The Securities and Exchange Commission (SEC) in collaboration with the Colombo Stock Exchange (CSE) launched the ‘Empower’, the newest listing platform dedicated for Small and Medium Enterprises (SMEs) yesterday. The picture shows Finance and Mass Media Minister Mangala Samaraweera launching the ‘Empower’ board using an iPad. Others present from left: SEC Director General Vajira Wijegunewardane, SEC Chairman Ranel T. Wijesinha, State Finance Minister Eran Wickramaratne, CSE CEO Rajeeva Bandaranaike and CSE Director Dakshitha Thalagodaptiya Pic by Nisal Baduge
By Nishel Fernando
The Securities and Exchange Commission of Sri Lanka (SEC) together with the Colombo Stock Exchange (CSE) yesterday launched ‘Empower – a dedicated listing platform for small and medium enterprises (SMEs) in a bid to provide much-needed equity for high growth potential SMEs.
Addressing the launch ceremony of the SME board, Finance and Mass Media Minister Mangala Samaraweera said this was an important step towards empowering private enterprises in Sri Lanka , which is a key element of the government’s economic programme.
While pointing out that Sri Lanka’s SMEs are over-dependent on debt for financing for growth, the recently appointed SEC Chairman Ranel T. Wijesingha asserted that the SME board provides opportunities for SMEs with new avenues of growth with equity.
Minister Samaraweera noted that the SME board compliments the recently launched Enterprise Sri Lanka Credit Programme of the government, which is aimed at creating 100,000 new entrepreneurs by 2020.
According to CSE CEO, Rajeeva Bandaranaike, SMEs with a stated capital between Rs.25 and Rs. 100 million and minimum five years in operation are eligible to list their securities in the new board.
In addition, they need to have a positive net asset base with a total asset base not exceeding Rs.600 million. In addition, In terms of an IPO, the applicant needs to have stated capital above Rs 10 million.
Speaking of the measures taken to ensure investor security in relation to the new board, SEC, DG, Vajira Wijegunawardane said the introduction of the concept of ‘Sponsor’ is the main element in the new board to protect investors.
The SMEs are required to apply to list their securities through a ‘Sponsor’ approved by the CSE. The ‘Sponsor’ is required to provide assistance for the SME in the listing process and to maintain the listing obligations for 2 years in the post-listed period.
Bandaranaike noted that the role of the ‘Sponsor’ would be similar to the role of an investment bank during an Initial Public Offering. The assistance of an ‘Sponsor’ is expected to help a SME to obtain optimum value for its businesses and make a strong investment case to local and international investors.
Meanwhile, Wijesinha appealed to all the stakeholders including professional accounting and auditing bodies, business chambers, foreign agencies and banks to extend their support to SMEs to get listed on the new SME board.
He particularly urged the professional accounting and auditing bodies to provide their service for SMEs at a discounted rate.
Elaborating governance structure of the new board, Bandaranaike said that SMEs have been provided with flexibility in corporate governance arena while retaining the essence of it.
He noted that listed SMEs only need to form one committee to perform functions of remuneration committee, related party transaction committee and audit committee.
The committee composition should include minimum of two directors— one as an independent director and the other, who should be a member of a recognised professional accounting body, as the chairman of the committee.
However, Bandaranaike noted that when the chairman is not a member of a recognised professional accounting body, he or she is required to seek assistance of a member of a recognised professional accounting body to carry out the duties.
The listed SMEs are required to submit the interim financial statements bi-annually and also are required to submit ‘supplementary disclosure statement’ for first and third quarters.
However, SMEs are relieved from minimum public holding requirements.
In terms of the fee structure, the Initial listing fee is Rs 75,000 and the annual listing fee is 0.003 percent of market capitalisation of the entry as at 31st of the immediate preceding year.
Bandaranaike said that the CSE and SEC are rolling out an awareness campaign with chambers to attract SMEs to the new board.
