By J. Kurukulasuriya
The purpose of the study — which is being conducted by Research Consultancy Bureau (Pvt) Ltd., an independent research group, is to "explore and understand the views of the local investors," and all CDS account holders have been contacted. After initial contact some months ago, the study has not proceeded.
www.ceylontoday.lk
Ceylon Finance Today: The Central Depositary System (CDS) of the Colombo Stock Exchange is mired in officialdom and over regulation according to reliable market sources. Shareholders whose parents or relatives have died leaving them as heirs to shares in companies listed on the stock exchange are being left in limbo.
One leading stock brokering firm told Ceylon FT that several of their clients have been unable to sell shares which they inherited, due to 'frivolous' objections by the CDS. For example, the CDS's own rules require an Administrator of a deceased person's Estate to submit copies of the letter of Administration with the 'consent to sell' signatures of the joint heirs, if any. In one instance where such documents were submitted, the CDS rejected them merely because the names of the joint heirs had been numbered as 1, 2, 3 in pencil. In another instance where two heirs jointly requested that the shares they inherited be transferred to their names as joint holders, the CDS refused. This was in spite of a load of paperwork being complied with. They now have no means by which they can dispose of their inheritance.
Evidence of shares languishing in the name of deceased persons can be seen by scrutinizing the lists of 'Top Twenty shareholders' which the listed companies are required to disclose in their Annual and quarterly reports. The 'Top Twenty' often include the names of many persons specified as deceased persons, represented by their Administrators or Executors. In many instances these are foreigners who find it doubly difficult to get through the CDS's red tape.
It is also frustrating for shareholders to identify the persons at the CDS making apparently high handed decisions because they do not disclose their names in correspondence, and make it a point to sign letters illegibly.
One leading stock brokering firm told Ceylon FT that several of their clients have been unable to sell shares which they inherited, due to 'frivolous' objections by the CDS. For example, the CDS's own rules require an Administrator of a deceased person's Estate to submit copies of the letter of Administration with the 'consent to sell' signatures of the joint heirs, if any. In one instance where such documents were submitted, the CDS rejected them merely because the names of the joint heirs had been numbered as 1, 2, 3 in pencil. In another instance where two heirs jointly requested that the shares they inherited be transferred to their names as joint holders, the CDS refused. This was in spite of a load of paperwork being complied with. They now have no means by which they can dispose of their inheritance.
Evidence of shares languishing in the name of deceased persons can be seen by scrutinizing the lists of 'Top Twenty shareholders' which the listed companies are required to disclose in their Annual and quarterly reports. The 'Top Twenty' often include the names of many persons specified as deceased persons, represented by their Administrators or Executors. In many instances these are foreigners who find it doubly difficult to get through the CDS's red tape.
It is also frustrating for shareholders to identify the persons at the CDS making apparently high handed decisions because they do not disclose their names in correspondence, and make it a point to sign letters illegibly.
At a recent CDS investor's forum which lasted several days, and aimed at encouraging more ordinary investors to put their money into listed shares, the CDS top managers talked of its transparency and efficiency. This is not the reality for those dealing with the CDS.
In a move to back up recent claims by SEC Chairman Nalaka Godahewa, that shortcomings in the Colombo Stock Exchange are being rectified, the CSC and Securities and Exchange Commission (SEC) has commissioned an independent study of the stock exchange.
In a move to back up recent claims by SEC Chairman Nalaka Godahewa, that shortcomings in the Colombo Stock Exchange are being rectified, the CSC and Securities and Exchange Commission (SEC) has commissioned an independent study of the stock exchange.
The purpose of the study — which is being conducted by Research Consultancy Bureau (Pvt) Ltd., an independent research group, is to "explore and understand the views of the local investors," and all CDS account holders have been contacted. After initial contact some months ago, the study has not proceeded.
www.ceylontoday.lk
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