New SEC Act streamlining do’s and don’ts
Mr. Viraj Dayaratna
The Securities and Exchange Commission (SEC) is crystallising its new rules and regulations in the new Act introduced in September and hopes to finalise many elements by the start of the next year.
The new Act embodies all the provisions and the powers of the SEC in executing its duties and acts as a good reference point for foreign investors intending to enter the Sri Lankan capital market, Viraj Dayaratna, Chairman SEC told the Business Times.
Noting the new categories included in the new Act, he said supplementary service providers such as auditors, custodians, trustees, and valuers are now included, and SEC may add some new ones as they go along. He said there is a duty cast on the auditors in that if the auditor is aware of any misconduct by a listed company during his duties, they must bring it to the attention of the company’s audit committee and if an action hasn’t been taken within two weeks it should be notified to the board of directors. Still, if nothing is done the misconduct has to be reported to the Colombo Stock Exchange (CSE) or the SEC.
Mr. Dayaratna added the administrative sanctions in the Act allows the SEC to reprimand, impose a penalty, restitution, impose a moratorium or prohibit company directors and/or promoters from trading.
John Keells Holdings Chairman Krishan Balendra said the new Act imposes greater emphasis on good corporate governance which in turn helps to attract investors.
Former Ceylon Chamber of Commerce Chairman Dr. Hans Wijesuriya, speaking at the discussion in Colombo on Monday on the SEC Act, noted that the reputation of the Sri Lankan capital market is much higher with the introduction of the new Act. “The innovation platform the new SEC has put in is world-class. There is a solid foundation with many rules coming into the body of this Act. The new SEC Act combined with New Port City Act could provide exciting opportunities.”
On the new fit and proper requirement imposed on directors of a listed firm in the Act, Sri Lanka Institute of Directors Chairman Faizal Salieh said this develops the SEC Act in line with other legislation that is already in existence, such as the Banking Act.
Dr. Harsha Cabral, PC, pointing out that the most important part of the new Act is Part 5, which sets out director duties and market offences, said the new piece of legislation has given the regulator teeth. In a lighter vein, he urged the SEC to start with the big sharks and not the small sprats in going after offenders.
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