Part I of the Schedule

SCHEDULE

PART I

Requirements and conditions to be satisfied for the purpose of granting a licence as a stock exchange to a body corporate and a renewal of such licence, are as follows:

a.       that the applicant is -

i.            a public limited liability company incorporated under the Companies Act, No. 17 of 1982; or

ii.            an association registered as a company with limited liability under section 21 of the Companies Act, No. 17 of 1982;

 

b.      that the articles of association of the applicant company referred to in paragraph (a) do not permit any distribution of profits to members;

c.       that the articles of association of the applicant company restricts the membership of the stock exchange to brokers and dealers only;

d.      that at least six members of the applicant company will carry on broking business in securities independently of and in competition with each other and that at least four members have experience in broking in securities during the last five years;

e.       that the applicant company is engaged solely in the business of operating a stock exchange;

f.        that the Board of Directors and the chief executive of the applicant company consists of persons of business integrity;

g.       that the Board of Directors of the applicant company consists of nine members approved by the Commission, out of whom not more than five members shall be from among individual stock brokers or stock dealers elected by the general membership, and not less than four members shall be appointed by the Minister from among persons recommended by the Commission;

h.      that the applicant company’s location and activities will enable the creation of a more orderly market for securities in Sri Lanka;

i.        that the applicant company’s financial standing is satisfactory;

j.        that the rules of the applicant company make satisfactory provision-

(i)            for admission of members;

(ii)          for exclusion from membership of persons who are not of good character and high business integrity;

(iii)        for the expulsion, suspension or disciplining of members for conduct inconsistent with just and equitable principles in the transaction of business or for a contravention of or failure to comply with rules of the stock exchange or the provisions of this Act;

(iv)         for appointment of authorised representatives and clerks;

(v)           with respect to the conditions under which securities may be listed for trading in the market;

(vi)         with respect to conditions under which listing of a particular security may be revoked;

(vii)       with respect to the conditions governing dealings in securities by its members;

(viii)     with respect to timely and accurate disclosure of all material information required for investors to make informed investments decisions;

(ix)         with respect to the protection of investors in securities from misrepresentation, misleading information, fraud, deceit and other adverse practices in the issue and trading of securities and from the abuse of certain persons of privileged information not yet made available to the general public;

(x)           with respect to prohibition of securities market manipulation of any form including false trading, market rigging & etc.

(xi)         for investigating into trading in securities and financial transactions of stock brokers and stock dealers and for conducting surprise checks on the members;

(xii)       for suspension of trading of any given security for the protection of investors or for the conduct of orderly and fair trading;

(xiii)     with respect to the conduct of securities trading of stock brokers and stock dealers and the manner in which information relating to such transactions shall be maintained;

(xiv)      for ensuring that the customer funds and securities are segregated from other business of brokers and dealers; and

(xv)        for the appointment of a disciplinary committee a majority of the members of which are not associated with any licensed stock broker or licensed stock dealer;

k.       that the articles of association of the applicant company provide procedure for removal of stock exchange management officials only by the vote of at least two-thirds of all  the member brokers or licensed stock dealers.