Listed firms on good behaviour after ‘Watch List”
The Colombo Stock Exchange (CSE) after renaming the default board as ‘Watch List’ with effect from January 2018 and enforcing the procedures to the CSE listing rules has seen ‘better’ behaviour by listed firms, officials say.
”Now they are better and ‘on time’ with disclosures,” a CSE official told the Business Times. Also now the number of firms that don’t disclose on time are lower and the compliance is high, he added. According to him now listed firms are more diligent and forthcoming when complying with the rules.
The Securities and Exchange Commission last year directed the CSE to give effect to the enforcement procedures to be implemented on listed companies from January 2018. These directions include violation of Corporate Governance Requirements, late submission or non-submission of interim financial statements late submission or non-submission of annual reports, incidence of modified audit opinions in the audited financial statements; and incidence of an emphasis of matter on going concern in the audited financial statements.
Once companies are on the Watch List, they now issue market disclosures on what they intend doing about becoming compliant. The SEC also tightened the noose on listed companies not adhering to norms with regard to minimum public shareholding. Companies found non-compliant with the minimum public holding requirement as of July 1, 2017 would be transferred to the Watch List on July 1, as directed by the SEC. As at January, 59 listed companies are non-compliant with the minimum public float rule of the Colombo Stock Exchange (CSE). Of this, between 30 to 40 firms are likely to exit the exchange through this mechanism which is meant to weed out bad eggs, officials say.