Securities Council

(1) There shall be established a Commission which shall be called the Securities and Exchange Commission of Sri Lanka(hereinafter referred to as “the Council”) consisting of the persons who are members thereof under section 3.

(2) The Commission shall, by the name assigned to it by subsection (1), be a body corporate and shall have perpetual succession and a common seal and may, sue and be sued in such name.

(1) The Commission shall consist of-

(2) The Minister shall nominate. from amongst the members of the Council, one member to be the Chairman of the Council.

(1) Any appointed member of the Commission may at any time resign his office by letter to that effect addressed to the Minister and such resignation shall take effect upon it being accepted by the Minister in writing.

(2) The Minister may, by Order published in the Gazette, remove, any appointed member from office without assigning any reason therefor and such removal shall not be question in any court.

(3) In the event of the vacation of office by death, resignation, removal or the operation of the provisions of subsection (5) of any appointed member, the Minister may appoint another person, having regard to the provisions of paragraph (a) of subsection (1) of section 3, to hold office for the unexpired period of the term of office of the number whom he succeeds.

(4) if any appointed member of the Commission is temporarily unable to perform the duties of his office during any period due to ill-health or absence from Sri Lanka or far any other cause, the Minister may appoint some other person to act in his place during such period having regard to the provisions of paragraph (a) of subsection (1) of section 3.

(5) An appointed member of the Commission who without leave of the Commission first being obtained, absents himself from three consecutive meetings of the Commission, shall be deemed to have vacated his office.

(1) The Chairman of the Commission shall. if present, preside at all meetings of the Council. In the absence of the Chairman from any such meetings, the members present shall elect one of the members to preside at such meeting.

(2) The quorum for any meeting of the Commission shall be five members and the Commission may subject to the requirement as to quorum, regulate the procedure in regard to the meetings of the Commission and the transaction of business at such meetings.

(3) All questions for decision at any meeting of the Commission shall be decided by the vote of the majority of the members present. In the case of an equality of votes the member presiding shall have a casting vote.

(1) If the Chairman of the Commission is, by reason of illness or absence from Sri Lanka temporarily unable to perform the duties of his office the Minister shall nominate other member of the Commission to act in his place.

(2) The Minister may, without assigning any reason therefor, terminate the appointment of the Chairman.

(3) The Chairman may at any time resign from the office -of Chairman by a letter addressed to the Minister. Such resignation shall take effect upon it being accepted by the Minister in writing.

(4) Subject to the provisions of subsections (2) and (3) the term of office of the Chairman shall be his period of membership of the Council.

(1) The seal of the Commission shall be in the custody of the Council.

(2) The seal of the Commission may be altered in such manner as may be determined by the Council.

(3) The seal of the Commission shall not be affixed to any instrument or document except in the presence of one member of the Commission and the Director-General of the Commission or in the absence of the Director-General, in the presence of any two members of the Commission, who shall sign the instrument in token of their presence.

(a) the creation and maintenance of a market in which securities can be issued and traded in an orderly and fair manner;

(b) the protection of the interests of investors;

(c) the operation of a Compensation Fund to protect investors from financial loss arising as a result of any licensed stock broker or licensed stock dealer being found incapable of meeting his contractual obligations; and

(d) the regulation of the securities market and to ensure that professional standards are maintained in such market.

(a) to grant a licence to a body corporate to operate as a stock exchange and ensure the proper conduct of its business;

(b) to grant a licence to any person to operate as a stock broker or a stock dealer as, the case may be, and ensure the proper conduct of their business;

(bb) to grant a licence to a managing company to operate a unit trust and to ensure the proper conduct of the business of such unit trust;

(bbb) to grant a certificate of registration to any person to carryon business as a market intermediary and to ensure the proper conduct of such business ;

(c) to give general or specific directions to a licensed stock exchange or a licensed stock broker or a licensed stock dealer or a licensed managing company or a trustee of a unit trust or a registered market intermediary, from time to time;

(d) to grant compensation to any investor who suffers pecuniary loss arising as a result of any licensed stock broker or licensed stock dealer being found incapable of meeting his contractual obligations;

(e) to advise the Government on the development of the securities market;

(f) to employ such officers and servants as may be necessary for the purpose of carrying out the work of the Council;

(g) to regulate the listing and issue of securities in a licensed stock exchange;

(gg) to direct a licensed stock exchange to reject any application made to it for listing;

(h) to cancel or suspend the listing of any securities or the trading of any listed securities or to suspend the trading of all listed securities for not more than three days at a time, for the protection of investors;

(i) to inquire and conduct investigations into any activity of a licensed stock exchange, a licensed stock broker or licensed stock dealer, a licensed managing company or a trustee of a unit trust, a registered market intermediary or any listed public company;

