Annual Report 2008 - Ministry of Finance and Planning

4. Reform Initiatives
195
way for Sri Lanka to become a vibrant financial hub in the
Region.
In 2008, the SEC analyzed the existing legal framework of
the Sri Lankan Capital Market Law against current needs,
by identifying measures that can be taken to regulate diverse
financial products, to enhance protection to investors in the
primary and secondary markets in respect of public offers,
by deciding on definitions that could capture codified capital
market offences including prohibited business conduct,
by recognising new methodologies to be able to deal with
Capital Market offenders providing for both criminal and
civil sanctions, by exploring licensing possibilities for both
mutual and demutualized exchanges and by identifying
required changes relating to holding companies, clearing
corporations, brokers, dealers and market intermediaries
while also strengthening the independence of the SEC.
SEC is working towards demutualization i.e. changing the
legal status of the exchange from a mutual association into
a company limited by shares. It is also working towards
providing necessary regulatory empowerment to enable
licensing demutualized exchanges under the SEC Act and to
introduce subordinate regulation to enable demutualization
of the CSE at an appropriate time.
Further studies were also conducted on Corporate bond
development as an alternative source of funding/investment
and on how best to regulate Over the Counter (OTC) activities
in the light of the large quantum of public funds mobilized
in the form of unlisted securities. New product development
initiatives made progress including the development of
Unit Trusts, derivatives, Real Estate Investment Trusts
and Exchange Traded Funds in order to increase the depth
and breadth of the market whilst providing tools for risk
management. SEC also worked towards the procurement
of a surveillance system to improve the effectiveness of
monitoring stock market activities. With the intention of
enhancing the financial literacy level of the Journalists, a
two day residential workshop on Financial Journalism was
organized jointly with FSA to educate the media personal and
30 media personal representing electronic and print media
participated. Publications, Quiz Programs and research
competitions were conducted to disseminate knowledge
relating on Capital Market operations. SEC working within
the framework of the capital market master plan established
the first Capital Market Information Center in 2008, being
a platform to disseminate knowledge on capital markets to
University undergraduates and researchers in the University
of Sabaragamuwa. SEC also established information
centers at Rajarata, Sri Jayawardhanapura and Ruhuna
Universities.
OFFICE OF THE TAX OMBUDSMAN
The appointment of the Tax Ombudsman in September 2005,
can be seen as the initial step towards creating a forum for
Tax- Payers to tender their complaints pertaining to alleged
grievances or injustices caused to them in consequence
of any maladministration on the part of any officers in the
Inland Revenue Department.
Table 4.9
Redress by the Tax Ombudsman 2005- 2008
No. of Complaints
received
No. determined &
concluded
No. rejected
clause - 17
No. on which CGIR
failed to send
observations on time
No. on which
recommendations
not complied with
by CGIR
Source: Tax Ombudsman’s Office
2005 2006 2007 2008
28 75 67 53
15 49 35 39
02 08 13 06
02 Nil 05 04
Nil Nil Nil Nil
The general nature of new complaints received in 2008 is
with regard to initiating legal proceedings without giving
any hearing to Tax-payers grievances, failure to make GST
and VAT refunds, seeking permission to pay arrears of taxes
on an installment basis, seeking to set-off penalties and
requesting to accommodate delayed returns on reasonable
Ministry of Finance and Planning Sri Lanka
Annual Report 2008