06 December 2010

Securities Investment Accounts (SIA) Replace SIERA & TIERA Accounts - For Investment in Sri Lankan Equity, Debt and Unit Trusts

SIA is a Sri Lankan Rupee (LKR) Account which eligible investors could open to invest in Government Securities (Treasury Bills and Treasury Bonds), Equity Capital of Companies incorporated in Sri Lanka and Units of Unit Trusts in Sri Lanka.

NOTE: Following LKR Accounts which were already opened for investment purposes will be re-named Securities Investment Accounts (SIA):

• Share Investment External Rupee Account (SIERA)
• Treasury Bond Investment External Rupee Account (TIERA 1)
• Treasury Bills Investment External Rupee Account (TIERA 2)
• Treasury Bonds and Bills Investment External Rupee Account – Deshabhimani for Sri Lankan Diaspora and Migrant Workers (TIERA-D)

Features and Benefits of Securities Investment Accounts (SIA)

• Remittances to the SIA would automatically be converted at the prevailing exchange rate to Sri Lankan Rupees (LKR) for investment.
• Not subjected to further taxation when investing in Government Securities, since a withholding tax of 10 percent of interest is charged at source.
• No exchange control regulations to repatriate original investment and any income realized (interest, maturity proceeds, sales proceeds of shares, dividend payments, liquidation proceeds of companies and proceeds of redemption of units) in any designated foreign currency to your overseas account.
• Ability to forward book foreign exchange to mitigate potential exchange rate risk.
• Transfer of funds between SIA of the same account holder is permitted.
• SIA maybe held jointly by eligible investors.
• Eligible investors who invest in Treasury Bonds/Treasure Bills are permitted to enter into Repurchase (Repo) and Reverse Repurchase (Reverse Repo) transactions using Treasury Bonds/Treasure Bills purchased under this scheme as collateral.
Who Can Open a SIA Account?
• Foreign institutional investors such as country funds, regional funds or mutual funds.
• Corporate bodies incorporated outside Sri Lanka.
• Citizens of foreign states, whether resident in Sri Lanka or outside Sri Lanka
• Non-resident Sri Lankans.
• Sri Lankan professionals living in Sri Lanka who receive inward remittances.
• Dual citizens who receive inward remittances.

What Deposits are Permitted to a SIA Account?

• Inward remittances received from abroad through banking channels.
• Transfer of funds from NRFC/FCBU/RNNFC accounts of the same account holder.
• Sale proceeds realised out of sale/transfer/maturity proceeds of Treasury Bonds/Treasury Bills or any income realised by way of capital gain thereof.
• Sale proceeds of share supported by documentary evidence (Broker's Contract Notes and evidence of tax payments, etc) and dividends.
• Dividend income on units of unit trusts net of tax supported by documentary evidence.
• Proceeds on redemption of units net of tax supported by documentary evidence.
• Commissions relating to share transactions with supporting evidence.
• Liquidations proceeds of companies.
• Interest received on Treasury Bonds held by the account holder.
• All other credits permitted on shares in terms of operating instructions No.06/02/12/2001 dated 06/11/2001 in respect of stock borrowings and lending (SBL) transactions.
• Local expenses incurred by account holder.
• Inward remittances for investments in debentures.
• Proceeds realized out of sale or transfer or maturity of debentures.
• Interest accrued on debentures.

What Withdrawals Can be Made to a SIA Account?

• Payments for investments in shares/units of unit trusts/Treasury Bonds/Treasury Bills.
• Outward remittances of sale/redemption/maturity/liquidation proceeds of shares/units/Treasury Bonds/Treasury Bills and dividends of shares or units.
• Payments to brokers, primary dealers, lead managers, management company of a unit trust and bank charges.
• Local expense payments in LKR of the account holder.
• Transfer of funds to the accounts maintained by the account holder at FCBU.
• All debits permitted in the operating instructions No.06/02/12/2001 dated 06/11/2001 in respect of SBL transactions on shares.
• Payments for investments in debentures.

Documents Required to Open a SIA Account?

For Individual Investors:

• Relevant mandate (duly completed).
• Photocopy of passport (relevant pages where photograph and personal details are available).
• Letter of introduction from your Banker overseas (required only from citizens of foreign states).
• Declaration from the customer.
• Central Depository System (CDS) Account Opening Form duly completed.

For Corporate Investors:
• A certified copy of the Certificate of Incorporation.
• Copy of Memorandum (as appropriate) and Articles of Association duly certified by the Chairman and Secretary.
• Certified extract of Resolution of the Board of Directors as stated in the Account Opening Form.
• Certified list of the Directors issued by the Registrar of Companies of the country where the Company is incorporated.
• Specimen signature cards of officials who are authorized to operate the account and copies of their passports duly witnessed by the Chairman/Secretary of the Company.
• Letter of Introduction from Institutions Banker overseas.
• Central Depository System (CDS) Account Opening Form duly completed.

See Also:
How to Invest in Sri Lanka Government Securities - Treasury Bills and Bonds
How to Invest in Sri Lanka Equity Market - Colombo Stock Exchange, the Best Performing Capital Market of the World

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