AN ACT TO MAKE PROVISION CONFERRING POWERS, AND IMPOSING DUTIES AND RESTRUCTIONS, IN RELATION TO GOLD, CURRENCY, PAYMENTS, SECURITIES, DEBTS, AND THE IMPORT, EXPORT, TRANSFER AND SETTLEMENTS OF PROPERTY, TO AUTHORISE THE CENTRAL BANK TO ADMINISTER THE PROVISIONS AFORESAID AND TO PROVIDE FOR MATTERS CONNECTED THEREWITH. 

(Act  No. 24 of 1953 - 15th August, 1953) 
(Act  No. 35 of 1956 - 1st September, 1956) 
(Act  No. 47 of 1957 - 25th October, 1957) 
(Act  No. 17 of 1971 - 24th March, 1971) 
(Law No. 14 of 1972 - 13th December, 1972) 
(Law No. 39 of 1973 - 1st October, 1973) 
(Law No. 4 of 1977 - 27th October, 1977) 
(Law No. 13 of 1977- 8th February,1977) 

Short Title.

1. This Act may be cited as the Exchange Control Act. 

Administration of Act  by Central Bank

1. (1) The Central Bank of Sri Lanka shall, as agent of the Government, be responsible for carrying out the provisions of this Act, and it shall be the duty of the Monetary Board to cause those provisions to be carried out in accordance with such directions as may from time to time be issued in that behalf by the Minister. 

(2)  The Monetary Board shall establish for the purposes of this Act a Department of  Exchange Control of the Central Bank to which the Board shall have the power to appoint or assign  such officers and servants as the board may consider necessary for the purpose of carrying out the provision of this Act: every such officer or servant shall, for the purpose of the application of the provisions of the Monetary Law Act relating to officers and servants, be deemed to be employed for the performance of duties under that Act. 

Exercise of powers & co., under the Act.

3.  Whenever by any provision of this Act any power, duty or function is authorised  or required to be exercised or performed by the bank, such power duty or Function shall be exercised or performed, subject to the direction and control of the Governor of the bank, by the officer designated as the head of the Department of Exchange Control or on his behalf by any other officer designated as an assistant to him; 

Provided, however, that any permission, which by any such provision is authorised to be granted by the bank, may be granted on behalf of the head of the department by an authorised dealer, if he is for the time being empowered, by directions issued by the head of the department, to grant such permission. 

Any directions given by the head of the department under this section may specify the circumstances in which and the conditions and restrictions subject to which an authorised dealer may grant the permission to which the directions relate. 

Authorised Dealers in gold or foreign currency.

4.  The  Minister may authorize any commercial bank to act for the purposes of this Act as an authorised dealer in relation to gold or any foreign currency. 

Dealings in foreign currency

5.  (1) Except with the permission of the bank - gold and 

(a) no person, other than an authorised dealer, shall in Sri Lanka buy, borrow or accept any gold or foreign currency from, or sell or lend any gold or foreign currency to, or exchange any foreign currency with, any person other than an authorised dealer, and 

(b) no person resident in Sri Lanka, other than an authorised dealer, shall outside Sri Lanka, buy or borrow any gold or foreign  currency from, or sell or lend any gold  or foreign currency to, any person other than an authorised dealer; 

Provided that the preceding provisions of this subsection shall not prohibit the sale and purchase at any post office in Sri Lanka, in accordance with such directions as may be given by the bank in regard thereto, of any foreign currency in the form of postal orders or money orders. 

(2) Except with the previous general or special permission of the bank, no person, whether an authorised dealer or not, shall enter into any transaction which involves the conversion of Sri Lanka currency into foreign currency or foreign currency into Sri Lanka currency at rates of exchange other than the rates for the time being authorised by subsection (3) of section 76 of the Monetary Law Act. 

Surrender of gold and of specified Foreign exchange

6.  (1) The foreign exchange to which this section applies is such foreign exchange (hereinafter in this Act referred to as the “specified foreign exchange’) as may be prescribed. 

