The Securities and Exchange Commission of Sri Lanka (SEC) has directed the Colombo Stock Exchange (CSE) and Central Depository Systems (Pvt) Ltd (CDS) to mandate the lodging of securities certificates pertaining to all listed securities at the CDS and thereby implement a system of full dematerialization of all listed securities at the CDS.
The term full dematerialization refers to the process of converting physical securities certificates of listed securities to a scripless (paperless) or electronic form by way of lodging the respective physical securities certificates in to the respective CDS accounts of shareholders.
The SEC has directed the CSE/CDS to implement the above process in the following manner.
1. To mandate securities of new listings to be in dematerialized form (electronic) form with effective from 01st January 2011
All applicants for IPO's which open for subscription on or after 01.01.2011 must therefore open a CDS account and indicate their respective CDS account numbers in the IPO application form. The Company Secretary/Registrar would not issue securities certificates to the applicants who do not have valid CDS accounts.
2. To mandate securities of all existing listed companies which have obtained a listed status before 01st January 2011 to be in dematerialized form within a transitional period of one year from 01st January 2011.
Accordingly all holders of physical securities certificates already issued by listed companies must convert their securities certificates to a dematerialised (electronic) form by lodging such certificates into their respective CDS accounts. This process would have to be completed within a transitional period of one year from 01st January 2011.
In order to facilitate this process the CDS would introduce a facility for shareholders of listed securities who would not wish to trade their securities, to "lock" their securities in a separate locked balance in their own CDS accounts .Once securities are " locked" in this manner such securities would not be visible to the CDS Participants (Stock Brokers and Custodian banks) thereby maintaining the confidentiality of the information and also safeguarding the account holder/shareholder from any possible unauthorized transaction by a Stock Broker. Trading on locked balances would be suspended.
Securities could be 'unlocked" from a locked balance and transferred to the trading balance of the CDS account holder only with the written authority given by the CDS account holder to the CDS through the relevant Participant.( (Stock Broker and Custodian bank).
Withdrawals from the CDS would be permitted for the purpose of mortgaging of securities.
CDS account holders having securities deposited in locked balances in their CDS accounts would receive a separate statement every month.
The relevant circulars issued to CDS Participants and Listed Companies can be found at the CDS web site at following web site www.cds.lk
source - www.dailymirror.lk
No comments:
Post a Comment