Circular to Shareholders Pertaining to the Proposed Issue of BASEL III Compliant Green Bonds

THIS DOCUMENT IS OF VALUE – If you are in any doubt as to the action you should take, you should consult your stockbroker or other professional adviser immediately.

Dear Shareholder/s,

The Commercial Bank of Ceylon PLC (the “Bank”) made a profit of Rs. 54, 074 Mn. (Group Rs. 55,686 Mn., as per the Audited financial statements) for the year ended December 31, 2024. Total shareholders’ funds improved to Rs. 275,262 Mn. (Group Rs. 285,819 Mn., as per the Audited Financial Statements) as of December 31, 2024 from Rs. 214,931 Mn. (Group Rs. 224,974 Mn., as per the audited financial statements) as of December 31, 2023. Figures shown herein are extracted from published Financial Statements.

The Board of Directors of the Bank, having identified the need to strengthen the Tier 2 Capital of the Bank as per Basel III requirements and in order to facilitate expansion of the Green Lending Portfolio, pursuant to a resolution, adopted on January 30, 2025, decided to initiate, and also to recommend to shareholders,

AN ISSUE OF BASEL III COMPLIANT – TIER 2 LISTED RATED UNSECURED SUBORDINATED REDEEMABLE 5 YEAR, 7 YEAR AND 10 YEAR GREEN BONDS WITH A NON-VIABILITY CONVERSION TO ORDINARY VOTING SHARES TO BE ISSUED BY THE BANK, SOLELY IF INSTRUCTED TO DO SO BY THE GOVERNING BOARD OF THE CENTRAL BANK OF SRI LANKA ON OCCURRENCE OF
A TRIGGER EVENT.

The proposed issue is to raise a sum of Rupees Ten Billion (Rs. 10,000,000,000/-) through the issuance of up to One Hundred Million (100,000,000) Basel III Compliant - Tier 2 Listed Rated Unsecured Subordinated Redeemable Green Bonds with a Non-Viability Conversion feature, each with a par value of Rs. 100/-, with an option to raise up to a further Rupees Five Billion (Rs. 5,000,000,000/-) through the issuance of up to a further Fifty Million (50,000,000) Green Bonds, each with a par value of Rs. 100/- in the event of an over-subscription of the initial issue (hereinafter collectively called the “Green Bonds” or “Bond Issue”). Based on the asset value referred to in Section 6 hereof, the proposed issue does not constitute a major transaction for the Bank as defined in Section 185 of the Companies Act No. 07 of 2007 (as amended).

The proposed Green Bonds will be redeemed after 5 years, 7 years and 10 years from the date of allotment of such Bonds and the principal sum and accrued interest (if any) payable on the redemption of such Green Bonds will be paid not later than three (03) market days from the date of redemption, unless a Trigger Event occurs as described in this circular.

The proposed issue of Green Bonds is subject to the approval of the Colombo Stock Exchange and the Central Bank of Sri Lanka and are to be issued under rules and regulations promulgated by the Colombo Stock Exchange and the Central Bank of Sri Lanka, including guidelines issued in relation to Basel III compliance in the Banking Act Directions No. 1 of 2016 issued by the Central Bank of Sri Lanka as may be amended from time to time.

The Bank is in the process of obtaining an expected Rating from Fitch Ratings Lanka Limited for the proposed Bond Issue. The final rating for the proposed Bond Issue with a convertibility feature in compliance with Basel III requirements will be issued by Fitch Ratings Lanka Limited. Issuance of this rating will be subject to the adoption of a Special Resolution by the Shareholders of the Bank, at the Extraordinary General Meeting (EGM) that is being convened, and receipt of approval of the Central Bank of Sri Lanka (CBSL). The final Rating Report will be incorporated in the Green Bond Prospectus.