(j) to publish findings of malfeasance by any licensed stock broker or licensed stock dealer or a licensed managing company or a trustee of a unit trust, or a registered market intermediary or any listed public company;

(k) to implement the policies and programmes of the Government with respect to the market in securities;

(l) to acquire in any manner whatsover and hold, take or give on lease or hire, mortgage, pledge, sell or otherwise dispose of any immovable or movable property; and

(m) to request the Registrar of Companies, in the exercise of the powers conferred on it by section 227 of the Companies Act, No- 17 of 1982, to call upon a private limited liability company to become a public limited company; and

(n) to regulate take-overs or mergers where such take-over or merger is between one or more listed companies or where at least one of the parties involved in such take-over or merger is a listed public company;

(o) to conduct investigations into any alleged violation or contravention of the provisions of this Act or any rule or regulation made thereunder by any person; and

(p) to do all such other acts as may be incidental or conducive to, the attainment of the objects of the Commission or the exercise of its powers under this Act.

(a) carry out inspections of the activities of licensed stock exchanges, licensed stock brokers, licensed stock dealers. licensed managing companies or trustees of unit trusts or registered market intermediaries. in order to determine whether they are operating in conformity with the provisions of this Act or any regulations or rules made thereunder and to charge the costs incurred in carrying out such inspections from the licensed stock exchange, licensed stock broker, licensed stock dealer, licensed managing company or trustee of a unit trust or registered market intermediary as the case may be, whose activities are being inspected;

(b) require licensed stock exchanges, licensed stock brokers, licensed stock dealers, licensed managing companies of unit trusts and registered market intermediaries to file with the Council, annual balance sheet and in come statements, certified by a qualified auditor in the form and manner specified by the Council.

(c) require the licensed managing company of a unit trust to file with the Commission, in respect of every year, at least two reports of the activities of that unit trust for that year. Every such report shall contain such particulars as may from time to time be determined by the Commission. The first report shall be filed not later than the thirtieth of September of that year and the second report shall be filed not later than the thirty-first of March of the subsequent year.

(1) There shall be charged, levied and paid a cess at such rates as may be specified by the Minister by Order published in the Gazette on every purchase and sale of securities recorded in a licensed stock exchange or notified to it under its rules by both the purchaser and the seller. Different rates may be specified in respect of different classes of securities.

(2) The cess imposed under this section shall be in addition to any other tax or cess levicd under any, other written law. Cess Fund.

(1) There shall be established a fund called the Cess Fund to which shall be credited the proceeds of the cess imposed under section 14A.

(2) There shall be paid out of the Cess Fund such sums as may be authorised by the Commission for the purpose of –

(3) The money lying to the credit of the Cess Fund may be invested by the Commission in such manner as may be determined by the Commission.

(a) any body corporate which is carrying on or intends to carryon the business of operating a stock exchange; or

(b) any person who is carrying on or who intends to carry on the business of a stock broker or, of a stock dealer, shall make an application to the Commission for the grant of a licence as a stock exchange, stock broker or a stock dealer, as the case may be, in such form, together with such documents and such fee as may be specified by the Commission from time to time in that behalf.

(1) Where a licence is granted to a stock broker or stock dealer on the basis of particulars furnished by such stock broker or stock dealer which are subsequently found to be inaccurate or false, the Commission shall suspend for a specified period the licence granted to such stock broker or stock dealer and request such stock broker or stock dealer to furnish the correct particulars on or before the expiry of the period of suspension. The Commission may on receipt of the particulars and after consideration thereof, revoke the order of suspension.

(2) Where the particulars are not furnished within the period specified under subsection (1) in compliance with a request made under that subsection or the Commission determines on a consideration of the particulars furnished that the order of suspension should not. be revoked, it shall cancel the licence,

(1) On receipt of an application made under section 15, the Commission having considered the particulars stated therein and, where it deems necessary, having given the applicant an opportunity of being heard, in person or by a representative, shall by written notice to the applicant, inform the applicant whether he is being granted licence or not.

(2) Where the Commission grants a licence to-

(1) Any person who is carrying on or who intends to carryon business as a market intermediary shall register with the Commission for such purpose.

(2) An application for the purpose of registration under subsection (1) shall be made to the Commission in such form, together with such documents and such fee as may be prescribed by the Commission from time to time in that behalf.

(3) On receipt of an application for registration, the Commission having considered the particulars stated therein and where it appears necessary having given the applicant an opportunity of being heard, shall by written notice inform the applicant whether he is being registered as a market intermediary or not, and where he is registered as a market intermediary, issue him with a certificate of registration valid for a period of one year effective from the date of issue of such certificate. Every person issued with a certificate of registration is referred to in this Act as a “registered market intermediary.”.

(4) No person shall be registered as a market intermediary unless he complies with the terms and conditions set out in Part V of the Schedule hereto.

