The Securities and Exchange Commission of Sri Lanka (SEC) was established in pursuance of the Securities and Exchange Commission of Sri Lanka Act, No. 36 of 1987 as amended by Act No. 26 of 1991, Act No. 18 of 2003 and Act no. 47 of 2009.
“To become the benchmark regulator in South Asia for effective, efficient and proactive capital market regulation”
“To promote, develop and maintain a capital market that is fair, efficient, orderly and transparent”
- the creation and maintenance of a market in which securities can be issued and traded in an orderly and fair manner;
- the protection of the interest of investors;
- the operation of a Compensation Fund to protect investors from financial loss arising as a result of any licensed stock broker or licensed stock dealer being found incapable of meeting his contractual obligations; and
- the regulation of the securities market and to ensure that professional standards are maintained in such market.
Powers Duties and Functions
Over time, its powers, duties and functions have expanded and at present it is entrusted with the following:
- to grant a licence to a body corporate to operate as a stock exchange and ensure the proper conduct of its business;
- to grant a licence to any person to operate as a stock broker or a stock dealer as, the case may be, and ensure the proper conduct of their business;
- to grant a licence to a managing company to operate a unit trust and to ensure the proper conduct of the business of such unit trust;
- to grant a certificate of registration to any person to carry on business as a market intermediary and to ensure the proper conduct of such business;
- to give general or specific directions to a licensed stock exchange or a licensed stock broker or a licensed stock dealer or a licensed managing company or a trustee of a unit trust or a registered market intermediary, from time to time;
- to grant compensation to any investor who suffers pecuniary loss arising as a result of any licensed stock broker or licensed stock dealer being found incapable of meeting his contractual obligations;
- to advise the government on the development of the securities market;
- to employ such officers and servants as may be necessary for the purpose of carrying out the work of the Commission;
- to regulate the listing and issue of securities in a licensed stock exchange;
- to direct a licensed stock exchange to reject any application made to it for listing;
- to cancel or suspend the listing of any securities or the trading of any listed securities or to suspend the trading of all listed securities for not more than three days at a time, for the protection of investors;
- to inquire and conduct investigations into any activity of a licensed stock exchange, a licensed stock broker or licensed stock dealer, a licensed managing company or a trustee of a unit trust, a registered market intermediary or any listed public company;
- to publish findings of malfeasance by any licensed stock broker or licensed stock dealer or a licensed managing company or a trustee of a unit trust, or a registered market intermediary or any listed public company;
- to implement the policies and programmes of the Government with respect to the market in securities;
- to acquire in any manner whatsoever and hold, take or give on lease or hire, mortgage, pledge, sell or otherwise dispose of any immovable or movable property; and
- to request the Registrar of Companies, in the exercise of the powers conferred on it by section 227 of the Companies Act, No. 17 of 1982, to call upon a private limited liability company to become a public limited company; and
- to regulate take-overs or mergers where such take-over or merger is between one or more listed companies or where at least one of the parties involved in such take-over or merger is a listed public company;
- to conduct investigations into any alleged violation or contravention of the provisions of this Act or any rule or regulation made there under by any person; and
- to do all such other acts as may be incidental or conducive to, the attainment of the objects of the Commission or the exercise of its powers under this Act.
- carry out inspections of the activities of licensed stock exchanges, licensed stock brokers, licensed stock dealers, licensed managing companies or trustees of unit trusts or registered market intermediaries, in order to determine whether they are operating in conformity with the provisions of this Act or any regulations or rules made thereunder and to charge the costs incurred in carrying out such inspections from the licensed stock exchange, licensed stock broker, licensed stock dealer, licensed managing company or trustee of a unit trust or registered market intermediary as the case may be, whose activities are being inspected;
- require licensed stock exchanges, licensed stock brokers, licensed stock dealers, licensed managing companies of unit trusts and registered market intermediaries to file with the Commission, annual balance sheet and income statements, certified by a qualified auditor in the form and manner specified by the Commission;
- require the licensed managing company of a unit trust to file with the Commission, in respect of every year, at least two reports of the activities of that unit trust for that year. Every such report shall contain such particulars as may from time to time be determined by the Commission. The first report shall be filed not later than the thirtieth of September of that year and the second report shall be filed not later than the thirty-first of March of the subsequent year.
- There shall be charged, levied and paid a cess at such rates as may be specified by the Minister by Order published in the Gazette on every purchase and sale of securities recorded in a licensed stock exchange or notified to it under its rules by both the purchaser and the seller. Different rates may be specified in respect of different classes of securities.
Who We Regulate
Registered Market Intermediaries and Licensed Stock Brokers, Stock Dealers, Management Companies of Unit Trusts as at 31st December 2016