1. OBJECTIVES OF THE PROPOSED BOND ISSUE

The Bank expects to use the funds raised through the Green Bonds to strengthen Tier 2 capital of the Bank and to expand the Green Lending portfolio of the Bank by extending new green lending facilities and refinancing of eligible green projects with a look-back period of no longer than three years from the date of allotment of the Green Bonds. Out of the proceeds from the Green Bond Issue, the Bank will allocate up to a maximum of 50% of the funds for refinancing of eligible green projects.

Funds raised through this Bond Issue are expected to improve the Capital Adequacy of the Bank. The medium to long term duration of the Bonds and the subordinated nature of the instrument issued in compliance with Basel III requirements will enable the Bank to strengthen the Tier 2 Capital Base as per Basel III requirements. Approval will be obtained from the Central Bank of Sri Lanka to include the Basel III compliant Green Bonds under Tier 2 capital.

Since the Green Bonds proposed to be issued are of a medium to long term nature, being of tenures of 5, 7 and 10 years, the raising of funds through Green Bonds can be expected to reduce the mismatch between medium to long term Green Loans which are funded
by short-term liabilities.

The Bank intends to use the proceeds of the Bond Issue exclusively for financing or re-financing green projects as defined in the Sustainable Bond Framework of the Bank [which is in line with the Principles issued by the International Capital Markets Association with regard to Green and Blue Bonds (ICMA)], and thereby expand the Bank’s Green Lending portfolio in the ordinary course of business over a period of twelve (12) months. Considering the Bank’s current Green Lending activities, there are sufficient projects which qualify as green projects as defined in the Sustainable Bond Framework of the Bank. The Bank’s average monthly rupee disbursements of the Green Lending Portfolio for the three months ended December 31, 2024 stood at Rs. 28.62 Bn. Therefore, it is unlikely that the Bank would not be able to lend the Bond proceeds within a period of twelve (12) months.

The Bank as at date of this circular has not recognised related parties for the lending of the Bond proceeds and therefore plans to disburse the Bond proceeds in the ordinary course of business. However, in the event the Bank lends funds raised through this Bond Issue to related parties, the Bank will comply with the requirements stipulated under Section 9 of the Colombo Stock Exchange (CSE) Listing Rules (as applicable). Further, in the event these Bonds are allotted to related parties, the Bank shall comply with all applicable laws/ regulations in this regard.

Current Capital Adequacy Status

The Bank is in compliance with the Basel III requirements as at December 31, 2024.

*CAR = Capital Adequacy Ratio

The minimum Capital Adequacy requirements under Basel III are as follows:

** CCB = Capital Conservation Buffer
*** D-SIB = Domestic Systemically Important Banks

Bank is in compliance with the Basel III minimum Capital Adequacy requirement as at December 31, 2024.

Further the Bank has decided to raise additional capital in order to accommodate future growth. As such, the subordinated funds raised through this Bond Issue in compliance with requirements under Basel III, are expected to further improve the Capital Adequacy Ratio of the Bank by increasing its Tier 2 Capital base thus strengthening its Total Eligible Capital as per Basel III requirements.

Regulatory aspects regarding Basel III compliant Subordinated Green Bonds.

As per Banking Act Directions No. 1 of 2016 issued by the Central Bank of Sri Lanka, subordinated debt issued by licensed commercial banks needs to be compliant with Basel III requirements effective from July 1, 2017 in order to qualify as Tier 2 Capital. According to Basel III guidelines, all subordinated debt issuance should have either a conversion feature allowing conversion to equity or a write-down feature. The Bank is therefore of the view that a Non-Viability Conversion feature should be included in the proposed Bonds, and that such conversion, if applicable, should be to Ordinary Voting Shares of the Bank upon occurrence of a Trigger Event.

The conversion of Bonds to Ordinary Voting Shares will be in accordance with the applicable laws and regulations of Sri Lanka and the new shares will, subject to the approval of the Colombo Stock Exchange, be listed and will be subject to the instructions of the Central Bank of Sri Lanka with regard to application of the Single Holder Limit at the time of conversion of the Bonds in to Ordinary Voting Shares of the Bank.