(1) A licensed stock exchange may six months prior to the expiry of the licence, make an application to the Commission in the prescribed from together with a prescribed fee for a renewal of the licence.

(2) A licensed stock broker. a licensed stock dealer: or a registered market intermediary may three months prior to the expiry of the licence or the registration as the case may be, make an application to the Commission in the prescribed form, together with the prescribed fee for a renewal of his licence or the registration as the case may be.

(3) In granting a renewal of a licence or registration, the Commission shall satisfy itself that the licensed stock exchange, the licensed stock broker, the licensed stock dealer or the registered market intermediary, as the case may be, has at no time been guilty of contravening any provisions of this Act or any rules or regulations made under this Act.

(1) The Commission shall. cancel or suspend the licence granted to a stock broker or a stock dealer, where the Commission is satisfied that-

(2) Before the cancellation or suspension of a licence granted to a stock broker or a stock dealer in terms of the preceding subsection such stock broker or stock dealer, as the case may be, shall be given an opportunity to show cause as to why such licence should not be cancelled or suspended.

(3) Where the licence granted to a stock broker or stock dealer is cancelled, it shall be the duty of such stock broker or stock dealer to forthwith surrender his licence to the Council.

(4) where the Commission is satisfied that a licensed stock broker or licensed stock dealer has contravened the provisions of paragraph (a) or (b) or (c) or (d) of subsection (1) and that such contravention is not of a serious nature, it may in lieu of acting under subsection (1), direct such licensed stock broker or licensed stock dealer to take whatever action that the Commission may consider appropriate to”

(5) The giving of a direction by the Commission, to a licensed stock broker or licensed stock dealer under subsection (4) shall not affect or prejudice the institution or maintenance of a prosecution against such licensed stock broker or licensed stock dealer for an offence under this Act.

(1) The Commission shall have the power to suspend or cancel the certificate of registration granted to a market intermediary under section 19A of this Act.

(2) The provisions of section 21 of this Act shall, mutatis mutandis, apply to and in relation to, any suspension or cancellation as the case may be, of a certificate of registration under subsection (1).

(1) Any person aggrieved by the decision of the Commission-

(2) Until rules are made under Article 136 of the Constitution pertaining to appeals under this section, the rules made under that Article pertaining to applications by way of revision to the Court of Appeal shall apply to every appeal made under subsection (1) of this section.

(3) The Court of Appeal may, on an appeal made to it under subsection (1), reverse, modify or set-aside the decision made by the Commission or make such order as the interests of justice may require.

(4)Until rules are made under Article 1:16 of the Constitution pertaining to appeals under this section, the rules made under that Article pertaining to application by way of revision to the Court of Appeal shall apply to every appeal made under sub section (3) of this section.

(5) The Court of Appeal may, on an appeal made to it under this section confirm, revise, modify or set aside the decision of the Secretary to the Ministry of the Minister, and may make an order as the interest of justice may require.

(1) Where the Commission is of the opinion that the public interest requires that the administration and management of a licensed stock exchange should be taken over, it may by Notice published in the Gazette, take over the administration and management of such stock exchange for such period as may be specified in .such Notice. The Commission may by a subsequent Notice published in the Gazette, extend the period specified in the first notice. The Commission shall cause a copy of every such notice to be sent to the Registrar of Companies who shall make a minute thereof in the records relating to the company licensed to carry on the business of operating such stock exchange.

(2) Where the Commission takes over the administration and management of a licensed stock exchange it may enter into an agreement with any person for the management of such, stock exchange, subject to such conditions as may be agreed upon between the Commission and such person, having regard to the interests of investors in companies listed in such stock exchange.

(3) Where the Commission takes over the administration and management of a licensed stock exchange, the Commission, or in any case where the Commission has entered into an agreement with any person under subsection (2), that person, may”

(4) During the period for which the administration and management of a licensed stock exchange has been taken over by the Commission, every director or officer of such licensed stock exchange shall, unless expressly authorised to do so by the Commission, cease to exercise, perform and discharge with respect to such licensed stock exchange, any power, duty or function conferred or imposed on or assigned to, such licensed stock exchange, by or under any written law or by the articles of association of the company licensed to carry on the business of operating such stock exchange.

(5) The Commission may at any time before the expiry of the period specified in the Notice published under subsection (1), call upon a licensed stock exchange to reconstitute its Board of Directors in accordance with the rules of such stock exchange, and after such reconstitution, and on expiry of such period shall hand over the property taken possession of, under subsection (3), to the reconstituted Board of Directors.

(1) The rules of a licensed stock exchange, in so far as they have been approved by the Council, shall not be amended, varied or rescinded without the prior approval of the Council.

(2) Where the Board of Directors of a licensed stock exchange wish to amend its rules it shall forward by written notice to the Commission the amendments, whether by rescission, alteration or addition, to such rules which such licensed stock exchange wish to make.

