Connect with us

Business

SEC overhauls Regulations Governing Market Institutions, Market Intermediaries and introduces a Code for Collective Investment Schemes

Published

3 years ago

on

The Securities and Exchange Commission of Sri Lanka (SEC), the securities market regulator has prepared Rules pertaining to Market Institutions, Market Intermediaries and a Code for Collective Investment Schemes following the enactment of the new Securities and Exchange Commission Act No. 19 of 2021. These Rules which were made in terms of the powers vested in the Commission under Section 183 of the Act. The Rules in respect of Market Institutions and Market Intermediaries were published in the Gazette Extraordinary bearing Number 2271/09 and 2271/10 dated 15 March 2022 whilst the Rules in respect of Collective Investment Schemes which will be known as the “CIS Code” was published in the Gazette Extraordinary bearing Number 2278/2 and dated 07 May 2022. They come in to force from the date of the respective Gazette Notices.

The key components of the Rules for the three Market Institutions, namely an Exchange, a Central Depository and a Clearing House, include the licensing procedure, minimum financial requirements, reporting and infrastructure requirements, governance structures, compliance and internal controls etc. In addition, these Rules embody detailed criteria for fitness and propriety of key management persons of market Institutions and has introduced the important role of a compliance officer whose responsibility is to ensure that the Market Institution at all times complies with applicable laws, rules and regulations and submits a compliance report to the Commission periodically.

The new SEC Act has redefined “Market Intermediaries” and has included a range of new Market Intermediaries such as corporate finance advisors, derivatives brokers, derivatives dealers and market makers. The newly gazetted Rules pertain to eight Market Intermediaries. They are Investment Managers, Margin Providers, Credit Rating Agencies, Underwriters, Stock Brokers, Stock Dealers, Managing Companies and Corporate Finance Advisors. They cover the licensing procedure, minimum financial and infrastructure requirements, qualifications and experience required for persons dealing with clients, maintenance of books and records, ceasing of operations etc. Rules in respect of market makers are being prepared with the assistance of experts from the Asian Development Bank and Rules in respect of derivative brokers and dealers will be published when derivatives are to be introduced.

Similar to the provisions contained in the Rules for Market Institutions, the Rules for Market Intermediaries require them to have a compliance officer whose duties have been clearly spelt out. The key management persons are required to submit an affidavit at the time of their appointment and at the time of renewal of the license affirming compliance with the criteria stipulated for fitness and propriety.

The new SEC Act contains specific provisions for the setting up of Collective Investment Schemes (CIS) which go beyond the presently available Unit Trusts and paves the way for the introduction of Interval Funds, Exchange Traded Funds, Money Market Schemes, Umbrella Schemes, Real Estate Investment Trusts and Hedge Funds to name a few. Section 183 of the new SEC Act defines what Collective Investment Schemes are. The detailed definition makes it clear as to what type of scheme or arrangement will be considered a Collective Investment Scheme and also explains what type of pools of funds are not included within it.

The Collective Investment Scheme Code of 2022 (the “CIS Code”) which has now been brought into force repeals and replaces the Unit Trust Code which was introduced in 2011. The CIS Code will thus provide for the creation of numerous types of collective investment schemes involving different asset classes including equity securities and fixed income securities to Real Estate, Gold, Derivatives etc. Unit Trusts will also come within this fold. They will cater to investors with diverse risk appetites. It will be possible to set up Hedge Funds although they are possible of being marketed only to Accredited Investors. The issue of high – risk instruments to the market is thereby facilitated whilst at the same time ensuring the protection of non-sophisticated investors.