Regulatory aspects regarding Green Bonds

• The utilisation of the Tier 2 Green Bond Proceeds shall be restricted to the Green Lending activities.
• As per the current Listing Requirements related to Sustainable Bonds, the Bank should adhere to at least one of the following International Sustainable Bond Standards,
  • Principles issued by the International Capital Markets Association with regard to Green and Blue Bonds (ICMA)
  • The European Green Bond Standard (EUGBS)
  • Climate Bonds Initiative Standards (CBI Standards)

The Bank’s Sustainable Bond Framework adheres to ICMA principles.

• Further, the Bank shall appoint an Independent External Verifier to provide the following.
  • Pre issuance – External Verification
  • As per the CSE Listing Rule 2.2.1 (l) (c), the Bank is required to obtain an independent Assurance Statement on its Sustainable Bond Framework from an Independent External Verifier prior to the issue. The Bank is currently in the process of obtaining an independent Assurance Statement from an Independent External Verifier to comply with the said Listing Rule of the CSE.
  • In addition, the Bank has already obtained a Second Party Opinion (SPO) for the Sustainable Bond Framework. Therefore, in a situation where the prevailing CSE Listing Rules at that time recognise SPO as an external verification, the Bank will be in a position to proceed with the Green Bond Issue without obtaining a pre issuance independent Assurance Statement.
  • Post Issuance – Periodic External Verifications
    Following the successful issuance of the Green Bond, the Bank is required to obtain external verifications on the periodic post issuance reports in connection with the Green Bond such as allocation reports and impact reports.

The issue of Green Bonds is governed under Sustainable Bond Framework of the Bank that adheres to the ICMA principles.

Note – As per the Banking Directions Act No 01 of 2016, the investors of the Basel III compliant Green Bonds have no rights to accelerate the repayment of future scheduled payments (either coupon or principal), except in bankruptcy and liquidation of the bank. Therefore, CSE Listing Rule 7.12.3 A II (d) (payment of maturity proceeds to dissenting bondholders) or any other Rule which could accelerate the repayment of future scheduled payments or any other Sustainable Bond features (or Green Bond features, depending on the prevailing terminology in the CSE Listing Rules at such point of time) that are non-consistent with CBSL requirements that are specific to Basel III compliant debentures shall not be applicable to these Basel III compliant Green Bonds.

3. BENEFITS FOR THE BANK AND ITS SHAREHOLDERS THROUGH ISSUING BASEL III COMPLIANT GREEN BONDS

• Issuance of Basel III compliant Green Bonds will improve the capital adequacy ratios of the Bank.
• The funds raised through the proposed Green Bond Issue being of a medium to long-term nature will reduce maturity mismatches in the assets and liabilities portfolios of the Bank.
• Issuance of Basel III compliant Green Bond will raise funds for expansion of the Green Lending portfolio.
• Upon the occurrence of a Trigger Event, any outstanding balance of these Green Bonds including the total par value of the Green Bonds and Green Bond interest accrued and unpaid as at that date will be converted to Ordinary Voting Shares of the Bank. As a result, the Non-Viability Conversion has the effect of acting as a buffer by reducing outstanding claims from liability holders (Green Bond holders) in the event of an occurrence of a Trigger Event.
• Voting rights of the then existing Ordinary Voting Shareholders are not altered as long as the Non-Viability Conversion Bonds are not converted into Voting Shares of the Bank, and to the extent that a Trigger Event does not occur, the issuance of these Green Bonds is a suitable instrument to improve capital adequacy and fund growth without resorting to a new issue of equity.
• Expand the Green Lending portfolio and will support the Bank’s efforts on sustainable initiatives while strengthening the brand image with regards to the same aspect.

