• Process is 95% complete, final drafts ready: SEC Chairman 
• Share allocation between brokers and Govt. remains key sticking point
• 2nd technical issue undisclosed but expected to be resolved soon
• Demutualisation Bill first presented to P’ment in 2018 but stalled over allocation dispute

The demutualisation process of the Colombo Stock Exchange (CSE) is in its final stages, with only two technical issues currently holding up the process, the Securities and Exchange Commission (SEC) of Sri Lanka reveals. 

The SEC hopes to resolve the technical issues in question shortly.

Speaking to The Sunday Morning Business, SEC Chairman Prof. Hareendra Dissabandara stated that the completion of the CSE demutualisation process was a priority for the SEC. 

He added that at present, there were primarily two technical issues delaying the process, which would be resolved soon.

Prof. Dissabandara further noted that once those two issues were resolved, about 95% of the CSE demutualisation process would be completed. 

“Once these two issues are sorted, almost 95% of the demutualisation will be over. The drafts are available, so we will be finalising them soon,” he stated. 

He revealed that one of the two remaining issues was the post-demutualisation share allocation. 

The SEC Chairman further noted that from the brokers’ perspective, they emphasised that they had invested funds to establish and develop the CSE, which he acknowledged that they had clearly done. 

However, he noted that the Government had also played a significant role in the CSE’s development and that therefore it was necessary to determine the Government’s stake.

However, he declined to provide any specifics regarding the remaining technical issue holding up the demutualisation process.

On 19 February 2018, the then Prime Minister and Minister of National Policies and Economic Affairs presented the CSE Demutualisation Bill to Parliament, which sought to convert the CSE from a company limited by guarantee into a company limited by shares. 

However, the bill was never passed in Parliament, as the 15 founding stockbroking houses objected to the proposed 60:40 share allocation and instead sought a 70:30 allocation in their favour.