The Colombo Stock Exchange (CSE) offers advanced infrastructure and systems for the trading of equity. The Automated Trading System is an online real-time system which provides for the secondary trading of equity. Post-trade clearing and settlement of transactions are executed through the Central Depository System (CDS). The Exchange is open for continuous trading from Monday to Friday from 9.30 am to 2.30 pm. The settlement for equity transactions is on the third market day after the transaction ie. T+3.
The issuance of shares by resident companies to foreign investors (non-residents) are permitted without prior approval of the Exchange Control Department subject to certain exclusions and limitations. Movement of funds of such transactions must be through a scheme of account titled “Share Investment Account” (SIA). The SIA would be credited by inward remittances received in convertible foreign currencies from the investors. The dividends and sales proceeds realized on this investment account are remittable through this account.
Non-resident applicants have to open a SIA with a bank in Sri Lanka. The applicants could instruct overseas banks to open the SIA with their Sri Lankan corresponding bank (HSBC, Standard Chartered, Citi and Deutsche Bank operate in Sri Lanka). The CDS account can be opened only after the SIA is opened. If a Custodian Bank is involved, the Custodian Bank will open the SIA and the CDS Account.
CDS Account Opening Guidelines
- A person resident outside Sri Lanka who is a party to a transaction permitted hereunder must make a declaration to the effect that such person is resident outside Sri Lanka on the share transfer form or share application form as applicable.
- The payment for shares in any issue or transaction permitted hereunder should be made only out of or into a SIA opened in a commercial bank of Sri Lanka in accordance with directions given by the Controller of Exchange in that behalf to commercial banks.
- A commercial bank, a licensed stock broker or any other person entrusted with the payment of capital monies such as sale proceeds of shares, dividends and commissions in respect of any transaction permitted hereunder shall make such payment only into or out of a SIA referred to in sub paragraph above.
- The Secretary/ Registrar to a company in which the issue or transfer of shares to persons resident outside Sri Lanka are limited under 'limitations' shall not register the name of any person resident outside Sri Lanka or a citizen of a foreign State or their nominee as a share holder in such company if by such registration the limits specified shall be exceeded.