4. ISSUANCE OF BASEL III COMPLIANT GREEN BONDS

In order for the Bonds to be recognised as Tier 2 Capital of the Bank under Basel III as described in the Banking Act Directions No. 1 of 2016 issued by the Central Bank of Sri Lanka, the Bonds are required to have the following minimum features:

• Issued and fully paid in cash
• Listed on a recognised stock exchange
• Redeemable
• Subordinated to the claims of depositors and general creditors
• Unsecured and not covered by a guarantee or any other arrangement that legally or economically enhances the seniority of the claim above the depositors and general creditors of the Bank.
• Issued with the prior approval from the Central Bank of Sri Lanka for inclusion in Tier 2 Capital
• A minimum tenure of 5 years
• Rated by an acceptable Rating Agency
• Have a feature through which, in the event that the Central Bank of Sri Lanka determining that it is appropriate and in the best interest of the Bank and therefore so directs the Bank to convert the Bonds into Ordinary Voting Shares of the Bank such that through issuance of these new Ordinary Voting Shares the new shares issued will cover the total outstanding under the Bonds (resulting from the “Trigger Event” referred to in this circular).
• The investors in the Bonds have no rights to accelerate the repayment of future scheduled coupons, except in bankruptcy and liquidation of the Bank.
• Neither the Bank nor a banking group over which the Bank exercises control or significant influence can have purchased the instrument and the Bank cannot directly or indirectly have funded the purchase of the instrument.

In order for the Bonds to be recognised as Green Bonds, the proceeds shall be used exclusively for financing or re-financing green projects that generate climate and other environmental benefits (i.e., must be utilised for the Bank’s Green Lending activities). Therefore, unlike a conventional Tier 2 Bond, proceeds raised through the Green Bond cannot be utilised for other lending portfolios.

The Bank may consider allotting up to seventy-five per centum (75%) of the issue value on a preferential basis to identified Qualified Investors of strategic importance.

5. ELIGIBLE INVESTORS FOR BASEL III COMPLIANT GREEN BONDS

Investment and trading in Basel III compliant Green Bonds will be limited to Qualified Investors, as per Colombo Stock Exchange Listing Rule No. 2.2.1 (n) and as defined in the Definitions section of the Listing Rules as “Qualified Investor”.

A Qualified Investor for the purpose of determining eligibility to invest in issuances of Basel III compliant Green Bonds shall be:

• A commercial bank licensed by the Central Bank of Sri Lanka in terms of the Banking Act No. 30 of 1988 (as amended)
• A specialised bank licensed by the Central Bank of Sri Lanka in terms of the Banking Act No. 30 of 1988 (as amended)
• A mutual fund, a pension fund, Employee Provident Fund or any other similar pooled fund
• A venture capital fund/company and private equity company
• A finance company licensed by the Central Bank of Sri Lanka in terms of the Finance Business Act No. 42 of 2011 (as amended)
• A company licensed by the Central Bank of Sri Lanka to carry on finance leasing business under the Finance Leasing Act No. 56 of 2000 (as amended)
• A company licensed by the Insurance Board of Sri Lanka to carry on insurance business in terms of the Regulation of Insurance Industry Act No. 43 of 2000 (as amended)
• A corporate (listed or unlisted) which does not fall under the above categories and is incorporated under the Companies Act No. 07 of 2007 (as amended)
• An investment trust or investment company
• A non-resident institutional investor
• An individual with an initial investment of Rs. 5,000,000/-

6. SPECIFIC RISKS CONSIDERING THE OBJECTIVES OF THE ISSUE

Since the proposed total Green Bond Issue is to raise up to Rs. 15 Bn. which is a relatively small amount as compared to the overall assets of Rs. 2,789.78 Bn. and liabilities of Rs. 2,514.52 Bn. of the Bank as at December 31, 2024 (as per the audited financial statements), there is no specific risk factor that may lead to non-achievement of the objectives as per the stipulated timelines, since the reliance on the Green Bond proceeds for asset growth is marginal. However, an adjustment in asset growth and in maturity mismatch reduction may result to the extent that capital adequacy is not improved due to an under-subscription of the issue.

