SEC pushes consistency in disclosure requirements
View(s):The Securities and Exchange Commission (SEC) directive on share dealings information by directors and CEOs of public quoted firms issued on Friday will bring in uniformity to the disclosure requirements by the regulator, SEC officials said.
“There are certain disparities between the Colombo Stock Exchange’s (CSE) listing rules and Section 200 of the Companies Act No 07 of 2007 disclosure requirements due to its interpretations,” one official told the Business Times. He added that scheduling of meeting dates by listed entities and the time to inform directors’ share transactions to the market varies substantially and also the disclosures on CEOs’ share transactions are excluded in the current disclosure requirements.
The Companies’ Act says that a director who has a relevant interest (acquisitions or disposal) in any shares shall ‘forthwith disclose to the Board’, but according to (rule 7.8 of) the CSE Listing Rules, a listed firm is required to make an ‘immediate announcement’ to the CSE.
The official said that acquisitions or disposals of shares by directors may reflect sensitive information privy to directors and CEOs of companies which might not be known to shareholders. “This requirement on immediate announcement will bridge the gap between the two regulations as it will have increased transparency due to ‘timely’ disclosure,” he said. Among the highlights of the directive, a company, on the day of listing should disclose directors/CEO interest in shares to the market, change of directors/CEO has to be disclosed within two days and acquisitions/disposals of shares by directors/CEO has to be disclosed within five days.
All listed companies are further directed to put in place a procedure to ensure that its directors and the CEO makes the above mentioned disclosures in a timely manner to enable it to comply with the requirements stipulated in this directive.
“A director or CEO of a listed entity shall be deemed to have a relevant interest in shares or other class of shares where a close family member of the director or CEO (not being himself a director or CEO of the listed entity) as the case may be, holds or has an interest in the said shares or other class of shares,” the SEC directive said.
This directive shall be effective from 1st April 2014.