(2) The bank may require any person in, or resident in, Sri Lanka-

(a) Who owns or holds any specified foreign  exchange to offer it or cause it to be  offered for sale to an authorised dealer at a price determined by the Monetary  Board, or

(b) Who is entitled to assign  any right to receive any specified foreign exchange to transfer such right to the Deputy Secretary to the Treasury on payment of such consideration as the Monetary Board may fix, 

unless the bank consents to his retention and use of such foreign exchange or he disposes of such foreign exchange to any person with the permission of the bank. 

(3)  If a  person who has obtained the consent of the bank to his retention and use of any gold or any specified foreign exchange and has stated in an application for the consent that he requires it for a particular  purpose, no longer requires that gold or exchange for that purpose, subsection (2) shall thereupon apply to him in relation to that gold or exchange as if t he bank had revoked the consent. 

(4) A person who acquires any gold or any specified foreign exchange from an authorised dealer shall be treated for the purposes of this section as if the bank had consented to the retention and use by him of that gold or exchange, and as if any statement made by him in an application for that gold or exchange as to the purpose for which he requires it has been made by him in an application for the consent of the bank to his retention and use thereof. 

(5) Where a person has become bound under this section to offer or cause to be offered any gold or any specified foreign exchange for sale to an authorised dealer he shall not deemed to comply with that obligation by any offer made or caused to be made by him if the offer is an offer to sell at a price exceeding that authorised by the Monetary Board or without payment of any usual and proper charges of the authorised dealer, or otherwise an any unusual terms. 

(6) Where a person has become bound  under this section to offer or cause to be offered any gold or any specified foreign exchange for sale to an authorised dealer and has not  compkied with that obligation, the Secretary to the Treasury may direct that, that gold or exchange shall vest in the Deputy Secretary to the Treasury, and where the Secretary to the Treasury so directs, it shall vest in the Deputy Secretary  to the Treasury free  from any mortgage, pledge, or charge, and the Deputy Secretary to the Treasury shall deal with or dispose of it in such manner as the Minister may direct, but the Deputy Secretary to the Treasury or any officer authorised in that behalf by such Deputy Secretary shall pay to that person such sum as he would have received for that gold or exchange if he had sold it to an authorised dealer in pursuance of an offer made  under this section at the time when the vesting occurred. Any money required for any payment under this subsection is hereby charged upon the consolidated fund. 

(7)  In any proceedings in respect of a failure to comply with the provisions of this section, it shall  be  presumed, until the contrary is proved, that the gold or exchange in question has not been offered for sale to an authorised dealer. 

Possession of Foreign currency

6A. Except with the permission of the bank, no person shall have in his possession any foreign currency. 

Accounts in foreign banks

6AA (1) No person in, or resident in Sri Lanka shall, except with the permission of the bank,- 
 
(a)  open an account with any bank of institution doing any kind of banking business outside Sri Lanka (hereinafter referred to as a “foreign bank”); 

(b)  continue to maintain, or operate on, an account which has already been opened in any foreign bank ; or 

(c)  close an account with any foreign bank. 

(2)  Where an account maintained by a person in, or resident in, Sri Lanka with any foreign bank is closed, such person shall not dispose of the funds to his credit at such foreign bank at the time of closing of such account, except in accordance with such directions as may from time to time be given to him by the Central Bank. 

Foreign assets.

6AB Every person in, or resident in, Sri Lanka who, on the date of commencement  of  this Act, holds, or who, after such date, acquires by way of purchase, gift, testamentary disposition or otherwise, any foreign assets- 

(a)  shall within one month of the commencement of this Act or the acquisition of the assets, as the case may be, render to the bank a return in such manner and giving such particulars with respect to the assets as may be prescribed; and 

(b)  shall not dispose of such assets or part thereof in any manner whatsoever except in accordance with such directions as may be given to him by the bank. 

