The Colombo Stock Exchange (CSE) has been dubbed as one of the best performing stock markets in Asia, prompted by many great strides it has taken in the development of its capital market. One of them includes the opening up of the market to potential investors across borders. Foreign investment in the local equity market is open to approved Country Funds and Regional Funds (approval is given by the Securities and Exchange Commission of Sri Lanka), Citizens of Foreign States (whether resident in Sri Lanka or outside Sri Lanka), Sri Lankan residents outside Sri Lanka and Corporate Bodies incorporates outside Sri Lanka. Foreign investors may invest in up to 100 per cent of the issued capital of a limited company in all sectors of the economy, except in the following activities, which are reserved for citizens of Sri Lanka:
- Money Lending
- Pawn Broking
- Retail Trade with a capital investment of less than US$ 1 Million
- Coastal fishing
Foreign investments are also subject to certain limitations set out in the notification of the Controller of Exchange in the government gazette no.1232/14 of 19 th April 2002 as amended by gazette no.1248/19 of August 08, 2002.
Procedure for Investments and Repatriation of Proceeds for Non Residents
Investment in shares in Sri Lanka and repatriation of proceeds should take place through Share Investment External Rupee Accounts (SIERA) opened with commercial banks. Individuals, Regional Funds, as well as Companies incorporated outside Sri Lanka are permitted to open SIERA accounts. The repatriation of proceeds arising out of investments, i.e. dividends paid on shares and sale proceeds of shares made through SIERA after 5 th June 1990 are not subject to Exchange Control regulations.
Special provisions have also been made in the Central Depository System to accommodate foreign clients operating in time zones different to that of Sri Lanka. The CSE has permitted free transfers between accounts in the System for transactions concluded by such clients. These transfers could only be affected before the expiry of two market days from the date of conclusion of the first transaction.
Procedure for Investments by Sri Lankan Non Residents
Non-resident Sri Lankans who have proceeded abroad to take up employment, set up a business or engage in a profession and continue to live abroad could remit money for investments in Sri Lankan companies through RANSI Accounts (Rupee Accounts for Non-Resident Sri Lankan Investments), maintained with authorized dealers.
Funds channeled through this account may be invested in shares, government securities, debentures, units in Unit Trusts and in real assets such as land and building. Payments for investment under the scheme have to be made by bank drafts purchased out of funds in a RANSI account.
All income from investments such as interest, dividends, profits and rental income could be credited to the RANSI account. The remittances to this account would be free to be taken back without exchange control restrictions. Funds realized on the sale and liquidation of investment could also be credited to the RANSI account.
Last Updated on: 19-05-2010