SEC Sri Lanka Eases Minimum Public Holding Rules for Listings via Introductions to Boost Market Flexibility

The Securities and Exchange Commission of Sri Lanka (SEC) has approved amendments to the Colombo Stock Exchange (CSE) Listing Rules to provide greater flexibility regarding the Minimum Public Holding (MPH) requirement for companies listing through the Introduction method.

These revisions were proposed and deliberated under Project 6 – New Listings (Public and Private), one of 12 key strategic initiatives launched by the SEC to strengthen Sri Lanka’s capital market framework. Project 6 aims to drive national capital formation, promote listings by highlighting benefits and opportunities for listed entities, and attract large-scale corporates to enhance market depth, liquidity, and investor confidence.

The amendments reflect a joint effort by the SEC and CSE, underscoring strong collaboration between the regulator and the Exchange to address evolving market needs while maintaining market integrity, transparency, and investor protection.

The salient features of the amendments to the CSE listing Rules are as follows;

• Entities seeking listing by way of an Introduction on the Main Board or Diri Savi Board that are unable to meet the MPH requirement at the time of submitting the initial listing application, may now be granted a listing, subject to certain conditions on compliance.
• Non-public shareholders who have held their shares for a minimum period of eighteen months prior to the date of the initial listing application may divest up to a maximum 2% of their shares each month during the six months commencing from the date of listing, and simultaneously, be subject to a lock-in requirement of 30% of their respective shareholdings as at the date of listing, until MPH compliance or 18 months from the date of listing, whichever occurs first.
• A phased MPH compliance framework has been introduced requiring a minimum 50% compliance with MPH requirement within 12 months and full compliance within 18 months from the date of listing.
• Entities should 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, certain enforcement actions have also been introduced.

The revised framework is expected to encourage more companies to consider listing via Introduction, thereby broadening market participation, improving liquidity, and contributing to the overall development of Sri Lanka’s capital market. Issuers, investors, and market intermediaries will benefit from a more enabling yet well-regulated listing environment.

Source: Adaderana