“Hapless depositors caught in a web of red tape spun by the CSE”
The Colombo Stock Exchange (CSE) has sent the following letter in response to an article titled “Hapless depositors caught in a web of red tape spun by the CSE” published in the Business Times on December 6:”The Colombo Stock Exchange (CSE) notes with concern that the statements made in the article aforesaid are totally distorted and baseless. In an initial listing of securities on the CSE the CSE cannot be expected to communicate with any depositors, shareholders or promoters of the company. In practice it is with the Issuer Company or the investment bank concerned that the CSE communicates with in relation to any matters arising from a listing application.
The conversion of deposits into shares by depositors was a matter totally beyond the control of the CSE and the CSE played no part in this matter at any stage. Further, the requirement to obtain the prior approval of the Securities and Exchange Commission of Sri Lanka (SEC) emanates from section 28 A of the SEC Act, which states that where shares are issued within one year from the date of listing, prior approval of the SEC shall be obtained for such Listing.Accordingly, it was in October 2014 that the company had to obtain the SEC approval for the shares allotted by the company on 30th October 2014. As such the statement made in the said article that the CSE entertained the application in October 2014 for listing of shares without referring to such requirement of SEC approval is baseless. It is the responsibility of the company, managing agent or the relevant investment bank to obtain such approval from the SEC.
The SEC approval was granted subject to receiving confirmation from the Central Bank of Sri Lanka (CB) on the proposed financial assistance the company were to receive in order to revive the company. The CSE reiterates that a separate audit report was not requested for as at the end of September 2015 for the listing of shares. However the company had carried out the regular statutory audit for the year ended 31st March 2015, in terms of the Companies Act and CB requirements.Finally, the CSE re-confirms that there has been no undue delay on the part of the CSE in processing this application and the listing approval would only be granted upon the company meeting the CSE and SEC requirements to obtain a listing.”