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

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.