Until full disbursement of the Bond proceeds, the funds raised through the Bond Issue will be invested in Short Term Securities. Such investments in Short Term Securities are expected to generate an average return of 7.5% p.a. at current market rates. In the event the funds are not utilised for the Objective of the issue, Bonds shall cease to be recognised as Green Bonds as per Rule 7.12.3 (A) (II) (f) of the CSE Listing Rules. As per the Banking Directions Act No 01 of 2016, the investors of the Basel III compliant Green Bonds have no rights to accelerate the repayment of future scheduled payments (either coupon or principal), except in bankruptcy and liquidation of the Bank. Therefore, CSE Listing Rule 7.12.3 A (II) (d) (payment of maturity proceeds to dissenting bondholders) or any other Rule which could accelerate the repayment of future scheduled payments shall not be applicable to these Basel III compliant Green Bonds.

In the event the proposed Bond Issue is under-subscribed, the Bank may have to adjust asset growth to comply with Basel III requirements. However, under-subscription is not envisaged since there has been reasonable demand for recent Bond Issues of the Bank. No further Shareholder approval will be needed in the event the proposed Bond Issue is not fully subscribed for or if the timelines stated above are amended as thought fit by the Bank.

7. CONTINUING DISCLOSURE REQUIREMENTS

The Bank undertakes to disclose the progress of the utilisation of the proceeds of the proposed Bond Issue in the Annual Report/s and future interim Financial Statements until funds raised through the proposed Bond Issue are fully utilised. The format of the relevant disclosures to be made shall be disclosed in the Prospectus.

Reporting requirements as per the Bank’s Sustainable Bond Framework

Allocation reporting

The Bank intends to make and keep readily available sustainable bond reporting after a year from the issuance, to be renewed annually until full allocation. Bank intends to report the allocation of the sustainable bond proceeds to the sustainable loan portfolio, at least at the category level and on an aggregated basis for all the Bank’s sustainable bonds and also impact created by sustainable bond proceeds. The Bank will publish a Green/Sustainable bond report on Bank’s website and the Bank may aim at aligning the timing of Sustainable Bond report/information with other investor directed publications such as Annual Report.

The Green Bond report will include (but not limited to) the following:

• The amount of net proceeds allocated to each green project/social project either individually or by category, subject to confidentiality consideration.
• Expected impact metrics, where feasible
• The outstanding amount of net proceeds to be allocated to eligible green projects/social project at the end of the reporting period
• Types of temporary investment instruments for the balance of unallocated proceeds

Impact reporting

Wherever applicable for impact reporting, this framework will be guided by the ICMA handbook on “Harmonised Framework for Impact Reporting”. An indicative list of impact indicators is depicted below:

Potential impact metrics

The Bank shall comply with the applicable reporting requirements of the CSE Listing Rules, namely the CSE Listing Rule 7.6 (xviii) and 7.12.3 A (I).

8. TERMS AND METHOD OF CONVERSION

Occurrence of “Trigger Event”

A “Trigger Event” is determined by and at the sole discretion of the Governing Board of the Central Bank of Sri Lanka (i.e. conversion of the said Bonds upon occurrence of the Trigger Event will be effected by the Bank solely upon being instructed by the Governing Board of the Central Bank of Sri Lanka), and is defined in the Banking Act Directions No. 1 of 2016 of Web Based Return Code 20.2.3.1.1.1(10) (iii) (a & b) as a point/event being the earlier of:

• “A decision that a write-down, without which the Bank would become non-viable, is necessary, as determined by the Governing Board of the Central Bank of Sri Lanka.
• The decision to make a public sector injection of capital, or equivalent support, without which the Bank would have become non-viable, as determined by the Governing Board of the Central Bank of Sri Lanka”

The Banking Act Directions No. 1 of 2016 dated December 29, 2016, on the web based returns specify in index reference 20.2.3.1.1.1. (10) (i) that, for such Bonds to be qualified as Tier 2 Capital (under Basel III guidelines) they should have a convertibility clause which enables the Bonds to be converted to Ordinary Shares on the occurrence of a Trigger Event. Furthermore, the Bank is of the view that any conversion of debt to equity upon conversion should have the same rights and privileges of the then existing Ordinary Voting Shareholders (ranking equal and pari passu with the then existing Ordinary Voting Shares) and hence consider it appropriate to effect conversion of the proposed Bonds to Ordinary Voting Shares.

