Saturday, 18 January 2014 00:00
Pledges to get tough on errant companies
Wants to expand product portfolio
Defends raft of new regulations
By Uditha Jayasinghe
Getting ready for a stellar year, the Securities and Exchange Commission (SEC) Head yesterday defended regulatory changes and insisted tough action would be taken against violators as it eyes stronger growth in 2014.
SEC Chairman Dr. Nalaka Godahewa told a symposium organised to brief companies on the latest changes that the new measures were made after public consultations and it was the duty of those present to remind their respective boards of directors about the compliance needs.
“From the SEC point of view we will continue to monitor adherence to the rules and regulations and will not hesitate to take action where violations are observed,” he told the gathering.
He noted that directors of a public listed company must be conscious of the fact that that they are responsible towards a large number of shareholders. By looking after the interests of the company, directors are actually looking after the interests of all shareholders.
“The shareholders depend on the board of directors to manage the company affairs to their satisfaction. According to The Companies Act of 2007, a minority shareholder can sue the company for mismanagement and seek relief. So it is important that directors are fully aware of their responsibilities and shareholders are aware of their rights,” he added.
He also made an open request to all directors of public listed companies to be conscious of their responsibilities and urged directors to work towards the interests of the company and be impartial.
“Ensure proper governance in the companies you manage; ensure adherence to the relevant rules and regulations; be transparent and follow the correct procedures in executing your duties; guide the management to achieve high corporate performance; offer your shareholders good returns for their investments. That’s the only way we can continue to deliver shareholder value and build confidence amongst the public who invest in listed companies.”
Introducing a mandatory public float for listed companies, introduction of a code of best practice for related party transactions, changes to directors disclosure requirements, reinstating introductions as a method for listing, allowing primary dealers to become trading members of CSE, introducing a maximum ticket size for corporate debts and revising the minimum number of public shareholders of companies seeking to listing on Diri Savi Board are among the raft of new regulations introduced by the SEC.
Godahewa insisted that none of the measures were ad hoc and stressed they were taken after public consultation, which in his view was the main reason for little criticism to be levelled at them.
“We wanted to expand our product portfolio beyond just equity. That required policy initiatives as well as infrastructure development. We are already seeing the results of the work done. A good example is the growth of corporate debt instruments. With 28 new corporate debt listings in 2003 the debt market grew by over 446% last year. As a result the total capital raised in 2013 through Colombo Stock Exchange was Rs. 94.25 billion, a record 271% growth compared to the previous year. The overall market capitalisation grew by 13.4 %. In 2013, Colombo Stock Exchange was the sixth best performing market in Asia ahead of Singapore, HK and Shanghai.”