April 24, 2007 (LBO) – Tough new corporate governance rules were being made mandatory to make the markets more attractive to foreign and local investors, Sri Lanka’s capital market regulators said. The SEC has also put in rules on money laundering, but so far no prosecutions have been made. We firmly believe it to be a key criteria for us to win the confidence of local and international investors – that we have a market which can be trusted, is clean and reliable, Channa de Silva, director general of the Securities and Exchange Commission (SEC) said Tuesday.
The new rules require companies to have a certain number of independent directors who cannot be close relations of other directors, or have been recently employed by the company or related firms.
Since April 2007, regulators have started asking firms listed on the Colombo Stock Exchange (CSE) to comply or explain non-compliance with the new rules that will become mandatory from April 2008.
Independent directors are also required not to have a significant shareholding or business connections with the company.
The CSE and SEC would not interfere in the judgement of a company about the independence of its directors