Power and Property Collide: New Conflict Rocks On’ally Holdings

Four decades after it built the landmark Unity Plaza, On’ally Holdings PLC is once again in the spotlight this time for reasons that reach far beyond its real-estate portfolio. The appointment of Eng. Kumudu Lal, the Chairman of the Urban Development Authority (UDA) and Secretary to the Ministry of Housing, Construction & Water Supply, as Chairman of On’ally Holdings has ignited a fierce governance debate and revived allegations of a serious conflict of interest at the heart of the company.

Founded in 1982 by Onally Gulam Hussain, On’ally grew from a private property venture into one of Colombo’s most visible real-estate firms. Its flagship project, Unity Plaza, launched in 1987, remains Sri Lanka’s most recognized IT and commercial complex. But beneath its polished façade, a long-running ownership struggle continues to cloud its boardroom.

The company’s shareholding is split between two major players: Lanka Realty Investments PLC (LRI), which controls around 50.9 percent, and the UDA, which holds 44.8 percent. What should be a strategic partnership has turned into a bitter legal rivalry.

In 2021, the UDA filed a civil case in the Colombo Commercial High Court, accusing LRI of oppression and mismanagement of shareholder rights after it acquired its majority stake in 2020. The court initially restricted LRI’s voting rights, but the Court of Appeal in March 2024 suspended that order, allowing LRI to exercise control until the final judgment is delivered.

Against this volatile backdrop, the appointment of the UDA’s own chairman to head On’ally Holdings has alarmed investors and legal observers alike. Corporate governance experts point out that Lal now sits on both sides of the conflict representing the litigant UDA while chairing the very company involved in the dispute. 

Under Sri Lanka’s Corporate Governance Code and OECD principles for state-owned enterprises, such dual positions create an “unmanageable conflict” that threatens board independence and market confidence.

Financially, On’ally’s latest performance adds further tension. For the nine months ending December 2024, cash and cash equivalents dropped 25.7 percent, while net operating cash flow plunged over 56 percent, signalling liquidity pressure. 

The current ratio weakened from 4.83× to 3.31×, and despite a modest revenue increase from rental income at Unity Plaza, profit margins remain under strain due to rising costs and fair-value losses on property assets.

 At the Colombo Stock Exchange, the company’s share price has fluctuated sharply within a Rs 23–37 band over the past year, reflecting investor uncertainty. Analysts warn that unresolved governance issues could continue to depress sentiment even as the Unity Plaza refurbishment nears completion.

Market sources suggest that the Securities and Exchange Commission (SEC) may review whether the appointment complies with conflict-of-interest and disclosure rules applicable to listed entities. Legal professionals say that unless Lal recuses himself from matters involving the UDA, or the board appoints an independent chairperson, On’ally risks breaching basic fiduciary obligations.

For now, On’ally Holdings stands at a crossroads its balance sheet weakened, its leadership questioned, and its founding legacy overshadowed by an intensifying power struggle. What began as a proud Colombo real-estate story has become a case study in how corporate control, public influence, and governance lapses can collide under the same roof.