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Study SEC Act in depth to avoid non-compliance: Dumith Fernando

07 Dec 2021

 
  • CSE Chief warns companies new Act has stringent requirements
  • Krishan Balendra says regulators must not overregulate
  • Hans Wijesuriya asks SEC to go beyond being a regulator 
  By Shenal Fernando The new Securities and Exchange Commission (SEC) Act No. 19 of 2021 should be carefully studied by the listed companies to avoid running into risks of not complying with the stringent requirements imposed under the new Act, Colombo Stock Exchange (CSE) Chairman Dumith Fernando noted during an event held last evening (6) under the title “The SEC Act No. 19 of 2021: Aspects Pertaining to Listed Companies”. He stated that the new Act allows for market development with the introduction of new products, which will increase liquidity. Explaining further, Fernando described the market exhibited under the previous Act as a one-way market which doesn’t prevent the hedging of risk, thereby not facilitating liquidity. Fernando described the new Act as a change that allows the capital market to face the needs of the modern world. He added that the Act provides for significant investor protection, which will increase investor confidence, leading to greater liquidity within the market. John Keells Holdings (JKH) Chairman Krishan Balendra agreed that the new Act imposes greater emphasis on good corporate governance.  However, he claimed that while increased governance is welcomed, regulators must be careful to not to overregulate the market and impose overly cumbersome red tape. Adding to this, former Ceylon Chamber of Commerce (CCC) Chairman Hans Wijesuriya claimed that the SEC has an important role to play beyond acting merely as a regulator, considering the globalisation of investment and knowledge. According to him, investors look for corporate governance particularly for minority shareholder protection. He claimed that traditionally, Sri Lanka rates well with regard to ease of business and possesses high standards with regard to corporate disclosure, which he believes will provide Sri Lanka a competitive advantage. Commenting on the new fit and proper requirement imposed on directors of a company under the new Act, Sri Lanka Institute of Directors Chairman Faizal Salieh commended this development and claimed that this develops the SEC Act in line with other legislations that are already in existence, such as the Banking Act. Dr. Harsha Cabral PC stated that as far as listed companies are considered, the most important part of the new Act is Part 5, which sets out director duties and market offences, and calls on listed companies to study the section of the Act in depth. Further, he claimed that ignorance of the law is not a defence.


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