Bill to demutualise stock exchange reaches House

The Bill providing for the demutualisation of the Colombo Stock Exchange (CSE) by the conversion of the CSE, which is a company limited by guarantee, to a company limited by shares, was moved in the Parliament yesterday.

According to the Ministry of National Policies and Economic Affairs, the Securities Exchange Commission (SEC) will submit the proposed articles of association of the demutualised stock exchange, the names of the persons to be appointed as directors, and the names of the initial shareholders of the demutualised stock exchange within nine months.

Based on the submissions from the SEC, the Minister of National Policies and Economic Affairs will direct the Registrar General of Companies to register the Colombo Stock Exchange as a company limited by shares, and the date on which the demutualised stock exchange is registered will be referred to as the date of Conversion. Subsequent to necessary gazette notifications, the Board of Directors of the demutualised stock exchange will determine the number of shares to be issued of the demutualised stock exchange, and value of the reserves to be converted to share capital for such purpose, within a period of one month from the date of conversion. 

The demutualised stock exchange will issue a maximum 40% of the shares, to be issued of the demutualised stock exchange immediately upon the determination made in terms of section 6, to members subject to the limitation on shares, to be issued to individual members as specified in section 8. The members shall only be entitled to the proceeds of sale of the balance shares, to be issued of the demutualised stock exchange allocated to members in terms of section 6, and issued in terms of subsection (1).