Local insurers cry foul over unfair listing rule
The Insurance Board of Sri Lanka (IBSL) has said that local insurers won’t be exempt from going public on the Colombo Stock Exchange (CSE) unlike their foreign counterparts.
The IBSL has said that as per the draft amendment they received from the Legal Draftsman’s Department, local insurance firms aren’t exempt from going public, much to the chagrin of local firms in the industry.
A summary of the proposed amendments relating to the mandatory listing requirement was outlined by the IBSL in response to a letter by the Insurance Association of Sri Lanka (IASL) mid this month.
It said that a local insurance company, may seek an exemption from the mandatory listing requirement from IBSL if it is able to satisfy (IBSL) that at least 85 per cent of shares of the local subsidiary insurance company are held by a foreign holding company, listed on a foreign stock exchange which is a member of the World Federation of Stock Exchanges.
Highlighting another requirement that would exempt foreign-owned local insurers from listing, the letter said that this would apply to the accounts of a local subsidiary insurance company which are included in the group consolidated accounts of the foreign holding company and that such a foreign holding company is legally required by the foreign stock exchange on which it is listed to ensure group level compliance inter alia pertaining to the accounts of the local subsidiary insurance company.
But Sri Lankan insurers are smarting and they point out that if a parent of a local insurer is on the CSE, the subsidiary insurance company also should be exempt from listing on the CSE. “This rule undermines the CSE and doesn’t do much to uplift a level playing field to the local insurers,” a CEO of a local insurance company told the Business Times.
“However, such an exempted local subsidiary insurance company will be required to comply with such terms and conditions as may be determined by IBSL from time to time,” the letter added.