The Colombo Stock Exchange (CSE), in consultation with the Securities and Exchange Commission of Sri Lanka (SEC), is proposing to revise the regulatory framework governing the initial listing of shares on the CSE.
The exercise is aimed at broadening the CSE Listing Rules to complement Sri Lanka’s rapidly developing commercial landscape comprising of multiple new business models and segments. The revisions are also directed at improving the efficiency of the listing process while offering greater flexibility to companies listing on the CSE.
Specifically, the CSE is exploring revisions on the eligibility criteria for initial listing of shares on the Main Board and the Diri Savi Board, IPO timelines and the basis of allotting shares. As part of the process, CSE has considered the views expressed by industry experts and the regulations/practices of stock exchanges around the world
In terms of the Main Board, the proposed amendments to the initial listing rules would offer companies looking to list on the CSE an alternative to the three-consecutive financial year net profit after tax requirement which is currently applicable. Under the proposed amendments, an aggregate net profit after tax for three consecutive financial years immediately preceding the date of the initial listing application will also be acceptable, where companies would not be required to be profitable in each financial year in the three-year period.
For Main Board applicants that cannot meet the profit requirement, the proposed revisions would offer alternatives to meet the eligibility in the form of revenue or positive operating cashflow (one of either), if the company’s market capitalization is valued at Rs. 5 billion or above at the point of listing. The revenue-based option would require the company to demonstrate an aggregate revenue of Rs. 3 billion for three financial years immediately preceding the date of the initial listing application.
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