The CIS Code spells out the manner of appointment and replacement of a Managing Company, its duties and functions, the manner of appointment and replacement of a Trustee and a Custodian of a scheme, their duties and functions and connected matters. It spells out in detail the types of schemes that can be set up, general conditions to be followed in their operation and marketing, general conditions for initial offers and sale and purchase of units, creation, issue, repurchase and redemption of units, sale and redemption of units in open ended and interval schemes, account keeping and reporting requirements, suspension of dealing and termination of schemes, termination or winding up of a scheme etc. The CIS Code enables the outsourcing of certain administrative functions of a Managing Company, enabling them to focus more on their core activity of investment management. It also has provisions relating to the role of an Auditor of a scheme and the co-operation that is required to be extended to an Auditor. The Annexures sets out minimum contents of a Trust Deed and the Key Investor Information Document as well as guidance on asset valuation and pricing, guidance on conflict of interest and guidance on complaints handling.

The Chairman of the SEC Viraj Dayaratne PC commenting on the publication of the Rules said “With the coming into force of the new Act, it was necessary for us to ensure that steps are taken to give effect to the provisions contained therein and have the mechanisms in place for its proper administration. We are happy that we have been able to compile them within a relatively short period of time”. He went on to observe that “We are optimistic that these Rules will foster good business conduct and a good corporate culture among all regulated entities and provide for the fair and efficient treatment of their clients and also promote confidence in the capital market. As the Market Intermediaries are directly in contact with investors, supervision of their functions by the SEC is an important function towards preventing possible misconduct and in promoting ethical behavior. This will in turn lead to the creation of a fair and orderly market thus instilling the much needed investor confidence”.

. Chinthaka Mendis, Director General of the SEC stated, “The Rules, which were finalized after several rounds of stakeholder consultations, spell out a clear framework for the operation and governance of these entities which play a pivotal role in the Capital Market. The Rules require these entities which are regulated by the SEC, to conduct themselves in a manner that will ensure the protection of the interests of their clients and preserve the integrity of the Securities Market. Compliance with these Rules is seen as an essential foundation for the maintenance of a fair and orderly market as well as to ensure investor protection”.

The Rules and the CIS Code can be accessed through the SEC Website www.sec.gov.lk.

The SEC has also finalized Guidelines to provide for the duties and obligations of ‘Supplementary Service Providers’ in terms of Section 169(3) of the Act. In terms of the definition found in Section 183, those who come within this definition are actuaries, auditors, custodians, trustees and valuers. These guidelines will be published on the Website of the SEC.


Related Topics:
Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

A Historic Hat-Trick: Home Lands Crowned Best Developer Sri Lanka for Third Consecutive Year, Also Wins Best Lifestyle Developer Asia

Published

6 hours ago

on

2025/12/19

By

Home Lands has once again solidified its position as Sri Lanka’s number one and most trusted real estate developer, achieving a historic milestone at the PropertyGuru Asia Property Awards 2025, held in Bangkok, Thailand on 12th December 2025. The company was crowned “Best Developer, Sri Lanka” for the third consecutive year, reaffirming its unmatched leadership in the nation’s real estate sector. Adding to the prestige, Home Lands was also honoured with the highly coveted “Best Lifestyle Developer, Asia” award, an extraordinary achievement for any Sri Lankan developer on the global stage.

The prestigious PropertyGuru Asia Property Awards, the ultimate hallmark of excellence in the Asian property sector was established in 2005 to recognise the region’s finest real estate. Over the years, the programme has become the most trusted and most sought-after awards platform in Asia. Upholding the highest levels of integrity, the Awards follow a professionally supervised, independent judging system, setting the gold standard for real estate recognition in the region.

In addition to its developer accolades, Home Lands’s landmark projects shone across multiple categories, bringing home several top honours:

  • Best Luxury Condo Development (Colombo) – Pentara Residencies, Thummulla Handiya – “The Address in Colombo”

  • Best Completed Condo Development – Santorini Resort Apartments & Residencies, Negombo

  • Best Waterfront Condo Development – Bayfonte Marina Resort Apartments & Villas, Negombo

  • Best Lifestyle Developer – Home Lands Skyline (Private) Limited

Speaking on yet another historic achievement, Mr. Nalin Herath, Chairman – Home Lands Group, stated:

“Securing the Best Developer title for the third consecutive year, along with being named the Best Lifestyle Developer in Asia, is a proud moment not just for Home Lands but for Sri Lanka. We sincerely thank our customers for their trust and support, which inspires us to continually raise the bar. These wins reflect our unwavering commitment to building with trust, innovation, and excellence, and we will continue to create exceptional living environments while elevating Sri Lanka’s presence in the international real estate arena.

