Market Profiles

For FII markets:

RBC IS operates a segregated account structure in this market. Please refer to the Client Market Account Opening (CMAO) Documentation webpage for further details.

For omnibus markets:

RBC IS operates an omnibus account structure in this market. For further information or support, please contact your RBC IS representative.

Client Notice

Please note not all financial instruments and exchanges listed below are available as an RBCIS product offering. Please consult our Terms & Conditions or reach out to your RBCIS representative for further details.

Colombo Stock Exchange (CSE)
The only stock exchange in Sri Lanka for all listed companies and is a company limited by guarantee, established under the Companies Act 17 of 1982 and is licensed by the SEC.  The CSE, formerly known as Colombo Securities Exchange was established in 1985. It currently has a membership of 14 institutions, all of which are licensed to operate as stockbrokers.

Automated Trading System (ATS) - ATS was introduced in 1997, replacing the physical trading floor and the call over system. When the trade order is placed with the broker, it is input into a PC terminal situated in the broker’s office and the order is then instantaneously transmitted electronically to the Stock Exchange trading system. ATS is linked to the Central Depository System (CDS) where the customer holdings data is stored. Soon after concluding a trade in ATS, CDS system will be updated online based upon successful trade matching in ATS.

Monday to Friday: 9:30 - 14:30

https://www.cse.lk/pages/trading-sessions/trading-sessions.component.html 

ISIN (International Securities Identification Numbering): Yes

Other: None

Colombo Stock Exchange (CSE): a company limited by guarantee, overseen by a board of directors. The board consists of five elected brokers and four non-brokers nominated by the Finance Minister upon recommendation from the Securities and Exchange Commission of Sri Lanka. The Central Depository System is a fully owned subsidiary of the Colombo Stock Exchange. Accordingly, the former has a nominal capital.

Securities and Exchange Commission (SEC): the statutory body that regulates the capital market. The SEC has extensive powers including the approval of the stock exchange rules and regulations, and the authority to dictate requirements for new listings. Accordingly it directly regulates the Colombo Stock Exchange and the Central Depository System (pvt) Limited.

Central Bank of Sri Lanka: All commercial banks are regulated under the Banking Act no. 30 of 1988. Accordingly custodian banks are regulated by the Central Bank. Overall banking functions are regulated by the Bank supervision department at Central Bank and one of the key divisions at CBSL is the Department of Exchange Control which regulates and monitors foreign exchange matters. There are various types of foreign exchange activity reporting to be performed by these commercial banks. Central Bank / Department of Exchange Control perform spot checks on all commercial banks.

All tradeable securities are already held in dematerialised form.

• Securities of all new listings must be in dematerialised form with effect from January 1, 2011.
• Securities listed prior to January 1, 2011, have been given a period of one year to convert all existing securities in to dematerialised format.

All listed securities will be converted to dematerialised format and held in CDS accounts with the Central Depository System of the CSE upon completion.

Tick size of 10 cents across all price ranges.

LKR

Unlisted securities transactions are typically executed between local brokers. OTC transactions do not settle through the Centralised Depository System.

Trading Hours: Monday to Friday: 09:30 - 14:30

Book-Entry:CDS automatically transfers share positions between buyer and seller accounts on SD. Trade details are communicated to the local custodian banks on T who affirm trades by 13:30 on T+1. The buyer’s payment must be made to CDS on T+2. After payment clears on T+2, CDS pays the seller’s custodian. Funds can then be repatriated. 

All accepted trades are to be mandatory settled on T+2 by the custodian bank. Reinstatement is not possible. A trade rejection on T+1 will be final and irreversible.

Cash settlement take place on T+2 on net basis via Central bank’s Real Time Gross Settlement System (RTGS). As a contingency to the RTGS system, Central Bank’s Electronic payment System or Central Bank’s cheques could be used for cash settlement with the settlement bank.

