cablegrams, telex or by facsimile transmission was duly dispatched and received in the readable and

understandable condition.

The Trustee shall at any time be entitled to give notice of any meeting or make any communication to the Debenture holders by notice published in Newspapers in all three

languages (Sinhala, Tamil and English) of its choice circulating in Sri Lanka and such notice will notwithstanding anything to the contrary herein contained be deemed to be sufficient notice to the

Debenture holders including the provisions of the above clause.

24 MISCELLANEOUS

(a) Nothing in the provisions of these presents shall require disclosure to the Trustee by

BOC of any information as to the affairs of any of its customers except,


(i) when required to do so by a Court of Law, or

(ii) in order to comply with any of the provisions of any Law.

PROVIDED however that BOC shall be obliged to furnish to the Audit Firm referred to in the clause 11(b) information in respect of BOC's books of accounts.

(b) In the event of any inconsistency between these provisions and any rules, regulations or

directions of the Securities & Exchange Commission of Sri Lanka, or the Colombo Stock

Exchange such rules, regulations or directions shall prevail.

IN WITNESS WHEREOF the authorized signatures of the Bank of Ceylon and Deutsche Bank AG, Colombo Branch have set their hands hereunto and to three others of the same tenor and date as these

presents at Colombo on the day herein before mentioned.

Signed for and on behalf of the Bank of Ceylon

By its duly authorized representatives

Pitumpe Appuhamilage Lionel

(Deputy General Manager - International Treasury & Investment)

Hettiarachchige Sunil Jayawardana

(Asst General Manager-Investment Operations)of the Bank of Ceylon

Witnesses:

1. Sgd

2.Sgd

Signed for and on behalf of the Deutsche Bank AG, ColomboBranch By its duly authorized representatives and attorneysSellapperumage Ruwanthi Prisca Shirlene Fernando and

Tyrone Hannan of the said Deutsche Bank AG, Colombo branch

Witnesses:

1.Sgd

2.Sgd


Annexure III


Annexure V

dfccstockbrokers.com

Web : www.asiacapital.lk

Level 04, Millennium house, 46/58

Nawam Mawatha, Colombo - 2

Mallory Stock Brokers

011 5732222

0112 326003, 2338066-7

Web site : www.jksb.keells.lk


[email protected]

ssb@web_lk.com

DP Global Securities (Pvt) Ltd.

3rd Floor, Forbes & walker Building 46/38, Nawam Mawatha, Colombo 02Tel : 4 700111, 2307366Fax : 4 700112, 2307365E mail : [email protected] : www.dpgsonline.com


[email protected]

375/3, Galle Road, Colombo 3

0112 372415-6 0115 371139

[email protected]

0115 539593

[email protected]

109

No. 14, Reid Avenue, Colombo 7

0112675200

Ceylinco Stockbrokers (Pvt) Ltd

Ceylinco House, Level 9, 69, Janadhipathi MawathaColombo 1 Tel : 4714300, 4714388,Fax : 2387228Email : [email protected]

532/4F, Srikotha Lane, Galle Road,Colombo -3Tel : 2372561-4Fax : 2362565 Email : [email protected] : www.asl.lk

Amana Securities Limited


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