In a major move to strengthen corporate governance and protect shareholder interests, the Colombo Stock Exchange (CSE) has announced a revised disclosure framework for how listed companies utilize funds raised through public offerings.

In Circular No. 06/2026, issued on August 21, 2026, to the Managing Directors and Chief Executive Officers of all listed companies, CSE announced the immediate revision of the disclosure format set out under Rules 7.6(xiii) and Appendix 7A, Part (a), Item 3 of the CSE Listing Rules. The new guidelines aim to raise corporate reporting standards and ensure that capital raised from the public is deployed in strict alignment with stated business plans.

According to the circular, the revised format has been introduced to "enhance the level of detail, transparency, and accountability in reporting the utilization of funds raised through public issuances." Listed entities are required to follow this format in both their Annual Reports and Interim Financial Statements until all proceeds from an Initial Public Offering (IPO) or further issuance of securities are fully utilized.

In a significant tightening of compliance standards, the CSE now mandates that once public funds are fully utilized, companies must submit a duly certified extract of a Board Resolution. This resolution must explicitly authorize the statement that the raised funds were utilized in strict conformity with the objectives outlined in the Prospectus or Circular to Shareholders.

In instances where the original objectives have been revised, the Board's authorization must demonstrate compliance with the applicable procedures for changing the use of funds. To back up this mandate, the CSE warned that it reserves the right to demand "further documents and explanations" to strengthen its regulatory oversight over public capital.

The revised disclosure format introduces a highly rigorous ledger for tracking fund utilization. Companies must now break down their spending by objective and sub-objective, detailing:

• The original amount allocated as per the prospectus.
• The proposed date of utilization.
• The actual amount allocated upon receipt of proceeds (both in absolute terms and as a percentage of total proceeds).
• The exact amount utilized and the utilization percentage against the allocation.

If any funds remain unutilized, the company must provide an explicit clarification of where the money is currently being held—specifically noting if it is deposited in a bank account, lent to a related party, or placed in other investments.

For companies that deviate from their original plans, the framework demands immediate disclosure. Listed entities must state whether they deviated from the prospectus objectives, confirm if the market was informed as per Appendix 8A, outline the specific details of the deviation, and provide the Board approval date for the shift.

The new rules place a heavy emphasis on tracking unutilized funds that flow to related parties or external investment instruments. If any unutilized funds are disbursed to a related party, the company is now required to disclose:

1. The name and relationship of the related party.
2. A detailed explanation of the objective of the disbursement.
3. The exact date of Board approval for the transaction.

Additionally, if unutilized funds are placed in other investments, the company must declare the specific details of the investment instruments and counterparties, along with the total amount invested.

The CSE has made compliance with the revised format and the new Board Resolution submission rules mandatory with immediate effect.