7.  Except with the permission of the bank no person shall in Sri Lanka -

(a)  make any payment to or for the credit of a person resident outside Sri Lanka, or 
(b)  make any payment to or for the credit of a person resident in Sri Lanka by order or on behalf of a person resident outside Sri Lanka, or 
(c)  place or hold any sum to the credit of any person resident outside Sri Lanka: 

Provided that where a person resident outside Sri Lanka has paid a sum in or towards the satisfication of a debt due from him, paragraph (c ) of this section shall not prohibit the acknowledgement or recording of the payment. 

Payments outside Sri Lanka

8 (1) Except with the permission of the bank, no person resident in Sri Lanka shall,  subject to the provisions of this section, make any payment outside Sri Lanka to or. for the credit of a person resident outside Sri Lanka. 

(2)  Nothing in this section shall prohibit the doing of anything otherwise lawful by  any person with any foreign currency obtained by him in accordance with the  provisions of Part I of this Act or retained by him with the consent of the bank. 

Compensation deals.

9. (1) Except with the permission of the bank no person shall in Sri Lanka, and no  Person resident in Sri Lanka shall outside Sri Lanka, make any payment to or for the credit of a person resident in Sri Lanka as consideration for or in association with- 

(a)  the receipt by any person of a payment made outside Sri Lanka, or the acquisition any person of property which is outside Sri Lanka, or 

(b)  the transfer to any person, or the creation in favour of any person, of a right (whether present or future, and whether vested or contingent) to receive a payment outside Sri Lanka or to acquire property which is outside Sri Lanka. 

(2)  Nothing in this section shall prohibit the making of any payment in accordance with the terms of a permission or consent granted under this Act.

Issue of securities

10.(1) Except with the permission of the bank, no person shall in Sri Lanka issue any  security or, whether in Sri Lanka or elsewhere, issue any security which is registered  or to be registered in Sri Lanka, unless the following requirements are fulfilled:- 

(a)  neither the person to whom the security is to be issued nor the person, if any, for whom he is to be a nominee is resident outside Sri Lanka, and 

(b)  the prescribed evidence is produced to the person issuing the security as to the  residence of the person to whom it is to be issued and that of the person, if any, for whom he is to be a nominee. 

(2)  The subscription of the memorandum of association of a company to be formed under the companies Act by a person resident outside Sri Lanka, or by a nominee for another person so resident, shall unless he subscribes the memorandum with the permission of the bank, be invalid in so far as it would on registration of the memorandum have the effect of making him a member of the company, so, however, that this subsection shall not render invalid the incorporation of the company, and if  by virtue of this subsection the number of the subscribers of the memorandum who on its registration become members of the company is less than the minimum required to subscribe the memorandum, the provisions of the said Act relating to the carrying on of business if a company the number of whose members is reduced below the  legal minimum shall apply to the company as if the number of its members had been so reduced. 

Transfer of securities Coupons.

11.  (1) No person shall, except with permission granted by the bank, transfer any  security, either on his own behalf or on behalf of any  other person, unless- and 
 
(a)  the holder of the security and, if the holder is a nominee, the person for whom he is acting as nominee, are resident in Sri Lanka; and

(b)  the transferor has produced to the person to whom the security is to be transferred or his agent such evidence of the facts aforesaid as may be prescribed,

and no person shall, except with such permission as aforesaid , acquire any security, either on his own behalf or on behalf of any other person, unless such evidence as aforesaid has been produced to him or to his agent. 

(2)  No person shall, except with permission granted by the bank- 

(a)  transfer any registered security, either on his own behalf or on behalf of any other person, to any person resident outside Sri Lanka or to any person acting as the nominee of any person so resident, or

(b)  transfer any bearer security, either on his own behalf or on behalf of any other person, unless the bank is satisfied that the person to whom the security is to be transferred and, if that person is a nominee, the person for whom he is to act as nominee, are resident in Sri Lanka. 

(3)  Except with the permission of the bank, no coupon shall be transferred-

(a)  in Sri Lanka, if either the transferee or the person, if any, for whom he is a nominee is resident outside Sri Lanka; 

(b)  outside Sri Lanka, if either the transferor or the transferee, or the person, if any, for whom the transferor or the transferee is or is to be a nominee, is resident in Sri Lanka.

