SEC prunes down ex-officio members in Commission

• Checklist of considerations when appointing Chairman and disqualifying commissioners
• Commissioners eligible for reappointment for a maximum of two successive terms 
• Institute of Chartered Accountants nominee must not be engaged in auditing

The new SEC Bill has pruned down the number of ex-officio members in the Commission while when appointing the Chairman, the Minister has been provided with several factors for consideration. In the existing Act there are three ex-officio members – the Deputy Secretary to the Treasury, Registrar of Companies and President of the Institute of Chartered Accountants. 

However, in the new Bill, the ex-officio slot has been reduced to one and confined to the Registrar of Companies. 

The Treasury nominee and Chartered Institute nominee have been brought in as part of three nominated members. The Central Bank Deputy Governor is the other nominee who at present is an appointed member of the Commission by the subject minister. 

The new Bill specifies the nominee of the Institute of Chartered Accountants must be someone who is not engaged in auditing as nominated by the Council of the Institute of Chartered Accountants of Sri Lanka. This, according to analysts, is to avoid any conflict of interest. 

The areas of interests of the six appointed members to the Commission have been widened as well. 

At present the six persons are drawn from the private sector, possessing professional expertise, wide experience and proven competency in the fields of law, finance, banking and business. These appointments can be made to facilitate a Commission with a multi-disciplinary capacity.

As per the new Bill, six persons from the private sector possessing professional expertise and standing in respect of matters relating to the securities market, special knowledge or wide experience and proven competency in the fields of law, finance, accounting, economics, banking or business are to be appointed by the Minister as members (hereinafter referred to as Appointed Members) in order to reflect the multidisciplinary character of the Commission.

The term of office of Commissioners remains unchanged at three years but the new Bill provides for them to be eligible for reappointment subject to a maximum period of two successive terms of office.

Whilst the existing Act does not specify the criteria for consideration when appointing the Chairman, the new Bill has been explicit. 

They include the person’s integrity and standing and the likelihood of any conflict between the interests of the Commission and any interest which that person has or represents.

The new Bill is also specific as to when a Commissioner shall be disqualified such as a) is or becomes a Member of Parliament or a member of any Provincial Council or any local authority; (b) is or becomes a director, partner or employee of an entity licensed or registered by the Commission; (c) is or becomes of unsound mind or incapable of carrying out his duties; (d) is or has become an undischarged bankrupt; (e) is guilty of serious misconduct in relation to his duties; (f) has been convicted of an offence which involves moral turpitude and (g) abuses his position.