With over 3,400 residential units delivered and over 2,300 units currently under construction across eight ongoing futuristic mega residential complexes, Home Lands continues to drive the evolution of modern living in Sri Lanka. Beyond developing homes, the company has consistently reshaped the lifestyles of Sri Lankans by introducing globally inspired, amenity-rich, resort-style living experiences.

Among its flagship projects, Canterbury Golf Resort Apartments & Villas stands as a testament to this vision — Sri Lanka’s Largest Residential Development, spanning over 55 acres of land, and the country’s first Victorian-style golf resort apartments and villas. Featuring a signature day & night golf course and an unparalleled collection of lifestyle amenities, this iconic development has redefined modern living standards, setting a new benchmark for integrated, resort-style residential environments in Sri Lanka.

Supported by a fully integrated group of 13 companies, including a CS2-graded construction arm certified by CIDA, Home Lands ensures world-class quality and seamless execution from design to delivery. With a growing global presence and offices in Australia and Dubai, the company continues to strengthen international investor confidence in Sri Lanka’s residential property sector.

According to the latest RIU Brand Health Survey 2025, Home Lands remains the undisputed market leader in the country’s real estate industry.

Continue Reading

Business

Unlocking Sri Lanka’s hidden wealth: A $2 billion mineral opportunity awaits

Published

14 hours ago

on

2025/12/19

By

Surveys have indicated that minerals such as thorianite and uranium-bearing minerals are present in Sri Lanka

Sri Lanka stands on the brink of an economic transformation, powered not by traditional exports, but by the vast, untapped mineral wealth lying beneath its soil and off its shores. According to a comprehensive new business report launched by the Pathfinder Foundation in collaboration with the Australian Trade and Investment Commission, on 17th December in Colombo, the island’s mineral sector holds a staggering unrealised export potential of up to USD 2 billion.

Currently, Sri Lanka exports most of its high-purity minerals including world-renowned vein graphite, rare earth elements (REEs), and mineral sands in raw or semi-processed form, capturing only a fraction of their true value. The report reveals that while current exports to top destinations total about USD 389 million, the achievable potential is estimated at USD 778 million, with the full downstream value-add opportunity reaching several times that figure.

“Sri Lanka has great potential for exports,” stated Australian High Commissioner Matthew Duckworth at the report’s launch. “It is not only about mining but also about refining – moving up the value chain to get significantly higher export earnings.”

The nation is endowed with critical resources essential for global clean energy and high-tech supply chains. This includes an estimated 5 million tonnes of graphite (with purity up to 99.9%), over 600 million tonnes of mineral sands containing REEs like neodymium, and the massive Eppawala phosphate deposit, which alone holds 60 million tonnes of phosphate-bearing material. Experts believe even these numbers may be conservative due to a lack of island-wide surveys, pointing to major exploration opportunities.

However, realising this potential requires urgent action. The report identifies systemic barriers: a fragmented regulatory framework involving over 18 agencies, slow licensing, infrastructure gaps, and outdated mining methods. These challenges have discouraged investment and prevented value addition.

The path forward is clear. The government is already moving to modernise the approval process via a unified digital platform and is crafting a national critical minerals strategy. The report emphasises that success hinges on attracting foreign expertise and investment, particularly in downstream processing – turning graphite into battery-grade material, refining rare earths, and processing mineral sands domestically.

Australia, with its global leadership in sustainable mining and technology, is positioned as a key partner. Australian METS (Mining Equipment, Technology, and Services) companies can bring advanced technology, ESG-compliant practices, and training, potentially reducing operational costs by 30-40% while improving recovery rates.

