Regulatory Alerts2024-01-01
SEC Directive on Minimum Financial Requirements applicable to certain categories of Market Intermediaries
The Securities and Exchange Commission of Sri Lanka has revised the minimum financial requirements for specific market intermediaries including investment managers, credit rating agencies, and underwriters. The directive establishes mandatory thresholds for shareholders' funds and liquid capital, such as a 7.5 million LKR minimum for investment managers and a 50 million LKR minimum for underwriters. Entities holding multiple licenses must comply with the highest applicable financial standards, and this directive rescinds the previous SEC directive dated April 26, 2023.
SEC SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA ශ්රී ලංකා සුරැකුම්පත් හා විනිමය කොමිෂන් සභාව இலங்கை பிணையங்கள் மற்றும் பரிவர்த்தனை ஆணைக்குழு
15th October 2024 Ref: SEC/DG/2024/10/495
TO: INVESTMENT MANAGERS, CREDIT RATING AGENCIES, MARGIN PROVIDERS, MANAGING COMPANIES, UNDERWRITERS, CORPORATE FINANCE ADVISORS, STOCK BROKERS AND STOCK DEALERS
DIRECTIVE ISSUED UNDER AND IN TERMS OF SECTION 16(C) OF THE SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA ACT, NO. 19 OF 2021
RE: MINIMUM FINANCIAL REQUIREMENTS APPLICABLE TO CERTAIN CATEGORIES OF MARKET INTERMEDIARIES
The Securities and Exchange Commission of Sri Lanka at its 506th meeting held on 03rd September 2024 resolved to revise the 'Minimum Financial Requirements' for the following categories of Market Intermediaries.
| Market Intermediary Category* | Minimum Shareholders’ Funds requirement (LKR) | Minimum Liquid Capital Requirement |
|---|---|---|
| Investment Manager | 7.5 million Or 50% of Stated Capital whichever is higher | 2.5% of total liabilities |
| Credit Rating Agency | 15 million Or 50% of Stated Capital whichever is higher | 2.5% of total liabilities |
| Margin Provider | 30 million Or 50% of Stated Capital whichever is higher | 2.5% of total liabilities |
| Managing Company | 25 million Or 50% of Stated Capital whichever is higher | 2.5% of total liabilities |
| Underwriter | 50 million | The Liquid Capital requirement will be determined case by case, based on the value underwritten. Accordingly, at the time of obtaining approval of the SEC for any underwriting obligation, the entity shall demonstrate availability of Liquid Capital equivalent to the value underwritten. |
| Corporate Finance Advisor | 7.5 million Or 50% of Stated Capital whichever is higher | 2.5% of total liabilities |
| Stock Broker and Stock Dealer | Shall comply with the Minimum Financial requirements as determined by the Exchange. |
28 වන 29 මහල, ලෝක වෙළඳ මධ්යස්ථානය 28 மற்றும் 29 ஆம் மாடி, கிழக்கு கோபுரம் உலக வர்த்தக மையம், எக்கலன் சதுக்கம் கொழும்பு 01. Level 28 & 29, East Tower World Trade Centre Echelon Square, Colombo 01, Sri Lanka. A Member of IOSCO International Organization of Securities Commissions
දුරකථන } +94 11 2143843 தொலைபேசி Telephone ෆැක්ස් } +94 11 2439149 தொலைநகல் Fax වෙබ් අඩවිය } www.sec.gov.lk இணையம் } www.cmet.sec.gov.lk Web site } www.cmic.sec.gov.lk
SEC SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA Continuation Sheet
i) This Directive is issued in furtherance of the SEC Rules applicable to Market Intermediaries issued by way of Gazette No. 2271/09 dated 15th March 2022 in terms of section 183 of the Securities and Exchange Commission of Sri Lanka Act. No. 19 of 2021 and the applicable provisions of the said Act;
ii) Entities acting under multiple licensing categories shall comply as follows: a. minimum Shareholders’ Funds requirement (LKR) shall be the highest value stipulated amongst the applicable categories. b. minimum Liquid Capital requirement shall be 2.5% of total Liabilities of the category.
SEC Directive dated 26th April 2023 bearing reference SEC/DG/2023/04/91 is hereby rescinded.
This Directive shall be called, 'Minimum Financial Requirements applicable to certain categories of Market Intermediaries Directive' and shall come into effect from the date hereof.
Chinthaka Mendis DIRECTOR GENERAL