Sri Lanka Bourse to Introduce Easier Listing Rules from 15 July

Source: Regulation Asia Duruthu Chandrasekera 2020-07-06

Requirements on capital, profitability and net assets have been relaxed to pave the way for new listings from start-ups and tech firms.

Sri Lanka’s SEC (Securities and Exchange Commission) has approved the introduction of new listing rules for the CSE (Colombo Stock Exchange), which effectively relax the requirements for companies to go public and speeding up dividend payouts to shareholders.

“These were introduced to attract new firms such as start-ups, IT companies and any company with forward-looking business models,” said SEC (Securities and Exchange Commission) Chairman Viraj Dayaratne.

Under the new framework, companies that wanted to list on CSE’s Main Board are subject to a Stated Capital requirement of between LKR 25 million ad LKR 200 million, compared to LKR 500 million under the previous rules.

In addition, they must be able to show aggregate profits and net positive assets in the previous two years. Previously, profitability in each of the previous three financial years was required, in addition to positive net assets for the previous two years.

An additional two options are allowed if a firm cannot satisfy the profit and net asset test: either they can show revenue of LKR 3 billion for the last three financial years and a market cap of LKR 5 billion; or positive operating cash flows and a LKR 5 billion market cap.

For the Diri Savi Board, designed for much smaller companies, the rules allow for either a profit and net asset test; or annual revenue of LKR 350 million and a LKR 2 billion market cap.

The new listing rules also shorten the timeframe for an applicant entity to refund payments due on fully/partly rejected IPO applications (from 10 days to 8 days), and for issuers to credit the new shares to investors’ CDS accounts (from 18 days to 12 days).

The time period for the payment of dividends by listed companies has also been shortened, from 7 market days to 2 days. Shareholders can continue to receive dividends by cheque, but the new rules offer an additional bank transfer option.

The new listing rules take effect from 15 June.

斯里兰卡证券交易委员会

Sri Lanka Bourse to Introduce Easier Listing Rules from 15 July

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