National Health Development Fund Act, No. 13 of 1981
The National Health Development Fund Act establishes a fund called the "National Health Development Fund" as a body corporate with perpetual succession and a common seal. The Fund is governed by a Board of Trustees of 7 members and is directed towards health-care service institutions, medical research, disease prevention, and procurement of medical equipment and drugs.
Base Act text available at LawNet (HTML). Amendment No. 17 of 1984 available at srilankalaw.lk (PDF). Amendment No. 26 of 1987 available at LawNet (HTML).
Act Structure
The Act has a flat section structure (no chapter or part divisions) with 15 sections:
| Section | Topic | Summary |
|---|---|---|
| 1 | Short title | Citation |
| 2(1-2) | Establishment of Fund | Creates the Fund as a body corporate with perpetual succession and common seal |
| 3(1-10) | Board of Trustees | Composition (7 members), Chairman, removal, resignation, acting members, validity of proceedings, rules for meetings |
| 4 | Remuneration | Appointed members remunerated as determined by Minister |
| 5 | Powers of the Fund | Acquire/hold/manage/sell/mortgage property; borrow from banks with Minister's concurrence (S.5(bb), added 1984); perform acts to give effect to Act |
| 6 | Payments to Fund | All gifts and donations credited to Fund account |
| 7 | Purposes | (a) health-care service institutions, (b) research, (c) disease prevention projects, (d) medical equipment/drugs |
| 8 | Investment | Board invests moneys subject to Minister's direction |
| 9 | Officers and servants | Board appoints staff, determines remuneration from Fund income |
| 10(1-5) | Accounts and audit | Proper books of accounts; Auditor-General annual audit; annual report |
| 11 | Report to Parliament | Auditor-General's report tabled in Parliament |
| 12 | Financial year | 1 January to 31 December |
| 13(1-5) | Tax exemptions | Customs duty, income tax, wealth tax, gift tax exemptions |
| 14 | Public servant status | Officers deemed public servants under Penal Code |
| 15 | Scheduled institution | Fund is a scheduled institution under Bribery Act |
Statutory Bodies
Board of Trustees — Composition Detail
The Board of Trustees consists of 7 members: 4 ex-officio and 3 appointed by the Minister.
Ex-officio members (4):
| # | Role | Note |
|---|---|---|
| 1 | Secretary of the Ministry of the Minister | Chairman (S.3(3)) |
| 2 | Director of Health Services | — |
| 3 | Commissioner of Ayurveda | — |
| 4 | Chief Accountant of the Ministry | — |
Appointed by Minister (3):
- 3 members appointed by the Minister
- Term as specified in letter of appointment
- Minister may remove without assigning reason (S.3(4))
- Removed members are ineligible for re-appointment (S.3(5))
- Members who resign may be re-appointed (S.3(6))
Meeting rules: The Board sets its own rules for meetings (S.3(10)). No quorum is specified in the Act. Acts or proceedings are not invalidated by vacancies or defects in appointment (S.3(9)).
Fund Purposes
Section 7 specifies four purposes for Fund disbursement:
| Purpose | Description |
|---|---|
| (a) Health-care service institutions | Development and improvement of health-care service institutions |
| (b) Research | Medical and health research |
| (c) Disease prevention | Projects for the prevention and control of disease |
| (d) Medical equipment/drugs | Procurement of medical equipment and drugs |
Funding Sources
The Act itself specifies only one source: gifts and donations credited to the Fund account (S.6). Historically, additional revenue streams have included:
- Placenta collection revenue (1989-1997): Revenue from the collection and export of human placentae was channelled to the Fund
- Hospital Lottery (from 1998): 15% of proceeds from the Hospital Lottery directed to the Fund
Historical funding source details are based on secondary sources. Current operational status of the Fund, its balance, and active disbursement patterns are unknown.
Tax Exemptions
Section 13 provides comprehensive tax exemptions:
| Exemption | Section | Details |
|---|---|---|
| Customs duty | S.13(1) | Goods imported by or on behalf of the Fund are exempt from customs duty |
| Income tax | S.13(2) | Income of the Fund is exempt from income tax (Inland Revenue Act No. 28 of 1979) |
| Wealth tax | S.13(3) | Net wealth of the Fund is exempt from wealth tax |
| Gift tax | S.13(4)-(5) | Gifts to the Fund are exempt from gift tax for both donor and Fund |
Legal Status Provisions
- Public servants: Officers and servants of the Fund are deemed public servants within the meaning of the Penal Code (S.14)
- Bribery Act: The Fund is a scheduled institution under the Bribery Act (S.15)
These provisions subject Fund personnel to criminal liability for corruption and bribery offences.
Amendment Timeline
Amendment No. 17 of 1984 — Borrowing Power
The sole amendment to the Act was certified on 26 April 1984. It makes a single change:
Section amended: Section 5 (Powers of the Fund)
Change: Inserts new paragraph (bb) after paragraph (b), granting the Board of Trustees the power to:
"with the concurrence of the Minister borrow by way of loan or otherwise from any bank or lending institution, such sums of money for the purposes specified in section 7 subject to the condition that the total amount of such borrowing shall not exceed the aggregate of its assets in fixed deposit"
Significance: Before 1984, the Fund could only spend what it received as donations/gifts. The amendment enabled the Board to leverage its fixed deposits to borrow additional funds for health purposes — effectively allowing the Fund to amplify its impact beyond passive donation receipts. The Minister's concurrence requirement and fixed-deposit cap provide safeguards against over-borrowing.
Amendment No. 26 of 1987 — Auxiliary Funds
The second amendment was certified on 21 May 1987. It inserts a new Section 7A (Establishment of Auxiliary Funds) with four subsections:
| Subsection | Provision |
|---|---|
| 7A(1) | The Minister may establish auxiliary funds under the main Fund for specific objectives |
| 7A(2) | All moneys received by way of gift or donation from private individuals, firms, or institutions (in Sri Lanka and abroad) for specific initiatives shall be credited to corresponding auxiliary funds and applied by the Board per ministerial direction |
| 7A(3) | The Minister shall appoint advisory committees for each auxiliary fund to counsel the Board on fund deployment |
| 7A(4) | Board member regulations (Section 3 — removal, resignation, vacancy, meeting rules) apply equally to advisory committee members with necessary modifications |
Significance: This amendment introduced a sub-fund mechanism allowing targeted donations to be ring-fenced for specific health initiatives rather than pooled into the general Fund. It also created a new category of ministerially-appointed advisory bodies — one per auxiliary fund — expanding the governance structure beyond the single Board of Trustees. The advisory committees are subject to the same appointment/removal rules as Board members under Section 3.
Entity Relationships & Governance
Governance Hierarchy (1952 Design)
Current Replacement Structure (Post-1989)
Data Confidence
Research Gaps
The following areas require further investigation:
- Current operational status: Whether the Board of Trustees is currently meeting and the Fund is actively disbursing
- Fund balance: Current balance and recent disbursement history unknown
- Placenta revenue cessation: The circumstances and exact date of cessation of placenta collection revenue (reportedly ceased around 1997)
- Hospital Lottery allocation: Whether the 15% allocation from Hospital Lottery proceeds is still in effect
- Board membership: Current Board members unknown — no recent gazette appointments found
- Cross-references: The Act references the Inland Revenue Act No. 28 of 1979 for tax exemptions — this Act has since been replaced by newer revenue legislation; whether the exemptions still apply under successor legislation needs verification