Sri Lanka’s CSE gives opportunity for local corporates to raise foreign currency denominated capital
Daily FT: The Colombo Stock Exchange (CSE) has said it has enabled local entities incorporated or established in Sri Lanka to issue and list foreign currency denominated shares in the main market segment (Diri Savi and Main Boards).
This new financing option for local companies is a result of the new strategic plan the CSE launched in 2020. Having obtained necessary clearances from the Securities and Exchange Commission of Sri Lanka (SEC) the Listing Rules and the Trading Rules of the CSE and the CDS Rules of the Central Depository Systems Ltd. have been suitably amended to facilitate the listing, trading and clearing and settlement of foreign currency denominated shares to be issued by local entities.
The aforementioned regulatory framework has been effective since 14 February.
CSE Chairman Dumith Fernando, welcoming the move said: “The enabling of the raising of foreign capital would fulfil a gap for capital raising in the Sri Lankan Capital Market. This was formulated taking into consideration the interests expressed by several local entities in raising foreign currency denominated capital via the CSE.
“We hope that Sri Lankan companies aspiring to grow internationally can now make use of this unique opportunity via the CSE to meet their foreign currency growth capital needs.”
CSE Chief Regulatory Officer Renuke Wijayawardhane said: “The CSE submitted a comprehensive business proposal, including the proposed regulatory policy framework governing the listing and trading of foreign currency denominated shares issued by local entities on the CSE, to the Central Bank of Sri Lanka (CBSL) and the Ministry of Finance via the SEC and the CSE continuously engaged with the Department of Foreign Exchange of CBSL in formulating the regulatory framework for this mechanism, resulting in a comprehensive set of regulations and directions being issued by the Ministry of Finance, which facilitate and enable the listing and trading of foreign currency denominated shares and debt securities on the CSE by local entities. With this initiative, we also hope to create a new stream of foreign currency-based revenue for the market participants.”
OSL take:
The decision by the CSE to give the opportunity for local corporates to raise foreign currency denominated capital will help expand Sri Lanka’s foreign currency-based revenue. Sri Lanka is in the process of building the country as an emerging regional business destination, which has been further boosted by the ongoing development programme in the country. With Sri Lanka focused on becoming a business hub in the South Asian region, there is building interest in the expansion of foreign-currency revenue avenues. The country’s ongoing development programme and the economic expansion have expanded business/investment opportunities in Sri Lanka that have managed to attract many foreign businesses/investors. Sri Lanka’s geographical positioning in the Indian Ocean and the many trade agreements as well as concessions enjoyed by the country have boosted attraction towards business/investment opportunities in the country. Sri Lanka therefore presents an attractive investment opportunity.
| Article Code : | VBS/AT/03032022/Z_2 |