(3) The Commission shall, after hearing the licensed stock exchange, and within twenty-one days of receipt of a notice under subsection (2) give written notice to the stock exchange stating whether such amendments to the rules are allowed or disallowed.

(4) Upon receipt of notice under subsection (3), the stock exchange, shall give immediate effect to such notice.

(5) Notwithstanding the provisions contained in subsections (3) and (4) of this section, amendments to rules of a stock exchange of such categories as may be specified by the Commission by rules made in that behalf, shall take effect immediately upon the forwarding of the written notice referred to in subsection (2) subject to the condition that the Commission may within twenty one days of such amendment taking effect disallow such amendment without prejudice to anything previously done thereunder and require the stock exchange to comply with the provisions of subsection (4) of this section.

(1) Where a licensed stock exchange, a licensed stock broker or a licensed stock dealer, as the case may be, proposes to alter any material particulars already furnished or undergoes or intends to undergo a change from the state specified in the application for a licence or the renewal of a licence, as the case may be, as a stock exchange, stock broker or stock dealer, it shall be the duty of such licensed stock exchange, licensed stock broker or licensed stock dealer, as the case may be, to inform the Commission and obtain its prior consent before such alteration or change is effected.

(1A) Where a registered market intermediary proposes to alter any particulars already furnished or undergoes or intends to undergo a change from the state specified in the application for registration or renewal of a registration as a market intermediary, it shall be the duty of such registered market intermediary to forthwith inform the Commission of such alteration or change.

(2) Notwithstanding the provisions contained in subsection (1) of this section, changes or alterations of such categories as may be specified by the Commission by rules made in that behalf, shall take effect immediately upon the Commission being informed of such change or alterations.

(1)

(2) No licensed stock exchange, licensed stock broker, licensed stock dealer, the licensed managing company of a unit trust or a registered market intermediary shall either directly or indirectly, in connection with the purchase, sale or otherwise of any listed securities-

(a) trade in or otherwise deal in listed securities outside the licensed stock exchange of which he is a member without the prior approval of the Commission;

(b) trade in listed securities in contravention of such rules as the Commission may formulate relating to the clearance, settlement, payment, transfer and delivery of listed securities ;

(c) effect any transaction in a margin account in a manner controry to the requirements set out by the stock exchange of which he is a member without the prior approval of the Commission ;

(d) effect any transaction by means of any manipulative, deceptive or other fraudulent device or contrivance in order to induce or attempt to induce the purchase or sale of any listed securities.

(1) No listed public company or any public company which has applied to obtain a listing in a licensed stock exchange, shall make any issue of securities unless the issue has been approved by the Commission or any person authorized in that behalf by the Commission.

(2) For the purposes of this section, “issue of securities” means

(1) From and after the appointed date, no body corporate or an individual shall use the words” stock exchange “, “stock broker” or “stock dealer” as the case may be unless such body corporate or individual as the ca e may be, has been licensed as a stock exchange or stock broker or stock dealer, by the Commission under this Act.

(2) From and after the appointed date, no body corporate or an individual shall carry on business as a stock exchange, stock broker, stock dealer as the case may be, such body corporate or individual is authorized to do so under a licence granted under the provisions of this Act:

Provided, however, any body corporate or an individual who, immediately before the appointed date was carrying, on business as a stock exchange, stock broker or stock dealer as the case may be, shall be entitled to carry on such business without obtaining a licence under this Act-

until the licence is granted or finally refused or the application is withdrawn.

(3) Any body corporate or an individual who contravenes the provisions of subsection (1) or (2), shall be guilty of an offence under this Act and shall be liable on conviction after summary trial before a Magistrate to a fine not exceeding one million rupees.

(1) No licence shall be granted under this Part for the operation of a unit trust, unless-

(2) Notwithstanding the provisions of paragraph (a) of subsection (1), where the trustee approved by the Commission is replaced by the appointment of a new trustee after the issue of a licence, such licence shall be deemed to be valid and continue in force until the new trustee is approved by the Commission,

(1) The Commission shall withdraw the approval of a trustee of a unit trust where the Commission is satisfied that the trustee of that unit trust

(2) Upon withdrawal of any approval under subsection (1), the trustee shall be deemed to have retired but such retirement shall not take effect until a new trustee duly approved by the Commission has been appointed.

(1) The Commission shall can eel or suspend the licence granted to a managing company in respect of a particular unit trust, where the Commission is satisfied that

(2) Before the cancellation of a licence granted to a managing company in respect or a particular unit trust in terms of the preceding subsection, such managing company shall be given an opportunity to show cause as to why such licence should not be cancelled,

(3) Where the licence granted to a managing company in respect of a particular unit trust is cancelled, it shall be the duty of such managing company to forthwith surrender its licence to the Commission,

((4) Where the Commission is satisfied that the managing company in respect of a particular unit trust has contravened the provisions of paragraph (a), (b) or (c) of subsection (1) and that such contravention is not considered by the Commission as being of a serious nature, it may, in lieu of acting under subsection (1), direct such managing company to take whatever action the Commission may consider appropriate to

(5) The giving of a direction by the Commission to a managing company under subsection (4), shall not affect or prejudice the institution or maintenance of a prosecution against such trustee or managing company for an offence under this Act.