The Bank on receipt of a Trigger Event notification from the Governing Board of the Central Bank of Sri Lanka will immediately make a market announcement of such notification and thereafter announce the “price” and “dates” (such as the Trigger Event date and the date of allotment) pertaining to the pending conversion of Bonds to Ordinary Voting Shares.

Conversion Ratio

Upon the occurrence of the Trigger Event, the Bank shall be required and entitled to issue and allot within twenty (20) days, Ordinary Voting Shares of the Bank ranking equal and pari passu with the then existing Ordinary Voting Shares, to the Bond holders up to the outstanding balance of such Bonds, including the total par value of the Bonds and the Bond interest accrued and unpaid. This will be at a conversion price which will be based on the simple average of daily Volume Weighted Average Price of Ordinary Voting Shares of the Bank as published by the Colombo Stock Exchange, during the three (3) month period, immediately preceding the date of the Trigger Event. The Central Depository System (CDS) upload pertaining to Ordinary Voting Shares will be completed within ten (10) market days from the date of allotment of such Ordinary Voting Shares. In the event if any Bond holder being entitled to a fractional allotment of an Ordinary Voting Share on such issuance and allotment, the Bank shall settle the resulting sums in cash, based on the conversion price within fourteen (14) market days from the date of allotment of the said Ordinary Voting Shares.

Conversion and Trigger

The Bank has decided to use the simple average of the daily Volume Weighted Average Price (VWAP) as indicated above due to its practicality and equitability to all shareholders as a pricing formula for conversion. This formula takes into account the market price over a three (03) month period preceding the date of the Trigger Event thereby lessening the impact of short-term price volatility and the volume impact in pricing. Due to the formula being applied using publicly available data published by the Colombo Stock Exchange, there is a high degree of transparency that results from the adoption of this method.

Ordinary Voting Shares arising from the Non-Viability Conversion will be listed on the Colombo Stock Exchange.

If there is an issuance of Ordinary Voting Shares to the Bond holders upon the occurrence of the Trigger Event, a Bond holder would cease to be a Bond holder and would become a Shareholder of the Bank to the extent of such issuance and will rank equal and pari passu with the then existing Ordinary Voting Shareholders with Voting rights after the allotment of new shares to such Shareholders (being the previous Bond holders) and will rank superior to the Ordinary Non-Voting Shareholders in respect of the voting rights attaching to the shares issued upon conversion.

Subsequent to the Bond holders becoming Shareholders of the Bank, due to the occurrence of the Trigger Event and the resultant conversion, they would be entitled to exercise such rights as are exercisable by the other Shareholders of the Bank holding Ordinary Voting Shares. Once the conversion of Bonds is concluded, the Bonds will cease to exist.

Dilution of Shareholding upon a Conversion of Bonds

In the event of conversion to Ordinary Voting Shares, there would be a dilution of the then existing shareholding percentage held by the then existing Shareholders. However, the extent of the dilution will be dependent on several factors that cannot be determined at this point, as indicated below:

The number of shares to be issued resulting from such a conversion will be determined by the “Conversion Price” at the “Trigger Point” as detailed below.

There will be a dilution impact on the shareholdings of the existing Shareholders.

