CSE's BOI-board for 'qualified investors'

Only the “qualified investors” will be allowed initially to invest in the companies that will be listed under the new board envisaged for Board of Investment (BOI) companies, which is likely come into operation this year, a top stock market regulatory official said.

According to Securities and Exchange Commission Chairman D r. N a l a k a Godahewa, certain safeguards to protect investor interest had to be prioritized in drawing the concept paper for a separate board for BOI companies, which has now been finalized and handed over to the BOI.

“The request to allow BOI companies to list from day one came from the BOI. They asked whether we can allow it, so that these companies will find it easier to attract consortiums.

We had a series of discussions about it and came up with a proposal to have a separate board of BOI companies. We also told them that these com- panies can get listed from day one and they don’t have to wait for three years to obtain a listing, which is the general rule. However, we stressed that there would be certain safeguards to protect investor interest,” Godahewa said.

The first safeguard that has been proposed was to set a minimum investment threshold of US $ 10 million for these companies and a lock in period of two years.

“To discourage fly-by-night operators, we proposed that 50 percent of the investment should be with the promoters and the money need come into the country. Further, it will be locked in for a period of two years,” Godahewa said.

The second safeguard that was proposed was not to allow retail investors to invest in these companies until both SEC and CSE feel satisfied about the performance of the companies listed in the new board.

“We decided that we would only allow “qualified investors” to invest and trade in these companies. The concept of “qualified investors” has to be defined by the CSE. Essentially, they will be institutional investors who have proper research and know-how to trade and invest.We don't want to expose retailers to these companies initially. But if this board works well, we will allow retailers in the future,” Godahewa stated. “The BOI Chairman is very excited about the possibilities as some of the investors have already shown interest. We told them that as soon as they can get five companies lined up, we would launch it,” he added.