(1) Any person aggrieved by a decision of the Commission:-

(2) Until rules are made under Article 136 of the Cinstitution pertaining to appeals under this section, the rules made under that Article pertaining to applications by way of revision to the Court of Appeal shall, mutatis mutandis, apply to every appeal made under subsection (3) of this section

(3) The Court of Appeal may, on an appeal made to it under this section confirm, revise, modify or set aside the decision of the Commission and may make any order as the interests of justice may require.

(1) The trust deed relating to a unit trust shall not be amended, without the prior approval in writing of the Commission.

(2) Where the trustee of a unit trust proposes to amend the trust deed of such unit trust he shall forward the proposed amendments, to the Commission.

(3) The Commission shall, within twenty one days of receipt of the proposed amendments forwarded under subsection (2), give written notice to the managing company and trustee stating whether the proposed amendments to the trust deed are allowed or disallowed.

In case such amendments are disallowed the Commission shall give reasons for such disallowance.

(4) Upon receipt of a notice under subsection (3), trustee shall give immediate effect to such notice.

(1) Notwithstanding anything in the Trust Ordinance or uny other law, a trustee of a unit trust shall not be liable for any breach of trust arising from any act of the managing compay of such unit trust if-

(2) nothing contained in subsection (1) of this section shall be deemed to exempt a trustee from liability for a breach of trust which has been occasioned by fraud or negligence.

(1) Subject to the provision of subsections (8) and (9), an individual who is, or at any time during the six months immediately proceeding the appointed date has been” connected with a company shall not trade in listed securities of that company if he has information which-

(2) Subject to the provisions of subsections (8) and (9), an individual who is or at arty time in the six months immediately preceding the appointed date has been connected with a company shall not trade in listed securities of any other company if he has information which

(3) Subject to the provisions of subsections (8) and (9), where-

(4) Subject to the provisions of subsections (8) and (9) where an individual is contemplating, or has contemplated, making, whether with or without another person, a takeover offer for a company in a particular capacity, that individual shall not trade in listed securities of that company in another capacity if he can reasonably be expected to know that the information that the offer is contemplated or is no longer contemplated is unpublished price sensitive information in relation to those securities.

(5) Subject to the provisions of subsections (8) and (9) where an individual has obtained, or has reasonable cause to believe he has obtained, from an individual to whom the provisions of subsection (4) apply, information that the offer referred to in subsection (4) is being contemplated or no longer contemplated the first mentioned individual shall not himself trade in listed securities of that company if he can reasonably be expected to know that the information is unpublished price sensitive information in relation to those securities.

(6) Subject to the provisions of Subsections (8) and (9) an individual who is for the time being prohibited by any provision of this section from trading in listed securities shall not counselor procure any other person to deal in those securities, knowing or having reasonable cause to believe that person would trade in such listed securities.

(7) Subject to the provisions of subsections (8) and (9), an indiviqual who is for the time being prohibited as aforesaid from trading in listed securities by reason of his having any information, shall not communicate that information to any other person if he knows or has reasonab1e cause to believe that or some other person will make use of the information for. the purpose of counselling or procuring any other person to trade in such listed securities.

(8) The provisions of this section shall not prohibit an individual by reason of his having any information from-

(9) An individual shall not, by reason only of having information relating to any particular transaction, be prohibited-

(10) Where a trustee or legal representative, or where a trustee or legal representative is a body corporate, an individual acting an behalf of that trustee or legal representative, who, apart from the provisions of paragraph (a) of subsection (8) would be prohibited by the provisions of this section from counseling or procuring any other person to. trade in listed securities, trades in those listed securities, or counsels or procures arty other person to. trade in them, he shall be presumed to. have acted as referred to in that paragraph if he acted on the advice of a person who-

(1) The provision of this section shall apply to any information which-

(2) The provisions of this section shall apply to a public servant or former public servant holding information to which this section applies and to any individual who knowingly obtained any such information (directly or indirectly) from a public servant or former public servant who, that individual knows or has reasonable cause to believe, held the information by virtue of his position or former position as a public servant.

(3) An individual to whom the provisions of this section apply-

(4) An individual shall not, by reason only of having information relating to a particular transaction, be prohibited by any provision of this section from doing anything, if he does that thing in order to facilitate the completion or carrying out of the transaction.

