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Part II · Markets and Market Institutions

39. Cancellation of licence of a clearing house

Official English translation. The Sinhala text prevails. Open the official Sinhala text, official PDF on documents.gov.lk

(1)

The Commission may by notice in writing -

(a)

cancel the licence granted under section 35 to a clearing house with effect from the date specified in the notice; or

(b)

direct the licensed clearing house to cease to provide or operate such facilities or to cease to provide such services, with effect from the date specified in the notice.

(2)

The Commission shall not cancel a licence or issue a directive under subsection (1) unless the Commission is satisfied that it is appropriate to do so for the protection of investors, in the public interest or for the proper regulation of the clearing and settlement of transactions in securities, if any of the following circumstances occur:-

(a)

the licensed clearing house ceases to provide clearing facilities;

(b)

the licensed clearing house is being wound up or otherwise dissolved, whether within or outside Sri

Lanka;

(c)

the licensed clearing house has contravened any term or condition of its licence or is charged with any offence under this Act;

(d)

the licensed clearing house has failed to comply with a term or condition of its license requirement or directive issued under this Act or otherwise fails to comply with any provision or requirement under this Act;

(e)

any information provided for the purposes of section 36 was false or misleading in a material particular or from which there is a material omission;

(f)

a judgment debt against the clearing house has not been satisfied in whole or in part;

(g)

a receiver, a receiver and manager, liquidator or an equivalent person has been appointed, whether within or outside Sri Lanka, in relation to or in respect of any property of the licensed clearing house;

(h)

the licensed clearing house has, whether within or outside Sri Lanka, entered into a compromise or scheme of arrangement with its creditors; or

(i)

the licensed clearing house has on its own accord applied to the Commission to cancel the licence granted to it.

(3)

For the purposes of paragraph (a) of subsection (2), the clearing house shall be deemed to have ceased to provide clearing facilities if it has ceased to provide such facilities for a period exceeding two weeks without obtaining the prior written approval of the Commission to do so.

(4)

Notwithstanding the cancellation of a licence or the issuance of a directive under subsection (1), the Commission may permit the clearing house to continue, on or after the date on which the cancellation or directive is to take effect, to carry on such activities affected by the cancellation or directive as the Commission may specify in the notice for the purpose of –

(a)

closing down the operations of the clearing house or ceasing to provide the services specified in the notice; or

(b)

protecting investors or the public interest.

(5)

Where the Commission acts under subsection (1), the

Commission may, where it considers necessary, appoint an interim board of directors for a period of six months which may be extended up to a period of one year to manage the affairs of the licensed clearing house until a new board of directors is appointed.

(6)

The Commission shall not take any action under subsection (1) without giving the clearing house an opportunity of being heard.

Read on from s 40

Part III

Issue of Securities

Read on from Part III

Part IV

Trade In Unlisted Securities

Read on from Part IV

Part V

Market Misconduct

Read on from Part V

Part VI

Finance

Read on from Part VI

Part VII

General

Read on from Part VII