• If the simple average of the daily Volume Weighted Average Price (VWAP) at the point of conversion is low compared to the prevailing share price, it would result in the allocation of a comparatively higher number of Ordinary Voting Shares by the Bank to the Bond holders, which will dilute the shareholding of existing Shareholders.
• If the simple average of daily Volume Weighted Average Price (VWAP) at the point of conversion is high compared to the prevailing share price, it would result in the allocation of a comparatively lower number of Ordinary Voting Shares by the Bank, which will dilute the shareholding of existing Shareholders to a lesser extent than in the former instance described above.
• In order to avoid dilution of the shareholding of the then existing Shareholders due to a conversion, in the event of there being a likelihood of the occurrence of the Trigger Event, prior to conversion of the said Bonds into Ordinary Voting Shares, the then existing Shareholders will be first called upon to infuse additional share capital and if such infusion is not forthcoming, the proposed Green Bond (i.e. Tier 2 Capital) will get converted in to Ordinary Voting Shares of the Bank upon the determination of the “Non-Viability” point by the Governing Board of the Central Bank of Sri Lanka and upon instructions being issued to the Bank in this regard.
• The extent of dilution of the then existing Shareholders will have to be determined by reference to the number of shares that are in issue at the time of such a conversion. The number of shares that are in issue at the time of a conversion can vary during the tenure of the Bonds due to the issuance of new shares by way of scrip dividends, rights issues, capitalisation of reserves, Employee Share Option Plan schemes and/or any other relevant corporate action.

Pre-emptive Subscription Rights Waiver of pre-emptive rights

In keeping with the Central Bank regulation, it is the Bank’s intention to obtain Shareholder approval for the issuance of Ordinary Voting Shares [which may be required to be issued due to the Governing Board of the Central Bank of Sri Lanka instructing the Bank to exercise the convertible feature attached to these Bonds (the occurrence of the “Trigger Event”)] and to waive the pre-emptive rights of the existing Ordinary Voting Shareholders.

Non-occurrence of a Trigger Event

In the event of a non-occurrence of a Trigger Event these Bonds will be redeemed after 5, 7 and 10 years from the date of allotment of such Bonds and the principal sum and unpaid and accrued interest (if any) payable on the redemption of Bonds will be paid not later than Three (03) Market Days from the date of redemption, unless otherwise a Trigger Event occurs.

9. REASON FOR CONVENING AN EXTRAORDINARY GENERAL MEETING

As per rule No. 2.2.1.m of the Listing Rules of the Colombo Stock Exchange, the Bank is required to obtain the approval of the Shareholders in respect of the proposed Bond Issue by way of a Special Resolution.

It will also be necessary to obtain a waiver of the pre-emptive right to a new issue of shares as prescribed by Article 9 A of the Articles of Association of the Bank by means of a duly passed Ordinary Resolution, in respect of the allotment and issue of new Ordinary Voting Shares by the Bank to the holders of the said Bonds in the case of a Trigger Event which warrants such a conversion of Bonds to Ordinary Voting Shares.

Furthermore, it will also be necessary, in compliance with Section 99 of the Companies Act No. 07 of 2007 (as amended) and Article 10 of the Articles of Association of the Bank, to obtain, by means of a duly passed Special Resolution, approval of the Shareholders in respect of the proposed share issue which may arise pursuant to the conversion of Bonds in the case of a Trigger Event, which may in turn affect the rights attached to the Bank’s existing Ordinary Voting and Non-Voting Shares.

Therefore, an Extraordinary General Meeting of the Bank is being convened in accordance with the Notice of Meeting attached hereto, for the purpose of passing the Resolutions set out therein.

Shareholders who are unable to participate at the meeting are entitled to appoint a proxy to participate at the said meeting and speak and also vote on their behalf, depending on their voting rights. If you wish to appoint such a proxy, kindly complete and return the enclosed Form of Proxy (in accordance with instructions specified therein) to the Bank by facsimile on 011 233 2317 or email to companysecretary@combank.net or by post to Company Secretary, Commercial Bank of Ceylon PLC, “Commercial House”, No. 21, Sir Razik Fareed Mawatha, Colombo 01, not later than forty-eight (48) hours before the time appointed for the holding of the EGM.

By order of the Board of |
Commercial Bank of Ceylon PLC

R A P Rajapaksha
Company Secretary

Colombo
March 05, 2025