(1) For the purposes of this Part of this Act, an individual is connected with a company if, and only if

(2) Any reference in this Part of this Act to “unpublished price sensitive information in relation to any listed securities of any company is a reference to information which

(3) In this Part of this Act except where the context otherwise requires “company” means a listed public company within the meaning of this Act;

“related company”, in relation to any company means any body corporate which is that company’s subsidiary associate or holding company, or a subsidiary of that company’s holding company;

“take-over offer for a company” means an offer made to all the holders (or all holders other than the person making the offer and his nominees) of the shares in the company to acquire those shares or a specified proportion of them, or to all the holders, or all the holders other than the person making the offer and his nominees, of a particular class of those shares to acquire the shares of that class or specified proportion of them.

(1) The Commission shall have its own Fund.

(2) There shall be paid into the Fund-

(3) There shall be paid out of the Fund all such sums of money required to defray the expenditure incurred by the Commission in the exercise, discharge and performance of its powers functions and duties.

(1) The Commission shall cause proper books of accounts to be kept of the income and expenditure, assets and liabilities and all other transactions, of the Council.

(2) The provisions vi Article 154 of the Constitution relating to the audit of accounts of public corporations shaJ.1 apply to the audit of the accounts of the Council.

(1) There shall be established a fund called the Compensation Fund, for the purpose of granting compensation to any investor who suffers pecuniary loss as a result of any licensed stock broker or licensed stock dealer being found incapable of meeting his contractual obligations.

(2) The Compensation Fund shall consist of –

(3) Moneys belonging to the Compensation Fund may be invested by the Commission in such manner as may be determined by the Council.

(1) The Minister shall appoint from among the members of the Council, three members who shall comprise the Compensation Committee (hereinafter referred to as the” Committee”) of the Council.

(2) The Committee appointed under subsection (1) shall be responsible for assessing and awarding compensation in respect of any application made under section 40 and the decision of such Committee on any such assessment or award shall be final and conculsive for the purpose of this Act.

(1) Any investor who has suffered pecuniary loss as a result of any licensed stock broker or a licensed stock dealer being found incapable of meeting his contractual obligation towards such investor may, within three months of the date on which he suffered such pecuniary loss, make an application to the Committee in the prescribed form claiming compensation from the Compensation Fund.

(2) The Committee may from time to time, require an applicant to produce any document or other evidence in support of his claim for compensation. Where the applicant fails to comply with such request, the Committee may disallow his claim.

(3) If at any time the Committee considers it necessary so to do it may hold an inquiry into the claim of the applicant and shall by notice in writing, inform the applicant to be present on such date, and at such time and place as may be specified in the notice. Where the applicant fails to appear for such inquiry on the date set out in the notice, the Committee may disallow his claim.

(1) The Committee may, after examination of the documents and other evidence produced in support of the claim by an applicant, or in any case where an inquiry was held on the conclusion of such inquiry, allow or disallow such claim for compensation.

(2) Where the Committee allows any claim it shall make an assessment of the amount of compensation payable and shall make an award in relation thereto. Notice of such award shall be given in writing to the applicant.

(3) The Commission shall make rules relating to the assessment of compensation payable and the assessment of compensation by the Committee under subsection (2) shall be in accordance with such rules.

(1) The Minister shall, on the recommendation of the Commission, appoint a Director-General of the Council, who shall be its chief executive officer. The conditions of employment including remuneration of the Director-General shall be determined by the Minister.

(2) The Director-General shall, subject to the general direction and control of the Council, be charged with the direction of the affairs and transactions of the Council, the exercise, discharge and performance of its powers, functions and duties, and the administration and control of the employees of the Council.

(3) The Director-General may, with the approval of the Council, whenever he considers it necessary to do so, delegate to any employee any power, function or duty conferred or imposed on or assigned to him by this Act and such employee shall exercise, discharge and perform such power, function or duty subject to the general or special directions of the Director-General.

(4) The Minister may on the recommendation of the Commission, remove from office the Director-General appointed under subsection (1) and such removal shall not be called in question in any Court.

(1) The Commission may appoint such other officers and servants as it considers necessary for the efficient discharge of its functions.

(2) The officers and servants appointed under subsection (1) shall be remunerated in such manner and at such rates and shall be subject to such conditions of service as may be determined by the Council.

(3) At the request of the Commission any officer in the public service may, with the consent of the officer and the Secretary to the Ministry of the Minister in charge of the subject of Public Administration, be temporarily appointed to the Commission for such period as may be determined by the Council with like consent, or be permanently appointed to such staff.

(4) Where any officer in the public service is temporarily appointed to the staff of the Council, the provisions of subsection (2) of Section 13 of the Transport Board Law, No. 19 of 1978, shall, mutatis mutandis, apply to and in relation to him.

(5) Where any officer in the public service is permanently appointed to the staff of the Council, the provision of subsection (3) of section 13 of the Transport Board Law, No. 19 of 1978, shall, mutatis mutandis, apply to and in relation to him.

