SEC to develop stock market through research

Ten year development plan to focus on new vistas

Anjana Samarasinghe

STOCK MARKET: The Securities and Exchange Commission of Sri Lanka (SEC) is to work on a series of research projects for the development of the stock market.

Speaking at a programme organized for listed companies to highlight the features of the new corporate

 governance rules Director General of SEC Channa de Silva said SEC is working in a new era in the capital market under their ten year development plan. The Commission expects to conduct a series of research to develop the stock market as part of the SEC development plan, he said.

Meanwhile, the SEC also expects to work together with a Malaysian partner. ‘We have signed an agreement with this Malaysian partner and they will be in Sri Lanka soon to work with us,’ de Silva said.

Plans have also been made to organise capital market programmes in their financial academy and promote investments in the stock market specially among the senior citizens.

Pursuant to a joint initiative by the SEC, the Institute of Chartered Accountants of Sri Lanka and the Colombo Stock Exchange (CSE) have formulated rules on corporate governance, to be incorporated in the Listing Rules of the CSE to enforce mandatory compliance from April 1, 2007.

‘Corporate Governance will be the key criterion in winning confidence of the people,’ he said.

These rules aim at ensuring accountability and transparency in the conduct of the affairs of listed companies enhancing investor confidence, a prerequisite of a sound stock market.

Governor of the Central Bank Ajith Nivard Cabraal said companies need to be prepared for the adoption of the new rules of Corporate Governance for the development of the capital market.

Chairman of the CSE Nihal Fonseka said new rules focused on the independence of company directors and the basic committee structure. Companies have ample time to prepare for the new rules by 2008.

In implementing Rules on the Corporate Governance it will be mandatory for listed companies to publish a table in the annual report relating to the financial year commencing on or after April 1, 2007 confirming that as at the date of the annual report they comply with the Corporate Governance rules and if not, explain why the company has not complied with identified rules.

It shall be mandatory for listed companies to comply with the Corporate Governance rules with effect from the financial year commencing on or after April 1, 2008 and the annual report must contain the relevant affirmative statements.