Regulatory Alerts2026-05-05
SEC Directive Related Party Portfolio Management Limits and Minimum Number of Clients
The Securities and Exchange Commission of Sri Lanka issued a directive requiring licensed Investment Managers to reduce Assets Under Management attributable to related parties to 60% within one year and 40% within two years. New Investment Manager applicants must ensure related party exposure never exceeds 40% of total Assets Under Management and must demonstrate a minimum of three prospective clients at the time of application. Existing license holders are mandated to maintain a minimum of three clients within one year of the directive's effective date of May 6, 2026.
re T* ff I tt.rRrrEs AND EXCHANGE \ t. q I aoMMiil,o* oF sRr LANKA L-"/ d.- {.-"/ I 6 Ooot eafO@od eset 86OG 6{DEBd 66P Oodo60 dlomuriom opuo uflofptgoo egomdlqqg O56 May 2026 Ref: SEC/SUP I 2026 I os I L59 To: ALL INVESTMENT MANAGERS DIRECTIVE ISSUED UNDER SECTION 16(c) OF THE SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA ACT, NO. 19 OF 2021 (SEC ACT) RELATED PARTY PORTFOLIO MANAGEMENT LIMITS AND MINIMUM NUMBER OF CLIENTS APPLICABLE FOR INVESTMENT MANAGERS The Securities and Exchange Commission of Sri Lanka (SEC) at its 531st Meeting held on 9th April 2026 resolved to stipulate related pafi portfolio management limits and minimum number of client requirements for the Investment Managers. Accordingly, the SEC hereby directs all Investment Managers licensed by the SEC to comply with the following regulatory requirements stipulated below in terms of Sections 16(c) of the SEC Act No. 19 of 202L:
- RELATED PARTY PORTFOLIO MANAGEMENT LIMITS I. Investment Managers who holds such licence as at the effective date below shall reduce the Assets Under Management (AUM) attributable to related party clients to sixty percent (600/o) of total AUM within the first (1st) year and further reduce such exposure to fofi percent (40o/o) of total AUM within the second (2nd) year, with effect from the effective date below; and II. All New Investment Manager licence applicants shall ensure that the Assets Under Management (AUM) attributable to related party clients do not exceed forty percent (40olo) of their total AUM at any time.
- MINIMUM NUMBER OF CLIENTS L lnvestment Managers who holds such licence as at the effective date below maintain a minimum of three (03) clients within one (01) year from the effective date below. II. New Investment Manager licence applicants shall have a minimum of (03) prospective clients at the time of applying for final approval to be licenced as an Investment Manager. For the purpose of this Directive, the term 'related party'shall have the same meaning as appearing in Sri Lanka Accounting Standard LKAS 24 - Related Party Disclosures. 'Related party client' means any client who falls within the definition of a 'related pafi'as set out in Sri Lanka Accounting Standard LKAS 24 - Related Party Disclosures. This Directive shall be effective from 06th May 2O26 and all Investment Managers and those who apply for such licence in the future shall ensure full compliance with its provisions. OFFICER.IN.CHARGE 28 60 29 000, oeoot'6d eOO 6@ic! oooq 04.d0)o6 88@d 0Q0€6, 66)g0 01. qoooo I GorooGudl | *g+ ll Zl+Sa4ts Telephone ) 28 Dourb 29 €U6 @trq, dlpeo G6trqr6 roe ori$ga oolrb. o&eooi eglBarb G6tr(q6q 01. Level 28 & 29, East Tower World Trade Centre Echelon Square, Colombo 01, Sri Lanka | *'o tt'o"to' 0OA IOSCO ea8(i I M.Sec.gov.lk tnternationatorganization $omuLb I m. cmet.sec.gov.lk ofse(uritiescommissions Website J www.cmic.sec.qov.lk oradd 66trooE6oi) Fax