New Sri Lanka securities law to give finance minister more flexibility

Mar 21, 2017 (LBO) – The Sri Lankan premier has asked for a new securities law which gives the finance minister flexibility to raise a lower or higher amount specified in treasury bill and bond issue notices.

Prime Minister Ranil Wickremesinghe told Parliament Tuesday that the government has asked the Attorney General to look into it and the legal draftsman to draft it.

Wickremesinghe said the new legislation will set up a procedure where once the minister takes a decision, it will be advertised in the papers.

“Finance Minister can inform the Parliament of those advertisements giving us the flexibility, raising the amounts specified or a lesser amount or a higher amount,” Wickremesinghe said.

“Sometimes you can raise the amount you want or you can raise the lesser amount or the higher amount when the issue is taking place. That flexibility has to be there.”

Finance Minister is empowered under the section 2 of the Registered Stock and Securities Ordinance, No 07 of 1937, to issue securities for the purpose of raising authorized loans according to any law in operation at the time.

Under section 4 of the Ordinance, the finance minister shall in respect of each loan to be raised specify by order in the gazette, the amount of money to be raised, the modes of raise, the rates and all other details.

According to section 5, the registrar can then take steps to raise the loans only after the order is gazetted.

“But it transpired in the commission that we have not followed it up for some time. In fact we have been raising the loans and then only gazetting it at the end of the year,” he said.

“This has started from 1999. I found for instance what the loans that were authorized by Mr. Choksy was gazetted by Dr. Sarath Amunugama as minister in a different government.”

“This is the procedure that has been going on for a long time. Now this is not very satisfactory.”

Prime Minister also revealed that they will bring legislation which will ensure the legality attached to all treasury bills and bonds issued including through private placements.

“Some people may challenge it by saying we raise the money before the gazette was issued and therefore it’s not legal,” Wickremesinghe said.

“We don’t need a position to come that people go and challenge and the court says you can’t redeem the bonds which have not been legally issued.”

Related: Sri Lanka CB recommends amendments to securities ordinance