“For Sri Lanka, the stakes are high. Developing a modern, sustainable mineral sector can diversify the economy, create high-value jobs, build resilience, and integrate the nation into strategic global supply chains,” the Australian High Commissioner noted. The message from the report is one of urgent optimism: the resources are here, the international partners are ready, and the roadmap is laid out. Now is the time for policymakers, investors, and stakeholders to come together to unlock this buried treasure for the benefit of all Sri Lankans.

By Sanath Nanayakkare

Continue Reading

Business

Environmental damage now a direct threat to telecom operations, SLT chief warns at 2026 calendar launch

Published

14 hours ago

on

2025/12/19

By

Dignitaries at the launch of the SLT calendar

Environmental destruction is no longer an abstract environmental concern but a direct business risk, Sri Lanka Telecom/Mobitel Chairman Dr. Mothilal de Silva warned, as the national telecom giant launched its 2026 corporate calendar linking climate change, marine degradation and network stability.

Unveiling the calendar, Dr. de Silva said the initiative was not a ceremonial exercise but a corporate statement on responsibility and survival. “Today we are not just unveiling a calendar; we are sharing a story — a story of beauty, resilience and profound responsibility,” he said, stressing that environmental protection had become business-integral for SLT.

The 2026 SLT-Mobitel desk and digital calendar takes viewers beneath Sri Lanka’s seas, focusing on the intricate forms of marine shells and clams. Created by renowned artists Pulasthi Ediriweera and Nalin Jayarathna, the artworks portray seashells as both natural marvels of design and lasting symbols of fragile marine life.

“Each shell is a protective home — a permanent memorabilia left by gentle creatures,” Dr. de Silva said. “In their form and pattern, they send us a silent message about their presence and their urgent need for protection.”

Drawing a direct link between ecological degradation and recent climate-related disasters, Dr. de Silva rejected attempts to mask environmental realities. “You cannot cover this up with fake news. The destruction of forests, hill-country ecosystems, tea estates and irresponsible land use has created these calamities,” he said, referring to recent cyclonic events and flooding.

He warned that climate change and rising sea levels were already affecting SLT’s core infrastructure. Sri Lanka’s international connectivity depends on five subsea communication cables landing in Colombo and Matara. “Unusual sea-level rise and abnormal tides have already caused network outages. When the sea is disturbed, it directly affects the quality and reliability of our network,” he said.

Dr. de Silva said SLT and its international consortium partners follow strict environmental safeguards when laying, maintaining and even disposing of subsea cables. These include detailed environmental surveys, route planning to avoid sensitive marine ecosystems and specialised installation techniques. Cable repair operations based in Galle, he added, also adhere to stringent environmental standards.

“Our work is fundamentally about connection — connecting people, businesses and nations. But this connection must be built with care for the environment that hosts it,” he said, noting that sustainability was not merely a corporate social responsibility obligation but essential to business continuity.

Marine naturalist Dr. Malik Fernando, addressing the launch, highlighted Sri Lanka’s rich but inadequately studied seashell diversity. He said several marine and freshwater mollusc species were protected under existing laws, yet continued to appear in markets due to weak enforcement.

Some shells, including cone shells, are highly venomous and capable of causing human fatalities, Dr. Fernando noted, underscoring the risks posed by unregulated collection. While many mollusc species are widely dispersed due to larval movement, he said certain rare species recorded from limited locations could be near-endemic and vulnerable to extinction.

Dr. Fernando also pointed to the broader challenge of biodiversity research, noting that many species remain unidentified due to the lack of systematic field studies, despite improved access to global scientific resources through digital platforms.

In concluding remarks, Dr. de Silva called on the media to play a responsible role in conveying environmental truths to the public and suggested that the calendar be shared internationally, including at future UN climate conferences. “A digitally empowered Sri Lanka must go hand in hand with preserving its natural wonders,” he said. “This calendar is a reminder that protecting the environment is not optional — it is essential for our future.”

By Ifham Nizam

Continue Reading

Trending