Inflated Fines

June 07, 2007 (LBO) – Sri Lanka’s capital markets watchdog is planning to impose stiffer penalties as part of an overall revamp of key statutes governing the Securities Exchange Commission (SEC), a top official said.

The authorities have recently introduced a new company law and new corporate governance rules are being made mandatory for listed firms from the financial year starting March or December 2009.

“We want to bring in best practices and standards,” SEC director general Channa de Silva told LBO. “We’re thinking of amending the SEC Act and the Takeovers and Mergers Code.”

The amendments, to come into effect in about six months, will include provisions found in more sophisticated emerging markets like India, Thailand and Malaysia.

“We want to significantly enhance the penalties,” de Silva said.

The SEC wants to increase the maximum penalty from its present level of 3.3 million rupees, he said.

The existing penalties are seen as not having enough of a deterrent effect.

Many market players and analysts believe abuses such as insider dealing and share price fixing are widespread practices on the Colombo bourse.

The SEC is also looking at having a policy making body to det