(6) Where the Commission employs any person who has agreed to serve the Government for a specified period, any period of service to the Commission by that person shall be regarded as service to the Government for the purpose of discharging the obligations of such agreement.

(7) At the request of the Commission any member of the Local Government Service or any other officer, or servant of a local authority, may, with the consent of such member, officer or servant and the Local Government Service Commission, or the local authority, as the case may be, be temporarily appointed to the staff of the Commission for such period as may be determined by the Commission with like consent or be permanently appointed to such staff on such terms and conditions including those relating to pension or provident fund rights as may be agreed upon by the Commission and the Local Government Service Commission or that local authority.

(8) Where any member of the Local Government Service or any officer or servant of any local authority is appointed temporarily under subsection (7) to the staff of the Council, he shall be subject to the same disciplinary control as any other member of such staff.

(1) At the request of the Commission any officer or servant of a public corporation may, with consent of such officer or servant and the governing board of such corporation, be temporarily appointed to the staff of the Commission for such period as may be determined by the Commission with like consent or with like consent be permanently appointed to the staff of the Commission on such terms and conditions, including those relating to pension or provident fund rights, as may be agreed upon by the Commission and the governing board of such corporation.

(2) Where any person is appointed whether temporarily or permanently under subsection (1) to the staff of the Commission he shall be subject to the same disciplinary control as any other member of the staff.

(1) The Commission or a person authorized in that behalf by the Commission may by notice in writing require any person within such period as shall be specified in the notice, to furnish any information or produce any document (other than any information or document which is prohibited from being disclosed or produced under any law which provides for the imposition and recovery of any tax) as shall be specified in such notice and as the Commission may consider necessary for the proper exercise of its powers or the discharge of its functions under this Act.

(2) It shall be the duty of any person who receives a notice under subsection (1) notwithstanding anything to the contrary in any written law, comply with the requirements of such notice within the period specified therein and where in compliance with such notice such person discloses any information or produces any document which he is prohibited from doing under any written law, such disclosure or production shall, notwithstanding anything to the contrary in such written law, not be deemed to be a contravention of the provisions of such written law.

(3) No information furnished or the contents of a document produced, in compliance with a notice issued under this section. shall be published or communicated by the Commission to any other person, except with the consent of the person furnishing such information, or producing such document,. as the case may be , or in the course of the discharge of the functions of the Commission.

(1) The Commission may establish a Committee consisting of three members of the Commission to hear and determine-

(2) The Committee may on receipt of any written complaint made by any person, or a licensed stock broker or a licensed stock dealer, examine the documents and other evidence produced. if any, in support of such complaint and determine whether such licensed stock exchange, licensed stock broker or licensed stock dealer, or the listed public company or the licensed managing company or trustee of such unit trust or the registered market intermediary as the case may be, has contravened the provisions of this Act or any regulation or rule made under this Act or contravened any rule of such licensed stock exchange. No such determination shall be made without affording such licensed stock exchange, licensed stock broker, licensed stock dealer, the listed public company, such managing company or trustee or such market intermediary as the case may be, an opportunity of being heard.

(3) Where the Committee determines that a licensed stock exchange, licensed stock broker, licensed stock dealer, a listed public company, licensed managing company or trustee of any unit trust or a registered market intermediary as the case may be, has contravened the provisions of this Act or any regulation or rule made under this Act or contravened any rule of such licensed stock exchange, the Committee shall recommend to the Commission the nature of the action to be taken against such licensed stock exchange, licensed stock broker, licensed stock dealer, the listed public company, managing company, trustee or the market intermediary, as the case may be. The Commission shall have the discretion either to take appropriate action to give effect to such recommendations or to refer the matter for further investigation to the appropriate authority,

(3A) Notwithstanding the preceding provisions of this section, the Committee shall also have the power to inquire into any matter referred to it by the Commission and upon the conclusion of such inquiry recommend to the Commission the nature of the action that may be taken in relation to such matter.

(4) The Commission shall upon receiving such recommendations made by the Committee under subsection (3) or subsection (3A), as the case may be, take such action as it may deem expedient, in accordance with the provisions of this Act.

(1) The Commission or any person duly authorized in that behalf by the Commission, may carry out such investigations or hold such inquiries as it or he may consider necessary or expedient for the exercise, performance and discharge of the powers, duties mid functions of the commission under this Act and for such purpose summon and call upon any person to appear before it or him to give evidence or to produce any books or documents in the possession or control of such person, as are required for the purpose of such investigation or inquiry,

(2) For the purpose of carrying out an investigation or inquiry under subsection (1), the Commission may authorize in writing any officer to enter at all reasonable hours of the day any premises of a licensed stock exchange, any licensed, stock broker, any licensed, stock dealer, any listed public company, licensed managing company of any unit trust a registered, market intermediary, and inspect and take copies of any records required to he kept under this Act or under, any regulation or rule made under this Act or any other law in respect of such business.

