SRI LANKA Law and Practice Contributed by: Ayanthi Abeyawickrama, Varners
in a listed company. Such transactions must also be disclosed to the Colombo Stock Exchange (CSE) in accordance with its rules. Separately, entities operating in regulated sectors, such as banking, insurance, finance and telecommu - nications, must obtain prior approval from the relevant regulator, including the Central Bank of Sri Lanka, the Insurance Regulatory Commission of Sri Lanka, or the Telecommunications Regulatory Commission of Sri Lanka, before completing any merger, acquisition or corporate restructuring within those sectors. 6.2 Merger Control Procedure While there is no unified merger control regime, certain sectors impose mandatory notification and approval requirements that must be complied with prior to the completion of a merger or acquisition. In the banking and finance sector, approval must be obtained from the Central Bank of Sri Lanka under the applicable financial sector statutes (such as the Banking Act or the Finance Business Act). The par - ties must submit a formal application with relevant corporate and financial documents, including details of the proposed transaction and its impact on capi - tal adequacy and market concentration. The review period varies but typically takes several weeks to a few months depending on the complexity of the trans - action and regulatory queries. In the telecommunications sector, mergers or acquisi - tions involving licensed operators must be notified to the Telecommunications Regulatory Commission of Sri Lanka (TRCSL). There is no codified timeline, but the TRCSL assesses such transactions on a case- by-case basis, considering market effects, spectrum allocation and technical capacity. Approval is gener - ally required before completing any change in control. For listed companies, any acquisition or takeover fall - ing within the scope of the Takeovers and Mergers Code (the “TOM Code”) requires prior SEC approval. The Code stipulates that once an offer is announced the entire takeover process must be completed within 60 calendar days, unless an extension is granted by the SEC under special circumstances. The acquirer must disclose the offer and obtain SEC clearance
before any shares are acquired above the relevant thresholds. In all these cases, parties must comply not only with sector-specific procedural steps but also with any dis - closure obligations applicable under the Companies Act, the Listing Rules or other relevant laws. There are currently no standardised pre-merger filing proce - dures or timelines for unregulated sectors. 6.3 Cartels Anti-competitive agreements and concerted practices are primarily regulated under the Consumer Affairs Authority Act, No 9 of 2003. This generally prohibits agreements, decisions or practices that have the effect of substantially lessening competition in any market in Sri Lanka. This would include classic cartel conduct such as price fixing, bid rigging, market allocation, and collusive limitation of supply or production. The Consumer Affairs Authority (CAA) is the designat - ed enforcement agency empowered to conduct inves - tigations, issue directions and take administrative action against anti-competitive conduct. However, the existing legal framework is limited in both scope and enforcement capacity. It does not clearly distinguish between horizontal and vertical agreements, lacks a formal leniency or whistle-blower mechanism, and does not provide for significant civil or criminal pen - alties. Moreover, enforcement tends to be reactive and complaint-driven, rather than proactive or systematic. The Act does not explicitly require that anti-competi - tive conduct occur within the country’s borders; rath - er, the relevant test is whether the conduct has a sub - stantial effect on competition in Sri Lankan markets. As such, agreements concluded abroad may still fall within the purview of the CAA if they affect domestic trade or consumers. There have been ongoing discussions and stakeholder consultations on introducing a modern and compre - hensive competition law framework to replace or sig - nificantly reform the current regime. These reforms are expected to establish a clearer prohibition structure, provide for merger control, introduce investigative and sanctioning powers, and align with international best practices in competition law enforcement.
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