US$10 mln worth foreign firms to be allocated a separate board on CSE
Foreign firms worth more than US$ 10 million would be encouraged to go public on a separate board on the Colombo Stock Exchange (CSE) with certain trading restrictions, officials said.
“We are trying to get a new board for companies with a BOI (Board of Investment) status with a size of $10 million,” Securities and Exchange Commission (SEC) Deputy Director General Dhammika Perera said, speaking at an investor forum organised by the CSE last week to encourage private companies to list in the stock exchange.
CSE Chairman Krishan Balendra speaks at the forum. Pic by Nilan Maligaspe
He said that they are also mooting the idea that trading on these companies will be restricted to ‘qualified investors’ with a certain transaction size till they fulfill the criteria of the other two boards of the CSE – the main board for larger companies, and the ‘Diri Savi’ second board for newer firms.
This idea to permit start-ups with foreign investments to be listed was put forward by the BOI in a bid to make it easier for some foreign investors to raise funds when an exit mechanism was readily available, he said.
“Our proposals were submitted to the CSE. They are deliberating it,” he said.
He added that the ‘Introduction’ method of listing company shares on the CSE has been reintroduced by the SEC with amendments ranging from the percentage public holding of a company, its issued share capital, lock in periods and more disclosures. In March last year, the regulator decided to stop listing of equity by way of an introduction with effect from 1 April 2012 as several companies that went public during 2011– 2012 period through introductions saw the main investors selling their stakes at times in the first week of listing after the stock prices shot up artificially.
Dr. Nalaka Godehewa, Chairman SEC told this forum, “We have witnessed a dynamic growth in the capital markets of Sri Lanka and we are looking forward to develop it further by increasing the listings on the CSE. Listing on equity or corporate debt will not only boost your company’s capital and corporate image, but it will have a significant impact on the company’s growth prospects. Increasing the number of listings on the CSE is also one of the 10 key strategies of SEC.”
He said that consultants were about to be appointed to demutualise the CSE. He added that the process required parliamentary approval and a draft bill was ready and it was expected to be submitted to parliament within the next six months.
Krishan Balendra, Chairman of CSE said that the CSE have received a positive response from the firms which is the CSE’s first Issuer Relations forum. “Over the years we have seen numerous companies listing on the Colombo Stock Exchange, with both the company and its public shareholders benefiting in the process. The continuous development of the capital markets of Sri Lanka has created a more positive atmosphere for listing and therefore, we encourage unlisted companies to make use of this opportunity.”
The forum was the first of its kind organised by the CSE which is one of many initiatives planned to create awareness and attract new listings.
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