(3) Any person summoned or called upon to appear before the Commission or any person duly authorized in that behalf under subsection (1), maybe examined orally, and any statement made by the person so examined may be reduced to writing. Every such statement reduced to writing shall be signed by the person so examined provided that prior to signing the same, such statement shall be shown or read to such person or if he does not understand the language in which it is written it shall be interpreted to him in a language he understands and he shall be at liberty to explain or add, to the same.

(4) Every person who fails to appear before the Commission or the person authorized, as the case. may ,be, when required to do so under subsection, (1), or who refuses to answer any question put to him by, the Commission, or a person duly authorized by the Commission or who refuses to produce any book or document in his possession or control when required to do so, or knowingly gives any false answer to any question put to him by the Commission or a person duly’ authorized by the Commission, shall be guilty of an offence under this Act and shall on conviction after summary trial before a Magistrate be liable to a term of imprisonment of either description not exceeding five years or to a fine not exceeding one million rupees or to both such imprisonment and fine.

(1) No suit or prosecution shall be instituted against any member of the Commission or against any of the officers or servants of the Commission for any act which in good faith is done or purported to be done by such person under this Act or on the direction of the Council.

(2) Any expenses incurred by the Commission in any suit or prosecution brought by or against it before any court, shall be paid out of the Fund of the Council, and any costs paid to, or recovered by the Commission in any such suit or prosecution shall be credited to the Fund of the Council.

(3) Any expenses incurred by any such person as is referred to in subsection (1) in any suit or prosecution brought against him before any court in respect of any act which is done or purported to be done by him under this Act or on the direction of the Commission shall, if the court holds that such act was done in good faith be paid out of the Fund of the Council, unless such expenses are recovered by him in such suit or prosecution.

(a) threatens or intimidates; or

(b) makes any derogatory remarks or publishes any statement with a view to bringing disrepute or defaming the reputation of any member of the Commission, the Director-General or any other officer or servant of the Commission in the course of discharging his, duties under the Act or under any regulation or rule made under this Act, shall be guilty of an offence and shall on conviction after summary trial before a Magistrate, be liable to a fine not exceeding fifty thousand rupees or to imprisonment of either description for a period not exceeding six months or to both such fine and imprisonment.” .

(1) Any person who-

(2) Any person who is found guilty of an offence under this Act for which no penalty is expressly provided for under this Act, shall be liable on conviction after summary trial by a Magistrate to of imprisonment of either description for a period not exceeding five years or to a fine not less than fifty thousand rupees and not exceeding ten million rupees or to both such imprisonment and fine.

(3) Where any offence under this Act is committed by a body corporate, any person who is at the time of the commission of the offence, a director, manager, secretary or other similar officer of the body corporate shall be deemed to be guilty of that offence unless he proves that such offence was committed without his knowledge or connivance or that he exercised all due diligence to prevent the commission of that offence as he ought to have exercised having regard to the nature of his functions and all the circumstances of the case.

(1) The Minister may make regulations in respect of matters required by this Act to be prescribed or in respect of which regulations are authorized to be made.

(2) Every regulation made by the Minister shall be published in the Gazette and shall come into operation on the date of such publication or on such later date as may be specified in the regulation.

(3) Every regulation made by the Minister shall, as soon as it is convenient after its publication in the Gazette, be brought before Parliament for approval. Any regulation which is not so approved shall be deemed to be rescinded as from the date of such disapproval, but without prejudice to anything previously done thereunder.

(4) Notification of the date on which any regulation is deemed to be rescinded shall be published in the Gazette.

(1)Without prejudice to the generality of the powers conferred upon it by section 13, the Commission shall formulate the following rules as may be required from time to time for the purpose of ensuring orderly and fair trading in securities and protection of investors interest;

(2) Every rule made under subsection (1) shall be published in the Gazette and shall come into operation on the date of such publication or on such later date as may be specified therein.-

(a) a person owning, directly or indirectly, a prescribed per centum or more of the ordinary share capital of the trust company, or licensed managing company, or is able to exercise direcly or indirectly a prescribed per centum or more of the total votes in the trust company, or licensed managing company;

(b) a company, a prescribed per centum or more of whose ordinary capital is owned, directly or indirectly, together by the trust company and the licensed managing company or a prescribed per centum or more of the total votes are exercised directly or indirectly by the trust company and the licensed managing company;

(c) a director or officer of the trustee, or the licensed managing company of a unit trust or a company referred to in paragraph (b) ;

(a) any public corporation which has its securities listed on a licensed stock exchange; and

(b) any private company which has its securities (other than shares) listed on a licensed stock exchange;

“listed securities” means any securities listed on a licensed stock exchange;