SEC and CSE to launch proposed SME board on July 5

• New SEC Chairman says he wants to make capital market work for SMEs
• CSE Chairman says SME board will offer new avenue to drive Lankan SMEs
• SEC develops seven-point action plan to ensure initiative’s success

The Securities and Exchange Commission (SEC) said yesterday it would expedite the launch of the proposed Small and Medium Enterprises (SME) board on the Colombo Stock Exchange (CSE) to attract small and medium sized firms to the country’s capital market.

The SEC said together with the CSE, the ‘Empower-SME Board’ will be launched on the July 05 at the BMICH.

This launch will be the first of a series of new capital market development initiatives proposed by the new SEC Chairman, Ranel T. Wijesinha.

“In essence what we wish to achieve can be summarised by the theme—Empowering Entrepreneurship, making the capital market work for the SMEs,” Wijesinha said.

“We transitioned from a closed and insular country, to an open and outward looking country, with an export-led growth strategy in 1977, 41 years ago. But yet, the SME sector, has not achieved the level of growth so vitally needed for this yet emerging economy,” he stressed.  While acknowledging the difficult role the country’s Central Bank has to play to ensure price stability, Wijesinha pointed out that the current high interest rates on bank loans may not adequately encourage entrepreneurship.

“Thus, I firmly believe it is necessary for apex level statutory institutions such as ours, while focusing on all regulatory aspects fully and completely, to simultaneously fast track and facilitate measures to encourage, incentivize, and empower entrepreneurship and SMEs”.

According to CSE Chairman Ray Abeywardena, the SME board will offer a new avenue to drive Sri Lankan SMEs through their next phase of evolution by offering a unique proposition and an opportunity to access a deep pool of international and domestic capital.

“Apart from access to capital, the new listing platform will offer SMEs opportunities to build credibility through disclosure of information and balanced governance standards, which would enhance their visibility and attract strategic investors. 

The new listing platform has the potential to make an all-round impact, bringing a positive change and shaping the stature and longevity of an SME for years to come,” Abeywardena said.

The SEC has developed a seven-point action plan to ensure the initiative is a success. 

The seven points are: 1) Invite all public and private sector banks to identify, guide and assist existing customers, potential SME PLCs to seek equity funding, through a listing on the SME Board 2) Invite all  apex, national and regional chambers to nominate and assist potential SME PLCs, 3) Invite all accounting and auditing firms, consulting and other firms to introduce and assist potential SME PLCs 4) Invite small and medium practitioners individually, or through the formation of consortia, to assist SMEs in developing prospectuses 5) Invite multilateral and bilateral development partners such as the World Bank, the Asian Development Bank, Japan International Cooperation Agency and other institutions to partner the SEC-CSE SME initiative 6) Mobilisation of island wide roadshows 7) Establishing clusters of SEC and CSE staff, who will be deployed to expedite answers to questions, clarifications, and approvals of prospectuses.