INSUBCONTINENT EXCLUSIVE:
The Securities and Exchange Commission of Sri Lanka (SEC) says it has approved the creation of a separate Listing Board and Listing Rules at
profitability, and empower them to add greater value to the economy.These rules were developed under the guidance and direction provided by
the SEC to the Colombo Stock Exchange (CSE), and include consultations with and inputs by the SOE Restructuring Unit of the government and
the Auditor General.SEC notes that the dismal performance of many SOEs in Sri Lanka has become a heavy fiscal burden on the country with
significant macroeconomic implications
accepted platform for raising long-term capital funds for business entities compared to banks which operate on a business model heavily
reliant on short-term customer deposits
businesses to attract strategic and other investors through the listing process.Most SOEs have relied on government funding and local and
foreign borrowings for expansion and modernization
By listing on the Stock Exchange these enterprises will be able to improve their internal governance, and operating efficiencies and attract
foreign and local investor capital.The SEC and the CSE have given due consideration to the current levels of governance, organization
structure and operational challenges prevailing in the SOE sector and have therefore created a separate Listing Board and Listing rules with
a view to enabling SOEs to progressively transition from what they are now to what they should be
Any SOE that meets the Listing criteria of the Main Board or the Diri Savi Board can straightaway list on those Boards.The new transitionary
Board, when launched, is expected to facilitate those SOEs seeking a listing to do so on a set of new rules that are designed to enable a
progressive transition from the initial listing Board to the Main Board or Diri Savi Board.The salient features of the rules applicable to
the new Board include a stated capital of not less than Rs
250 million; revenue, net asset and market capitalization tests; a minimum 3 years of operating history; time-bound requirements for
financial reporting; and a minimum 10% public float with 300 public shareholder requirement.The Corporate Governance requirements under
these rules will be the same as those applicable to the Main Board and Diri Savi Board with a view to aligning the internal governance
structures and processes of listed SOEs with the standards set in the market.
