The DFCC Bank which is a major shareholder of the Commercial Bank of Ceylon Ltd. (CBC) has moved the Court of Appeal seeking a writ of Certiorari against the Monetary Board of the Central Bank to quash a determination under Declaration No. 1 of 2007 requiring the DFCC to reduce its shareholding in CBC to 15% by Oct. 23 this year, DFCC has announced in an interim statement incorporating its nine month results to Dec. 31, 2007.

``Court has ordered notice to be issued on the Monetary Board and this action is pending,’’ DFCC said in the interim report.

Legal actions have also been filed against DFCC by several parties seeking the reduction of DFCC’s shareholding in CBC, together with that of several other connected shareholders, to an aggregate not exceeding 10%.

The parties to these actions include the Ceylon Bank Employees Union, its president, Mr. M.R. Shah and members of CBC’s Executive Officers Association as well as veteran politican Vasudeva Nanayakkara who has filed a public interest action.

The Appeal Court has issued an interim order in this regard restricting the aggregate voting rights of these shareholders to 10% pending a final determination by the court.

``The bank is defending these actions,’’ DFCC said.

Central Bank Governor Ajith Nivard Cabraal has consistently taken the position that concentration of ownership is detrimental to the banking industry and the bank has been moving to reduce such concentration.

DFCC has slightly over 29% of the Commercial Bank with this shareholding, aggregated with those of other connected parties, rising to 42.6%.

New rules laid down by the Central Bank will also see the exit of 14 directors of different commercial banks who have served over nine years on these boards or are over 75-years old, in a phased out basis.

Eight of these 14 directors are on the board of Seylan Bank.

Cabraal said that not less than two and not more than five bank directors would exit the boards each year under this rule which has been devised to ensure a smooth transition. Considerable pressure has been brought at various levels against these requirements.

Well informed sources said yesterday that with the 10% limitation of voting rights of some major CBC shareholders, the bank’s AGM next month is likely to be adjourned without a quorum. But the articles permit the meeting to be adjourned for a week with a smaller quorum required then.