SEC explains more on new regulations

Below we reproduce a set of Q&A took place between the SEC and CSE officials and the representatives of listed firms who gathered last week in Colombo to discuss new regulations.

Top CSE and SEC officials took part in the symposium orgarnised by the market regulator to create further understanding among the listed firms regarding the recent market regulations introduced.

The symposium included a series of lectures and was followed by a panel discussion, which saw participants raising a number of questions, which are reproduced below.

Question and answers

Can the members of the Board in the Risk Committee of an entity function on the Related Party Transactions Review Committee (RPTRC) ? Yes, provided, the committee will fulfill the requirements of the RPTRC and are need to maintain separate minutes.

If Trustees of a Pension Fund are total outsiders and are not Directors of the public listed company, should the Pension Fund’s shareholding in the public listed company be excluded when calculating “Public Holding” ? For the stake to be considered “Public”, the Pension Fund should not be under the control of the public listed company.

Does the SEC Directive on Maintenance of Minimum Public Holding as a Continuing Listing Requirement apply  to non-voting shares ? No, but the Public Holding in other classes of shares needs to be disclosed in the interim financial statements and Annual Report of the public listed company.

Had there been any delay in disclosing share purchases by Directors of public listed companies, due to the requirement under the Companies Act to inform the Board of such purchase & It is not possible to convene Board meeting within 5 days on all share purchases by Directors ? When a share trade takes place, the Director or CEO concerned needs to simply notify the Company Secretary of the public listed company, who accordingly will make the required market disclosure to the CSE.

How can a Main Board public listed company ensure that it maintains 750 public shareholders holding 100 shares each ? As an entry criterion to be eligible to list shares on the Main Board of the CSE, a Company needs to have a minimum of 1,000 public shareholders holding not less than 100 shares each. The maintenance public holding only requires 750 public shareholders. Further, an option exists whereby the public listed company can maintain 500 public shareholders, with a minimum public holding of 10%, if such company’s public float reflect a market cap of at least Rs. 5 billion.

Has the SEC/CSE prescribed mechanisms for increasing “public holding” ?The public listed company has the freedom to devise a suitable plan with defined timelines and submit same to SEC. An issuance of shares to public through prospectus, sale of a partial stake by controlling shareholders through the secondary market, Rights Issue etc. were discussed.

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