Regulatory Framework on Investments and Disposals in Listed Securities by Unit Trust Managing Companies

SEC SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA ශ්‍රී ලංකා සුරැකුම්පත් සහ විනිමය කොමිෂන් සභාව | இலங்கை பிணையங்கள் மற்றும் பரிவர்த்தனை ஆணைக்குழு

BY HAND AND REGISTERED POST

Ref: SEC/SUP/18/12/827

31st December 2018

TO: ALL MANAGING COMPANIES OF UNIT TRUSTS

RE: REGULATORY FRAMEWORK ON INVESTMENTS/DISPOSALS IN LISTED EQUITY/DEBT SECURITIES BY A UNIT TRUST MANAGING COMPANY IN ITS OWN NAME

The Securities and Exchange Commission of Sri Lanka (SEC) has received requests from time to time from Managing Companies of Unit Trusts for approval to invest in listed equity/debt securities in their own name. Accordingly, the Commission at its 412th Meeting approved the issue of a Framework to be followed by Managing Companies of Unit Trusts for investments/disposals in listed equity/debt securities by Managing Companies of Unit Trusts in their own name.

All Managing Companies of Unit Trusts are hereby required to henceforth follow and comply with the Regulatory Framework as appearing in Annexure I for any investments/disposals in listed equity/debt securities in their own name.

Signature

Vajira Wijegunawardane Director General

GG/PH

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28 වන 29 වන, ලෝක වෙළඳ මධ්‍ය ස්ථානය, එචලන් චතුරශ්‍රය කොළඹ 01, ශ්‍රී ලංකා.

28 மற்றும் 29 ஆம் மாடி, உலக வர்த்தக மையம் கீழடிக்கு கோபுரம், எச்சலன் சதுக்கம் கொழும்பு 01.

Level 28 & 29, East Tower World Trade Center Echelon Square, Colombo 01, Sri Lanka.

தொலைபேசி Telephone } +94 11 2143843

தொலைநகல் தொலைநகல் Fax } +94 11 2438149

வலைத்தளம் இணையம் Web site } www.sec.gov.lk www.cmet.sec.gov.lk www.cmlc.sec.gov.lk

A Member of OICU-IOSCO

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SEC SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA

Continuation Sheet

Annexure I

The following procedure is to be followed by a Unit Trust Managing Company for investments/disposals in listed equity/debt securities in its own name;

1. The Unit Trust Managing Company shall make a request to the SEC seeking approval to invest/dispose in listed equity/debt in its own name. The Request shall contain the following information; a. The intended total value of the investment/disposal b. The list of the intended listed securities of investment/disposal c. The holding of the intended listed securities in the existing Unit Trust Funds as a percentage of the Net Assets Value (NAV) d. The procedure in place with the Managing Company to ensure the avoidance of possible conflicts of interest situations e. A Declaration to be provided (jointly) by the Chief Executive Officer and the Compliance Officer of the Managing Company, that procedures have been put in place to avoid possible conflicts of interest situations

2. The Approval for the above investment/disposal shall be granted subject to the following conditions; a. Priority in trade allocation shall be given to the unit trust funds and private portfolios over Managing Company's own investments. b. The Managing Company shall not cross trade listed equity/debt securities between unit trust funds/ private portfolios and the portfolio of the Managing Company. c. Furnish the CDS Statement of the Managing Company in its own name, unit trust funds and private portfolios and the information requested in the manner specified in Annexure II, on a monthly basis

3. Managing Companies who have already been granted the approval for investments/disposals in listed equity/debt securities in its own name are also required to comply with the conditions stipulated in 1 and 2 above in addition to the conditions currently applicable.

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SEC SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA

Continuation Sheet

Annexure II

Investment/Disposal Information for the Month .................... of 20...

Transactions of Unit Trust Fund

Name of Security	Date	Time	Purchase / Sale	Quantity	Price

Transactions of Private Portfolios

Name of Security	Date	Time	Purchase / Sale	Quantity	Price

Transactions of Managing Company

Name of Security	Date	Time	Purchase / Sale	Quantity	Price