Capital market regulator relaxes public float rules for listings via introductions

The capital market regulator has eased the minimum public holding (MPH) requirements for the companies seeking to list on the Colombo Stock Exchange (CSE) via introductions. 
The move is aimed at widening the listings pipeline and improving market depth.
The Securities and Exchange Commission of Sri Lanka (SEC) yesterday said it has approved amendments to the CSE Listing Rules, to provide greater flexibility for the issuers that are unable to meet the MPH thresholds at the point of application when listing through the introduction method.
The changes were developed under Project 6 – New Listings (Public and Private), one of the 12 strategic initiatives launched by the SEC to strengthen the capital market framework, boost national capital formation and attract large corporates to the exchange.
Under the revised rules, the companies seeking listings on the Main Board or Diri Savi Board via introductions may be granted approval subject to phased compliance with the MPH requirements.
The framework requires the issuers to meet at least 50 percent of the applicable MPH, within 12 months of listing and full compliance within 18 months.
The non-public shareholders, who have held shares for at least 18 months prior to the initial listing application, will be permitted to divest up to 2 percent of their holdings per month during the first six months after listing, while being subject to a lock-in of 30 percent of their shareholdings until the MPH compliance is achieved or 18 months from listing, whichever occurs first.
The amendments also require enhanced disclosures in introductory documents on timelines and obligations to meet the MPH thresholds, while introducing enforcement measures in cases of non-compliance.
The SEC said the revisions reflect close collaboration with the CSE and are designed to address the evolving market needs while preserving transparency, market integrity and investor protection.