Physical: Not applicable

Short selling is not encouraged at this stage. The CSE has introduced controls in order to ensure such trades will not take place. example - Authorized personnel of Stock brokers to verify stock sufficient prior to executing sell trades. However, in the event a shortfall in securities, the CSE will introduce a rectification mechanism by way of a Buy-In board where the short position can be covered through a buy in. The settlement cycle for the Buy in Board will be T + 1.

The turnaround trading mechanism allows for same day buying and selling of the same stock quantity from the same account. Since both purchases and sales settle on the same day, the cash proceeds can be netted off and FX booked for settlement accordingly.

The Centralised Depository Systems pvt Ltd. (CDS) - The Centralised Depository Systems pvt Ltd. (CDS) - CDS acts as the clearing agent for the Colombo Stock Exchange. All customer listed securities holding records are maintained in book entry form in CDS. , client’s CDS accounts will be debited / credited with securities On SD.

Central Depository System (pvt) Limited (CDS) -All listed securities are mandatory to be lodged with the CDS. LankaSecure – All treasury bills/treasury bonds are held in scripless form with the LankaSecure of the Central Bank of Sri Lanka. 

Once securities have been purchased, a written confirmation of the trade is received from the Participant. This written confirmation is the confirmation of the transaction and serves as the invoice for payment. Share allocations are also obtained through IPOs, Rights, Bonus or any other issue. These allotments are directly deposited (directly uploaded) into the CDS. All securities traded on the CSE are cleared by the CDS. Securities accounts are updated on real-time as soon as a transaction is completed.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

DVP is available for settlement of government securities and equity settlement in Sri Lanka.

Registration is processed automatically by CDS on SD. Entitlements Date / Record Date” will move to Ex Date + 1 days from Ex Date – 1 day. If a share certificate is deposited, it takes one to two days before it is registered in the books of the company. However the beneficiary will be entitled to all corporate entitlements from the date of deposit, unless the deposit is rejected by the company due toany technical or other reason.

All listed securities will be converted to dematerialised format and held in CDS accounts with the Central Depository System of the CSE upon completion. Effective December 31, 2011, no physical scrip will exist for any listed securities.

Registration is processed by the CDS on SD. For physical securities, registration is done by the relevant company secretary.

Registration at CDS is done on a real time basis, while the company secretaries may take up to two working days.

Shareholdings in this market may be required to be disclosed by the beneficial owner, particularly when such shareholdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue we encourage you to consult your legal counsel.

Failure to comply with the reporting requirements in this market may lead to penalties and/or other sanctions.

When an individual investment reaches 10% in a listed company, the investor must inform the SEC, the CSE and the respective company secretary within two business days. When an investment reaches 30%, the same entities need to be notified, and regulatory approval granted to proceed with a mandatory offer to acquire the remaining shares from other shareholders. However, the company monitors this separately

There are no buy-in provisions. A seller’s depository balance must be credited with the relevant securities prior to trading. Should a buyer default, it is the broker’s responsibility to cover the shortfall. However, if the trade has been affirmed by the custodian bank, then that bank will be responsible.

Stock Lending and Borrowing is not applicable in the Sri Lankan market.

The Settlement Guarantee Fund (SGF) and the Compensation Fund - SGF guarantees cash settlement between clearing members of the Central Depository and the Colombo Stock Exchange.

AML became law in Sri Lanka, by an act passed in parliament in March 2006. Accordingly Central Bank of Sri Lanka has from time to time being issuing guidelines to all banks, the most recent issue being in June 2007. Further, similar control policies were implemented in the Capital Market. As a result, account documentation requirements and procedures, granting investor approval, were revised with stringent controls.

This is an FII market. Please contact your RBC Investor Services' Client Manager before making portfolio investments.

All funds are required to obtain investor approval from the Securities and Exchange Commission of Sri Lanka to open accounts at the Central Depository. If the investor is a Trust or a partnership, then there is a reservation in granting approval by SEC. The trust or the partnership should fall into the definition of a ‘fund’ where such investments are approved and monitored by a local regulator. (Fund domicile country).

