New Securities Exchange Act gets Cabinet nod

• Slew of legal amendments including new Foreign Exchange Bill to encourage foreigners and diaspora to transfer money to SL 

The Securities Exchange Act, Economic Service Charge, Immigrants and Emigrants Bill and Foreign Exchange Bill all received Cabinet approval to be revamped yesterday as the Government worked to strengthen and update regulations within the country’s legal system. 

The Securities Exchange Act, containing seven parts, includes giving wider powers to the Securities and Exchange Commission to better regulate capital markets and intervene in markets to instil greater credibility, the Cabinet paper noted. The draft bill also said the existing commission would continue to function until its term expires in accordance with the savings and transitional provisions of the new draft. 

Market institutions, trade in listed securities and trade in unlisted securities, dealing with market misconduct and finance including the CESS Fund of the commission, are laid out in the other parts of the draft bill. 

“The draft bill can be seen as an important pillar in making the capital market more attractive as an alternative way to raise capital in the Sri Lankan economy. More foreign investors would also view the market favourably as a well regulated and orderly market. It is also recommended to strengthen the independence of the commission through the implementation of a stringent governance structure with a healthy system of checks and balances in place,” the Cabinet paper presented by Prime Minister Ranil Wickremesinghe said. 

The Economic Service Charge Act will be changed in line with changes proposed in the last two budgets. This would include an increase of Economic Service Charge rate from 0.25% to 0.5%, the removal of the maximum liability limit of Rs. 120 million per annum, and reduction of Economic Service Charge from Rs. 50 million to Rs. 12.5 million per quarter. Exemptions from the Economic Service Charge currently applicable on any public institution will be removed, according to the Cabinet paper. 

The existing Immigrant and Emigrant Act was passed in 1948 and is significantly outdated and requires broad reform to incorporate fluid workforce migration as seen in the modern world, the Cabinet paper noted. Therefore the Legal Draftsman has been authorised to draw up fresh regulations.   

The Foreign Exchange Bill has already been drafted and approved by the Attorney General, with Cabinet approval given this week it can be gazette and presented in Parliament. 

“The existing law has not been successful in preventing the outflow of foreign exchange out of the country through not only legal but also non-legal channels. Therefore a new law which would provide incentives for Sri Lankans having money outside the country to remit that money to Sri Lanka without having to face criminal penalties is required. The proposed new law has incorporated provisions for the Minister to intervene where foreign exchange outflow can be a threat to the national economy,” the Cabinet paper presented by Prime Minister Ranil Wickremesinghe stated.