| LISTINGS RULES FOR
CORPORATE DEBT
The Commission has approved the final draft rules formulated by
the Colombo Stock Exchange relating to the listing of debt securities
issued by existing listed companies and the granting of quotations
for debt securities issued by companies, which do not have their
equity, listed on the Colombo Stock Exchange.
The Rules are as follows :-
[A] New companies seeking listings by obtaining a quotation
only for their debt securities.The following rule is to be included
as rule 1.1-7Debt Securities:
A company applying for a quotation of debt may, as a general rule,
be considered for admission to the official list (Debt Securities
Board) if the debt securities comply with the following:
| 1. |
Have a guarantee (from a bank licensed by
the Central Bank of Sri Lanka or a multilateral lending
agency acceptable to the CSE) for the repayment of capital
and interest. |
| 2. |
Be secured against collateral. For the purpose of this
rule ‘collateral’ shall mean land and building ;or security
acceptable for purposes of asset securitisation. or |
| 3. |
Have obtained for the security a rating acceptable to
the Exchange from a rating agency registered with the
SEC.
or |
| 4. |
The securities are issued by companies which conform to
the following |
| a |
Have a debt/shareholders funds ratio of at
most 2:1 following the issue of debt securities for which
a zzquotation is sought. For the purpose of calculating
the debt/shareholders funds ratio as required by this
rule, debt includes all forms of borrowing and bank overdrafts
but excludes trade creditors.and |
| b |
Have at least a 7.5% return on investment (shareholders
funds) on an average in the three immediately preceding
years.and
|
| c |
Which will create a reserve fund for the redemption
of the debt securities. Appropriation of profits should
be made to the reserve fund in equal annual installments
during the tenure of the debenture so that on the
date of maturity of the debenture the total amount
required for repayment of capital would have been
appropriated. The reserve fund need not be a sinking
fund. Following the redemption of debentures the reserve
fund may be extinguished. |
| 1 |
A minimum of 50% of the debt securities for
which a quotation is sought is in the hands of the public
following a public offering of securities. Underwriting
of the public offering is mandatory. The minimum size
of the public offering is Rs.50 million. |
| In complying with this
requirement the following are to be excluded |
| a |
Holdings by parent, subsidiary or associate companies. |
| b |
Holdings by group companies (subsidiaries or associates
of the parent company). |
| c |
Holdings by directors, members of their families (spouses
and children under 18 years of age) and/or their nominees. |
| d |
Holdings by a company in which a director has a controlling
interest. A controlling interest prevails where the director
owns at least 51% of the equity of the company or can
control the composition of the Board of Directors of such
company. |
B |
Granting quotations for debt securities of
existing listed companies |
The following
new rule is to be included as rule 4.9 |
| "An existing listed company may seek
a quotation for debt securities if such securities conform
with the following: |
| 1 |
Have a guarantee from a bank licensed by the Central Bank
of Sri Lanka or a multilateral lending agency acceptable
to the CSE for the repayment of capital and interest.
|
| 2 |
Be secured against collateral. For the purpose of this
rule ‘collateral’ shall mean land and building or security
acceptable for purposes of asset securitisation.
or |
| 3 |
Have obtained for the security a rating acceptable to
the Exchange from a rating agency registered with the
SEC.
or |
| 4 |
Securities issued by companies which conform to the following: |
| a |
Have at least a 7.5% return on investment (shareholders
funds) on an average in the three immediately preceding
years.
and |
| b |
Which will create a reserve fund for the redemption of
the debt securities. Appropriation of profits should be
made to the reserve fund in equal annual installments
during the tenure of the debenture so that on the date
of maturity of the debenture the total amount required
for repayment of capital would have been appropriated.
The reserve fund need not be a sinking fund. Following
the redemption of debentures the reserve fund may be extinguished.
and |
| 5 |
A minimum of 50% of the debt securities for which a quotation
is sought is in the hands of the public following a public
offering of securities. The minimum size of the public
offering is Rs.50 million. |
| |
In complying with this requirement the following are to
be excluded: |
In complying with this
requirement the following are to be excluded: |
| a |
Holdings by parent, subsidiary or associate companies. |
| b |
Holdings by group companies (subsidiaries or associates
of the parent company). |
| c |
Holdings by directors, members of their families (spouses
and children under 18 years of age) and/or their nominees. |
| d |
Holdings by a company in which a director has a controlling
interest. A controlling interest prevails where the Director
owns at least 51% of the equity of the company or can
control the composition of the Board of Directors of such
company". |
[C] Continuing Listing Requirements
The Following Rule will be Included as Rule 3.1-17.
"Companies listed on the debt securities board and companies
that have obtained quotations for debt securities shall make available
to the Exchange and to all holders of debt securities a profit
and loss account and balance sheet before the expiry of two months
from the end of each half year. If a company circulates to the
Exchange and to all holders of debt securities the audited accounts
before the expiry of three months from the end of the financial
year it will be exempted from circulating the accounts for the
second half year.
Half-yearly accounts should be similar in format to the audited
accounts. Detailed notes as given in the audited accounts are
not deemed necessary. However, the following minimum requirements,
explanatory notes and ratios should be adhered to and included
in the case of half yearly accounts. .
MINIMUM REQUIREMENTS
1. A balance sheet and a profit and loss account.
The profit and loss account should be prepared on a cumulative
basis for the second half year.
2. Figures for the previous corresponding period for comparison.
3. Where the company is a holding/parent company, disclosure
of results separately for the holding/parent company and of the
group as a whole.
4. An additional column to be included in the profit and loss
account indicating the variance, calculated against the results
of the previous comparative period.
EXPLANATORY NOTES
A statement that the same accounting policies and methods of computation
are followed in the half-yearly accounts as compared with the
most recent annual financial statements or, if those policies
or methods have been changed, a description of the nature of the
change and the effect of the change.
Material events subsequent to the half year period that have not
been reflected in the accounts for the half year.
The effect of changes in the composition of the assets and liabilities
of the enterprise during the half year period, including business
combinations, acquisition or disposal of subsidiaries and long
term investments, restructuring and discontinuing operations.
Changes in contingent liabilities of a material nature since the
last annual audited balance sheet date.
Liability for management fees or any other similar expenditure
not provided for in the half yearly accounts.
Any material change in the use of funds raised through an IPO/Rights/Debt
The following ratios should be included in the half-yearly accounts.
| |
CURRENTPERIOD |
PREVIOUS COMPARATIVE
PERIOD |
| Interest rate of comparable government security |
X |
X |
| Debt/equity ratio |
X |
X |
| Interest cover |
X |
X |
| Quick asset ratio |
X |
X |
The market prices
during the year/half year
(ex interest) |
X |
X |
| Highest Price |
X |
X |
| Lowest Price |
X |
X |
Last traded price
(as at dd/mm/yy) |
X |
X |
| Interest yield as at date of last trade (dd/mm/yy) |
X |
X |
| Yield to maturity of trade |
X |
X |
| done on (dd/mm/yy) |
X |
X |
In deciding how to recognise, measure, classify or disclose an
item in the half-yearly accounts, materiality should be assessed
in relation to the half-yearly financial data. In making assessments
of materiality, it should be recognised that half-yearly measurements
may rely on estimates to a greater extent than measurements of
annual financial data.
Twenty Five (25) copies of the half-yearly accounts should be made
available to the CSE at the same time that the accounts are circulated
or published".
|
