Minimum Governance Requirements Applicable to Market Intermediaries

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

Office of the Director General

Ref: SEC/DG/2023/07/200

July 24th, 2023

TO: MARKET INTERMEDIARIES

DIRECTIVE ISSUED IN TERMS OF SECTION 16(c) OF THE SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA ACT NO. 19 OF 2021

MINIMUM GOVERNANCE REQUIREMENTS APPLICABLE TO MARKET INTERMEDIARIES

The Securities & Exchange Commission of Sri Lanka at its 485th Meeting held on 6th June 2023, resolved to stipulate minimum Governance requirements applicable to Market Intermediaries.

I. BOARD COMPOSITION

Market Intermediaries shall, as a minimum requirement, comply with following;

i. Board of Directors of a Market Intermediary shall comprise of a minimum of 3 Directors in total; of whom at least One (1) shall be a Non-executive Director.

ii. Where the Chairman is a Non-independent director, the Non-executive Director shall be 'Independent'.

iii. Further, in the event the Chairman and CEO roles are combined, the Board shall appoint the Independent Non-executive Director to be the 'Senior Independent Director' (SID) with powers equivalent to that of the Chairman, as specified in the Board Charter and/or Terms of Reference.

II. CHIEF EXECUTIVE OFFICER (CEO)

Market Intermediaries shall comply with following requirements applicable to the Chief Executive Officer (CEO) of such entity.

i. The CEO shall be a full time employee, dedicated for the entity and shall;
a. possess a degree or a professional qualification from a recognized university/institute with a minimum five (05) years of executive experience; or, b. a minimum of ten (10) years of senior managerial experience.

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SEC SECURITIES AND EXCHANGE COMMISSION OF SRI LANKA Continuation Sheet

ii. However, where the entity holds more than one category of license issued by the SEC, a dedicated Business Head with adequate competence, reporting to the CEO shall be appointed for each license category; whilst ensuring appropriate processes are in place to have a clear demarcation of the different functions pertaining to such businesses.

This Directive shall be effective from 24th July 2023 with a transitional period of a maximum of 06 months to fully comply.

(Signature)
Chinthaka Mendis
DIRECTOR GENERAL
-/dm/sp/hm

'Independent' – Reference; item A.5.5 'Code of Best Practice on Corporate Governance 2017' issued by the Institute of Charted Accountants of Sri Lanka (CASL)

Directive no 02 issued by supervision in terms of SEC Act no. 19 of 2021