Legislation to demutualization of Sri Lanka’s Stock Exchange presented to parliament
The legislation providing for the demutualization of the Colombo Stock Exchange (CSE) by the conversion of the CSE from a company limited by guarantee to a company limited by shares was presented to parliament yesterday.
The Ministry of National Policies and Economic Affairs has stated that the Securities Exchange Commission (SEC) will submit the proposed articles of association of the demutualised stock exchange, the names of the persons to be appointed as directors, and the names of the initial shareholders of the demutualised stock exchange within nine months.
According to reports, the Minister of National Policies and Economic Affairs will direct the Registrar General of Companies to register the Colombo Stock Exchange as a company limited by shares, and the date on which the demutualised stock exchange is registered will be referred to as the date of Conversion based on the SEC submissions.
Once the necessary gazette notifications are released, the Board of Directors of the demutualised stock exchange will determine the number of shares to be issued of the demutualised stock exchange, and value of the reserves to be converted to share capital for such purpose, within a period of one month from the date of conversion.
The local media reporting on the move states that the demutualised stock exchange will issue a maximum 40% of the shares, to be issued of the demutualised stock exchange immediately upon the determination made in terms of section 6, to members subject to the limitation on shares, to be issued to individual members as specified in section 8.
The members shall only be entitled to the proceeds of sale of the balance shares, to be issued of the demutualised stock exchange allocated to members in terms of section 6, and issued in terms of subsection (1).
The Sri Lankan government’s move to demutualize the Colombo Stock Exchange is a positive move that would attract more foreign investments. Many of the world’s leading stock markets have been demutualized resulting in increased trading. It would open opportunities in the global market as well.
|Article Code :||VBS/AT/20180222/Z_1|