In Sri Lanka, foreign investors may invest up to 100% of the issued capital of companies incorporated in Sri Lanka (both listed and unlisted companies) subject to the following exclusions and limitations. The CSE’s trading system automatically identifies and cancels trades that exceed the relevant foreign ownership limits (details below).

Exclusions: Companies carrying on any of the following businesses:

• Money lending
• Pawn broking
• Retail trade with a capital of less than USD1 million;
• Providing personal services other than for the export or tourism sectors
• Coastal fishing.

Limitations 
a. Permission will be granted in respect of shares in a company carrying, on or proposing to carry on, any of the following up to 40% of the issued capital of such company or, if approval has been granted by the Board of Investment of Sri Lanka, a higher percentage of foreign investment in any company only up to such higher percentage (e.g. plantation sector - 49%): 

• Production of goods where Sri Lanka's exports are subject to internationally determined quota restrictions
• Growing and primary processing of tea, rubber coconut, cocoa, rice, sugar and spices
• Mining and primary processing of non-renewable national resources
• Timber-based industries using local timber
• Fishing (deep sea fishing)
• Mass communications
• Education
• Freight forwarding
• Travel agencies
• Shipping agencies.

1. Permission will be granted in respect of shares in a company carrying, on or proposing to carry on, any of the following up to the percentage of the issued capital of the company for which a percentage, either general or special approval, has been granted by the Government of Sri Lanka or any legal or administrative authority set up for the approval of foreign investment in such business: 

• Air transportation
• Coastal shipping
• Industrial undertakings in the Second Schedule of the Industrial Promotion Act No.46 of 1990 namely any industry manufacturing arms, ammunitions, explosives, military vehicles and equipment aircraft and other military hardware, or any industry manufacturing poisons, narcotics, alcohols, dangerous drugs and toxic, hazardous or carcinogenic materials, or any industry producing currency, coins or security documents
• Large scale mechanised mining of gems

The maximum percentage of ownership of shares in commercial banks should not exceed 15% of the issued share capital. 

Foreign investors can hold up to 5% of the total value of T-bonds/bills outstanding at any given time.

Eligible foreign investors are now permitted to purchase, sell and transfer treasury bills/bonds with any maturity period issued by the government of Sri Lanka. Eligible foreign investors as defined by the Central Bank of Sri Lanka are:

• Foreign Institutional Investors such as foreign country funds, mutual funds or regional funds.
• Corporate bodies incorporated outside Sri Lanka.
• Citizens of foreign states.

Please note the following procedures applicable to eligible foreign investors investing in treasury bills/bonds:

• The investment should be routed through a special rupee account titled Inward Investment Accounts (IIA), which can be opened through any Licensed Commercial Bank in Sri Lanka.
• Treasury bills/bonds must be purchased via direct placement through primary dealers or at a primary auction. Eligible foreign investors are also permitted to enter in to Repo/Reverse Repo transactions with eligible investors using treasury bills/bonds purchased under this scheme as collateral.

The treasury bills/bonds can be sold at any time and proceeds should be routed through the IIA.

Dividend and sale proceeds arising from investing in listed/unlisted companies are remittable through an IIA account opened with a Commercial Bank without any prior approval from the Central Bank Exchange control Department, and can be repatriated freely. However, custodian banks are required to identify these credits which are dividends or sale proceeds outward remittances and subsequently report such outward remittances to the Central Bank.

The Central Bank of Sri Lanka (CBSL) regulations require all cash movements related to purchases, sales and dividends to be routed through the IIA for equity investments. All authorised dealers (i.e. Commercial Banks) are permitted to convert the LKR proceeds in IIA to foreign currency at the request of the client. LKR credited to client’s cash account is fully convertible without restriction provided they are routed via IIA. 

All cash settlement take place via RTGS at Central Bank. That is, net cash settlement is effected via RTGS to the settlement bank of Central Depository. This is the standard cash settlement mode and platform used by all custodian banks when settling cash for trade settlement. However, the Electronic Fund Transfer system and the Central Bank Cheque can also be used as a contingency. These payment modes carry the same day value.

Overdrafts are not permitted for foreign investors by the Central Bank of Sri Lanka.