Issue of bearer Certificates and coupons.

12.  Except with the permission of the bank, no person shall, in Sri Lanka, and no person resident in Sri Lanka shall, outside Sri Lanka, issue any bearer certificate or coupon or so alter any document that it becomes a bearer certificate or coupon. 

Substitution of securities and certificates outside Sri Lanka

13 Except with the permission of the bank, no person in or resident in Sri Lanka shall do any act with intent to secure- 

(a)  that a security which is- 
(i)  registered in Sri Lanka, of 
(ii)  transferable by means of a bearer certificate in Sri Lanka, 

becomes, or is replaced by, a security registered outside Sri Lanka or a security  transferable by means of a bearer certificate outside Sri Lanka, or 

(b)  that, in substitution for or in addition to any such certificate of title to the first mentioned security as is in, or is or has been lost or destroyed in, Sri Lanka, a certificate of title to any other security is issued outside Sri Lanka. 

Payment of Capital moneys outside Sri Lanka

14.  Except with the permission of the bank, no person resident in Sri Lanka shall do any act with intent to secure that capital moneys payable on a security registered in Sri Lanka, capital moneys payable on the security are paid outside Sri Lanka without production of the certificate to the person making the payment. 

Duties of persons keeping registers

15.  Except with the permission of the bank, no person concerned with the keeping of any register in Sri Lanka shall-. 

(a)  enter in the register the name of any person in relation to any security unless there has been produced to him the prescribed evidence that the entry does not form part of  a transaction which involves the doing of anything prohibited by this Act, or 

(b)  enter in the register, in respect of any security, an address outside Sri Lanka, except for  the purpose of any transaction for which the permission of the bank has been granted with the knowledge that it involves the entry of that address, or

(c)  do any such act in relation to the register as recognizes or gives effect to any act appearing to him to have been done with the intent mentioned in section 13 or section 14, whether done by a person in or resident in Sri Lanka or not. 

Additional provisions as to nominee holdings

16.  (1) Where the holder of a security is a nominee, then except with the permission of the  bank, neither he, if he is resident in Sri Lanka, nor any person resident in Sri Lanka through whose agency the exercise of all or  any of the holder’s rights in respect of the security is controlled, shall- 

(a)  do any act whereby he recognizes or gives effect to the aubstitution of  another person as the person from whom he directly receives his instructions unless both  the persons  previously instructing him and the person substituted for the person were, immediately before the substitution, resident in Sri Lanka and not elsewhere, or 

(b)  do any act whereby he ceases to be a person bound to give effect to the instructions  of another person in relation to the security, unless the person who theretofore instructed  him is resident in Sri Lanka and not elsewhere, or 

(2)  Where the holder of a security is not a nominee and is resident in Sri Lanka, then, except with the permission of the bank, he shall not do any act whereby he becomes the nominee of  another person is resident in Sri Lanka and not elsewhere. 

(3)  Where the holder of a security transferable of means of a bearer certificate is resident in Sri Lanka and is a nominee for a person resident outside Sri Lanka, then, except with the  permission of the bank, be shall not deliver the certificate into the possession of any person, whether the delivery amounts to a transfer or not. 

Special provision as to dealings in prescribed Securities

17.(1) This section shall apply to prescribed securities on which any capital money,  dividend or interest is payable in any foreign currency or as respects which the holder has an option to require payment of any capital money, dividend or interest thereon in  any foreign currency. 

(2)  Except with the permission of the Minister, no person shall, in Sri Lanka, and no person resident in Sri Lanka shall, outside Sri Lanka, acquire, hold or transfer any  security to which this action applies or do anything which affects his rights or powers in relation to any such security. 

(3)  The bank may in writing direct any person resident in Sri Lanka by whom or to  whose order a security to which this section applies is held in or outside Sri Lanka to  render a return to the bank, in such manner and within such period as may be specified in the direction, giving such particulars with respect to that security as may be so specified. 

