The establishment administering the buying and selling of the shares of Listed companies
is known as the Colombo Stock Exchange.
Colombo Stock Exchange (CSE) is a company Limited by Guarantee.
The authority of functioning as the share market in Sri Lanka has been granted to the
Colombo Stock Exchange by Sri Lanka Securities and Exchange Commission.
Colombo Share Market
Primary market
Secondary market
Importance of Colombo Share Market
Encouraging individuals and institutions for investments
Investors can enjoy various benefits by investing through Colombo Share Market
Companies get the opportunity to collect a large capital
The government can collect required funds by selling government securities
Ability to attract foreign investors to the country
Creating a value for company shares
Increasing the goodwill and the image of companies
Creating a secondary market for company shares
Conditions to be fulfilled by a company to be listed in the Main board
The stated capital of the company should be at least 100 million Rupees
Profits should have been earned before tax continuously for at least three (03) previous years
At least 25% of the shares to be listed should have been issued to the public
Conditions to be fulfilled by a company to be listed in Dirisavi Board
The stated capital of the company should not be less than 35 million rupees
At least 10% of the shares to be listed should have been issued to the public
Default Board
The board in which the companies those violate or do not follow the conditions of listing, are entered is known as the Default Board.
Securities exchanged in Colombo stock exchange
Ordinary shares
Preference shares
Share warrants
Corporate Debentures
Government Debt Securities
Benefits gained by investing in securities exchanged in the share market
Dividends
Interests
Capitalizing of reserves through issue of Bonus Shares
Rights Issue
Capital gains
Splitting
Colombo Stock Exchange
The membership of Colombo Stock Exchange is possessed by the Share Brokering
Companies.
Colombo Stock Exchange is controlled by nine directors
05 directors are representing the Brokering Companies
04 directors are nominated by the minister of finance of the Sri Lankan government
The parties involved in the Colombo Stock Exchange can be shown as follows in
a diagram:
Realization and settlement of the transactions related to the shares exchanged in Colombo
Stock Exchange are done by the Central Deposits System.
This is a company limited by guarantees and it is fully possessed by the Colombo
Stock Exchange.
Securities and Exchange Commission of Sri Lanka has been established under a
parliamentary act in order to supervise and formalize the activities of Colombo
Stock Exchange.
There are two methods of exchanging securities in Colombo Stock Exchange:
The Automated Trading System – (ATS)
The Debt Securities Trading System – (DEX)
Price indices
All Share Price Index (ASPI)
Milanka Price Index (MPI)
Total Return Index (TRI)
Importance of Share market indices
Ability to gain some knowledge about the performance of the economy
Ability to gain a rough awareness about the functions of companies
Ability to compare with share market conditions in other countries
