Over 60 companies in CSE watch list
View(s):The Colombo Stock Exchange (CSE) has rounded up 62 “naughty” companies into the Watch List as at date, officials said.
These firms are on the Watch List for various reasons including non-submission of financials. Officials said that two companies are on the Watch List for not submitting their annual reports and 15 companies in the list haven’t submitted their quarterly and/or interim financials. The CSE has nearly 300 companies.
CSE’s Head of Trading, Market Surveillance and Corporate Affairs Nilupa Perera told a group of media professionals at a CSE workshop recently that many companies are now ‘ disciplined ‘ after the CSE introduced new rules on incorporate governance. “Most of them abide by the rules now unlike earlier.”
Renuke Wijayawardhane, Chief Operating Officer – CSE noted that erratic behaviour by companies are less frequent than before. For an example, earlier when announcements relating to dealings by directors had to be disclosed to the market before five market days, some companies tended to submit them after this stipulated time period. Ms. Perera noted that now they are on time.
These rules should have been introduced to the CSE long time ago but Mr. Wijayawardhane noted that, “its’ better late than never”.
Analysts noted now the listed firms seem disciplined when adhering to the rules.
The Securities and Exchange Commission (SEC] 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; among others.
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.
The CSE is a disclosure based environment and the public companies are required to disclose meaningful financial and other information to the public as it provides a common pool of knowledge for all investors to use to judge for themselves whether to buy, sell or hold a particular security.
Only through the steady flow of timely, complete, and exact information can people make sound investment decisions.
It was also revealed at the workshop that Sri Lanka has the best valuations in the region. The CSE Price to Earnings ratio is 8.9 times when compared to the region.
This was also confirmed by Tundra, the frontier market investment fund, in a statement recently. They said the Sri Lankan stock market is now one of the cheapest frontier markets, from being one of the most expensive in the past. “Despite the risk of continuing turbulence in the short term, we conclude that much of it has been discounted by the market. An early election would be clearly positive for the stock market.”