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New SEC Act designed to attract and protect foreign investment – Viraj Dayaratne P.C.

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By Steve A. Morrell

The new SEC Act is designed to attract and protect foreign investment, Securities and Exchange Commission chairman Viraj Dayaratne P.C. said.

Dayaratne was addressing a recent SEC-organized symposium for public listed companies on the New SEC Act at the Galle Face Hotel.

The discussion panel also comprised CEO, Colombo Stock Exchange Rajeeva Bandaranaike, chairman SLID Faizal Salieh, chairman, Tokyo Cement PLC Dr. Harsha Cabral, president, Institute of Chartered accountants of Sri Lanka Manil Jayasinghe, Group Executive Vice President and CEO Telecommunications Business, Axiata Group Bhd. Dr. Hans Wijayasuriya, Director General, SECSL Chintaka Mendis, chairman, CSE Dumith Fernando, chairman, JKH PLC Krishan Balendra, chairman, Integrated Reporting Council Asite Talwatte, CRO, CSE Renuke Wijewardane and director, SECSL Dr. Harsitha Suriyapperuma.

Dayaratne introducing the content of the Act said the new law was enacted in September 2021. Section 2 applies to securities and the SEC network overlooking fair and orderly securities markets. Stock brokers and stock dealers were covered by section 188 of the new legislation, particularly in relation to duties and obligations of listed companies. The prospectus clearly spells out the aim of the Companies Act.

Dayaratne went on to explain, among other things, that wrong-doing will be subjected to inquiry, inclusive of the application of fit and proper criteria for effective corporate governance.

Of special relevance was the fact that the new legislation was designed to encourage foreign investment and that such investors would be protected. The corporate governance framework was drafted to also minimize market misconduct, through for example, declaration of false statements and also provided for curbing market malpractices, misleading ambiguity and uncertainty that would result in a negative impact on the market, Dayaratne said.

‘The new act would help capital markets. It is also of importance that whistle blowers would be protected by this law, the SEC Head said.

At the panel discussion Chintaka Mendis said the new Act was a progressive piece of legislation that ensured a level playing field.

Krishan Balendran made the point that the new Act would prevent irregularities and go a long way to ensure red tape is avoided. By stressing the value of good corporate governance, the new legislation would prove a factor in attracting investments.

Hans Wijesuriya said, among other things, that Sri Lanka rates quite well among foreign investors. That would be a plus factor in taking the investment process forward and the new Act provided the basis for this.

Bribery and corruption would also be addressed and that would give added credibility to the SEC, he said.

Faizal Saleh and other panelists were of the general view that the new legislation would lead towards Colombo being recognized as an investor hub in the region.



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Business

Seven factors of concern at upcoming Monetary Policy Review

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by Sanath Nanayakkare

The Central Bank of Sri Lanka (CBSL) is scheduled to announce its latest monetary policy review on 20th January 2022, with all eyes on dwindling foreign reserves and foreign currency exchange in the country.

In this context, First Capital Research has named 7 factors of concern that could be taken into account at the upcoming monetary policy review. They are as follows.

* Foreign Reserves USD 3.1 billion – Dec 2021

* Inflation CCPI 12.1% – Dec 2021

* GDP Growth -1.5% – 3Q2021

* Private Credit LKR 60.5 billion – Nov 2021

* 03M T-Bill rate 8.38% as at 12.01.22

Liquidity and CBSL Holdings LKR -364.0 billion and LKR 1.42 trillion

Balance of Trade (BOT) and Balance of Payment (BOP) USD -6.5 billion and USD -3.3 billion for Jan-Oct 21

First Capital Research’s Policy Rate Forecast – Jan 2022-Apr 2022 notes that they believe the CBSL may highly consider tightening the monetary policy rates in this policy review but given the concerns over economic growth, there is a probability of 40% for CBSL to maintain its policy stance at current levels.

“With high frequent indicators improving in line with expectations, we have eliminated any probability of a rate cut. We expect a continued increase in probability for a rate hike in order to prevent overheating of the economy amidst the given fiscal and monetary stimulus,” they said.

As per First Capital’s view, CBSL either can choose to hike policy rates by 50bps or 100bps or hold policy rates steady, while a rate cut is off the table due to the high debt repayment and the high domestic borrowing requirement.

First Capital believes that there is a 60% probability for a rate hike due to the remedial actions required in achieving external stability.

However, there is also a 40% probability to maintain the policy rates at its current level in order to further improve the high frequency indicators.30%, they noted.

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Business

Sri Lanka’s dash brand enters international markets

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Multichemi International Ltd, which manufactures and distributes a wide range of products under dash, one of Sri Lanka’s leading detergent and household care brands, has begun exporting its products to several international markets in Asia and Oceania, with plans also to enter Africa. The dash brand includes a wide range of products in car care, household care, home fragrances and laundry care sectors. Multichemi International Ltd, which has been awarded ISO 9001:2015 certification, is a Sri Lankan pioneer in environment-friendly cleaning products, having launched the country’s first biodegradable, safe cleaning products over 28 years ago.

Amila Wijesinghe, General Manager of the Company said,”Having conquered the domestic market, we are now ready to capture the international market. We are confident that our products which are of high quality will receive a good demand overseas as well. The feedback we have received so far from our overseas customers is extremely encouraging. We are dedicated to taking our products to the international market, to bring in foreign currency to the country and help uplift the economy”,

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Janaka Abeysinghe appointed SLT CEO

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Sri Lanka Telecom PLC has announced the appointment of Janaka Abeysinghe as its Chief Executive Officer (CEO) with effect from February 1, 2022.

The incumbent CEO Kiththi Perera will be overseas on leave for a period of two years to pursue higher studies, according to a stock market filing by the company.

Abeysinghe joined SLT in 1991. In his present role, he leads the enterprise and wholesale business of SLT that provides integrated voice and data solutions to enterprises, government institutions, domestic telco operators and global wholesale carriers.

In his career at SLT spanning 29 years, he has held a number of senior positions, including general manager Enterprise and International Sales and has extensive experience in the areas of Enterprise Digital Services, Enterprise Communications Solutions, Data Communications, Business Development, Domestic and International Switching Operations and Global Wholesale Voice & Data Business.

He holds a Master’s Degree in Electrical and Computer Engineering from the University of Kansas, USA and a BSc degree in Electronics and Telecommunications Engineering with a First Class Honours from the University of Moratuwa.

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