• Interest in MCB remains low due to restrictions on fund repatriation
• Current regulations limit repatriation of foreign currency-denominated funds raised to 60%
• CSE requests CBSL to increase limit to 90% to attract foreign, local firms
• Several Maldivian companies that showed interest in listing have backed out

The Colombo Stock Exchange (CSE) has requested the Central Bank of Sri Lanka (CBSL) to consider relaxing the current restrictions imposed on the repatriation of foreign currency-denominated funds raised by listing shares on the Multi-Currency Board (MCB).

Speaking to The Sunday Morning Business, CSE Chairman Dilshan Wirasekara revealed that interest in the MCB, launched by the CSE in 2018, continued to be poor due to the restriction imposed by the CBSL’s foreign exchange control regulations. 

These regulations limit the repatriation of foreign currency-denominated funds raised by listing shares on the MCB to 60% of the proceeds raised.

“Interest in the MCB has been very poor with no listings so far. The biggest impediment is a restriction that allows only 60% of funds raised to be deployed overseas, which prevents usage at present,” he stated.

He elaborated that this 60% limit had proved to be a significant hindrance to attracting foreign and local firms to list foreign currency-denominated shares on the MCB. 

Therefore, the CSE has requested the CBSL to consider relaxing the rules in respect of the MCB, permitting up to 90% of the foreign currency-denominated funds raised locally to be deployed overseas.

Wirasekara further pointed out that although several Maldivian companies had expressed an interest in listing in the CSE MCB last year, the companies had since backed out due to the financial situation in the Maldives. 

According to CSE Circular No.2-02-2022 dated 14 February 2022, in terms of the Foreign Exchange (Classes of Capital Transactions Undertaken in Sri Lanka by a Person Resident Outside Sri Lanka) Regulations No.2 of 2021 published in Gazette Extraordinary Notification No.2213/35 dated 3 February 2021 issued under the Foreign Exchange Act No.12 of 2017 as amended by Gazette Extraordinary Notification No.2235/22 dated 6 July 2021, the proceeds raised by listing shares in the MCB shall be subject to the following restrictions:

• The consideration of the investment in listed shares issued in any designated foreign currency received through the Inward Investment Account (IIA) of the non-resident investor shall be credited into a Special Foreign Currency Account (SFCA) opened and maintained by the investee with an authorised dealer.  
• Only an amount equivalent to 60% of the proceeds referred to above may be utilised for any capital transaction of the investee outside Sri Lanka.