(4)  The Minister may direct any person resident in Sri Lanka by whom or to whose order a security to which this section applies is held in or outside Sri Lanka- 

(a)  to sell procure the sale of the security, and thereafter to offer or cause to be offered the  net foreign exchange proceeds of 
sale to the bank, directly or through an authorised  dealer; or 

(b)  to transfer the security to the Deputy Secretary to the Treasury on behalf of  the Government at a price which in the opinion of the Deputy Secretary to the Treasury is not less than the  market value of the security on the date of the giving of the direction. 

Any direction under this subsection may be given either generally, with respect to specified securities and the holders thereof by notice published in the Gazette, or specially to any holder by notice in writing. 

Validation of certain transfers

18.(1) The title of any person to a security for which he has given value on a transfer  thereof, and the title of all persons claiming through or under him, shall notwithstanding  that the transfer, or any previous transfer, or the issue of the security, was by reason of the residence of any person concerned other than the first mentioned person prohibited by the provisions of this Act relating to the transfer or issue of securities, be valid unless the first mentioned person had notice of the facts by reason of which it was prohibited. 

(2)  Without prejudice to the provisions of subsection (I), the bank may issue a  certificate declaring in relation to a security, that any such acts done before the issue of  the certificate as purport to effect the issue or transfer of the security, being act which were prohibited by this Act, are to be, and are always to have been, as valid as if they had been done with the permission of the bank, and the said act shall have effect accordingly. 

(3)  Nothing in this section shall  affect the liability of any person  to prosecution for any offence against this Act. 

Application of part III to secondary securities

19(1) This Part of this Act shall, with any modification which may be prescribed in  relation to any document mentioned in subsection(2), apply as if the documents created, and were the certificate of title to, a security (hereafter in this Act referred to as a “secondary security”). 

(2)  The documents referred to in subsection (1) are any letter of allotment which may be renounced, any letter of rights, any 
warrant conferring  an option to acquire a security, any deposit certificate in respect of securities, and such other documents conferring, or containing evidence of, rights as may be prescribed. 

Interpretation of part III.

20 (1) In this part of this Act- 
 “registered” includes inscribed; 
“registered in Sri Lanka” and “registered outside Sri Lanka” means respectively, registered in a register in, and registered in a register outside, Sri Lanka;“a register” includes any book, file or index in which securities are registered; and “holder”- 

(a)  in relation to a security transferable by means of a bearer certificate or to a coupon, includes the person having physical 
custody of the certificate or coupon: 

Provided that where the certificate or coupon is deposited with any person in a locked or sealed receptacle from which he is not entitled to remove it without the authority of some other person, that other person shall be deemed for the purposes of this provision to have the physical custody of the certificate or coupon; and 

(b)  in relation to a security which is registered in the name of a deceased person, or of any person who, by reason of insolvency, unsoundness of mind  or any  other disability, is incapable of transferring the security, means the executor of the last will or the administrator of the estate of the deceased, the assignee of the insolvent’s estate, or any other person entitled to transfer the security. 

(2)  For the purposes of any provision of this part of this Act prohibiting the transfer of securities, a person shall be deemed to transfer a securities if he executes any instrument of transfer thereof, whether effective or not, and shall be deemed to transfer it at the place where he executes the instrument. 

(3)  The holder of a security or coupon shall be deemed for the purposes of this part of this Act to be a nominee in respect of 
that security or coupon if he is not entitled to exercise any right relating to that security or coupon except in accordance with instructions given by some other person, and references in this part of this Act to the person for whom the holder of a security or coupon is a nominee shall be construed as references to the person who is entitled to give instructions, either directly or  through the agency of one or more persons, as to the exercise of any right relating to the security or coupon and is not in so doing him self under a duty to comply with instructions given by some other person; 

Provided that- 

(a)  a person shall not, by reason only that he has a controlling interest in a body  corporate, be deemed for the purposes of this subsection to be entitled to give instructions to that body as to the exercise of any right relating to any security or coupon of which that body is the holder, and 

(b)  a person shall not be deemed to hold a security or coupon as a nominee by reason only that he holds it as trustee if he is entitled to transfer the security or coupon without permission from any other person. 

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