Dividends are typically paid twice a year are paid to the shareholders appearing on the CDS records on ex-date. The CDS sends a statement of ex-date holdings to the company registrars, and cheques will be mailed out on this basis.

Semi-annually by cheque, although some companies pay dividends more than twice a year. Most companies are now converting this in to Slips/RTGS so that direct credits are received to clients on pay date itself. Further the Listing rules of the CSE were amended on 16 June 2020 (Circular No: 06/2020). This amendment instructed listed companies as follows. “the date of dispatch of the dividend payment shall be within fourteen (14) Market Days from and excluding the ‘XD’ date. however in instances where the shareholder has given accurate dividend disposal instructions to the CDS or the Listed Entity by providing the bank account number, the dividend shall be directly credited to such bank account within two (2) Market Days from and excluding the ‘XD’ date.

Semi-annually

Actual/365 basis

Entitlements are calculated on Ex date +1 (closing balance) driven.

Ex-date + 1 is record date

The buyer is entitled to all corporate entitlements on the SD as soon as the movement of securities on SD has been completed. However the beneficiary will be entitled to all corporate entitlements from the date of deposit, unless the deposit is rejected by the company due to any technical or other reason. Any dispute can be brought before the company secretaries and if a satisfactory solution is not received this can be escalated to the stock exchange.

Unrestricted voting rights. There is no difference in voting rights between a foreigner and a local investor.

No

Provided in English. Annual general meetings and extraordinary general meetings are announced two to four weeks in advance.

On request, subject to availability

On request, subject to availability

Not required (Not mandated but for ease of operational activities it’s recommended to appoint sub custodian as power of attorney).

Attendance or submission of a proxy is required to exercise voting rights. Voting is conducted by a show of hands unless a poll is demanded by either at least five members with voting rights, or by any members or representatives holding at least 10% of the total voting rights.

With effect from January 1, 2023, 15% WHT on dividend shall be deducted on payments which has a source in Sri Lanka. 

Dividend received or derived by a non-resident during the period from October 1, 2022 to December 31, 2022, is exempt from Income Tax.

Interest or discount paid on deposits i.e. Debentures/Corporate Bonds etc. are liable for a withholding tax of 10% with effect from April 1, 2025. Any investment made by a foreign investor in Government Securities (Treasury Bills & Bonds), the redemption proceeds (capital) & Interest arising out of such investment is exempted from Income tax & withholding Tax.

A Tax clearance will not be required at the time of repatriation, as any investment made by a person outside Sri Lanka in Government Securities (Treasury Bills & Bonds), has been treated as a loan granted to the Government of Sri Lanka by such person. A public ruling has been issued on 20th  June 2022 (PR/IT/2022/1) by the Commissioner General of Inland Revenue on this regard and it has mentioned that any such investment to be treated as a loan granted to Government of Sri Lanka.The interest accruing to or derived by any person outside Sri Lanka on any loan granted to any person in Sri Lanka or to the Government of Sri Lanka by such person is exempt from Income Tax under schedule 3 of the Inland Revenue Act.

As per the item 10 of the negative list of the Circular SEC/2022/E/06 dated 23/12/2022, no clearance is required when remitting any capital or interest of such loan.

Effective April 1, 2018, realised gain on government securities will be liable for 10% capital gains tax. However, foreign investors are exempted from such CGT. Further, Corporate Bonds and Unlisted securities are liable for 10%capital Gains Tax effective April 1, 2018. 

Refer details from attached link for most updated list attached here

Not applicable on investment in equities listed at Colombo Stock Exchange. All documents used on the purchase, transfer or redemption of treasury bills are also free from stamp duty.

18% VAT.

Effective January 2024, the VAT rate increased to 18%. VAT is applicable on all safe custody and transaction fees.

Sri Lanka Holiday Calendar

• Colombo Stock Exchange cse.lk
• Central Bank of Sri Lanka cbsl.gov.lk
• Securities and Exchange Commission of Sri Lanka sec.gov.lk
• Central Depository System Limited www.cds.lk