The Securities and Exchange Commission of Sri Lanka (SEC) has approved amendments to the Colombo Stock Exchange (CSE) Listing Rules, granting greater flexibility in relation to the Minimum Public Holding (MPH) requirement for companies seeking listing through the Introduction method.
The revisions were proposed and reviewed under Project 6 – New Listings (Public and Private), one of twelve key strategic initiatives introduced by the SEC to strengthen Sri Lanka’s capital market framework. Project 6 is designed to support national capital formation, promote listings by highlighting the benefits and opportunities available to listed entities, and attract large-scale corporates to the market in order to enhance depth, liquidity, and investor confidence.
The amendments represent a collaborative effort between the SEC and the CSE, highlighting strong coordination between the regulator and the Exchange in addressing evolving market requirements while ensuring market integrity, transparency, and investor protection.
The key features of the amendments to the CSE Listing Rules include:
Companies seeking listing by way of an Introduction on the Main Board or Diri Savi Board, which are unable to meet the MPH requirement at the time of submitting the initial listing application, may now be granted a listing, subject to specific conditions relating to compliance.
Non-public shareholders who have held shares for a minimum period of 18 months prior to the date of the initial listing application may divest up to a maximum of 2% of their shares per month during the six months commencing from the date of listing. At the same time, such shareholders will be subject to a lock-in requirement of 30% of their respective shareholdings as at the date of listing, until the entity achieves MPH compliance or 18 months from the date of listing, whichever occurs first.
A phased MPH compliance framework has been introduced, requiring a minimum of 50% compliance within 12 months and full compliance within 18 months from the date of listing.
Entities are required to include clear disclosures in the Introductory Document, confirming their obligation to meet MPH requirements within the prescribed timelines.
In the event of non-compliance with the MPH requirement, specified enforcement actions have also been introduced.
The revised framework is expected to encourage a greater number of companies to consider listing through the Introduction method, thereby expanding market participation, improving liquidity, and supporting the overall development of Sri Lanka’s capital market. Issuers, investors, and market intermediaries are expected to benefit from a more facilitative yet well-regulated listing environment.
