ISSN: 1391 - 0531
Sunday January 13, 2008
Vol. 42 - No 33
Financial Times  

Firms say CSE too strict

Some firms say the Colombo Stock Exchange (CSE) is ‘forcing’ investment on them and that the regulator is not swift and timely in its decisions.

“For an example at times the CSE requests bank guarantees to underwrite a rights issue. Nowhere in the world where good financial investment is practised have there been things like this. This is forcing firms to invest,” a stock market analyst said.

He said if a company wishes to raise a substantial amount of money, through a rights issue, the investor needs to ‘fully’ convince the CSE that such an investment is good for the investor. “Due to the present country scenario, one cannot plan anything ahead here and added to that the regulators take time in giving an answer to firms who want to forge ahead with their business plans,” he complained. However, CSE has a different story to tell. Surekha Sellahewa, Director General, CSE said that it is in the best interest of the public that regulators adhere to certain strict measures. She said that CSE is not supposed to do merit based regulation. “We only do disclosure based regulation. Therefore when looking at a listing application we consider it from a point of adequate disclosure to enable a prospective investor to make an informed investment decision,” she said. When asked about underwriting a rights issue, she explained that CSE needs to know how the company plans to meet the right issue’s objective in the event that it is not fully subscribed by the public. “When they take public funds, there has to be adequate disclosure and accountability on the part of the company raising money. Therefore, I agree we are very rigid on these aspects,” Sellahewa reiterated.

 

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