Central Depository Systems (Pvt) Ltd (CDS), a subsidiary of the Colombo Stock Exchange (CSE), has introduced new measures to strengthen the protection of dormant investor accounts that have remained inactive for three years or more.
According to the latest CDS circular, eligible accounts will be classified as “Non-Operative Client Accounts”, restricting transactions until the account holder completes a reactivation process.
The initiative has been introduced under CDS Rule 3.10 to reduce fraud risks associated with dormant accounts and improve the security of investors’ holdings.
The new framework will be implemented through a staggered suspension process for accounts that have not recorded any activity for at least three years.
What the New Rule Means for Investors
Once an account is classified as a Non-Operative Client Account, transactions and dealings through that account will be temporarily restricted.
However, CDS emphasized that the measure does not affect the ownership of securities held by investors.
Account holders will continue to receive all corporate action benefits, including dividends, bonus issues and other distributions linked to their investments.
The securities held in dormant accounts will not be transferred, forfeited or cancelled under the new framework.
According to CDS, the objective is to prevent unauthorized transactions while protecting investors whose accounts have remained inactive for extended periods.
How Account Holders Can Reactivate Their Accounts
CDS account holders can reactivate their accounts at any time by updating their Know Your Customer (KYC) information.
The reactivation process can be completed through the CSE Mobile App by selecting the “Non-Operative Reactivation” option or through the CDS website.
Importantly, CDS has clarified that there is no deadline for account reactivation.
Once updated KYC information has been submitted and verified, the account can be restored to normal operating status.
Focus on Investor Protection
Dormant investment accounts are generally considered more vulnerable to fraudulent activities because they are less frequently monitored by account holders.
By introducing additional safeguards, CDS aims to strengthen market integrity while protecting investors from unauthorized access or misuse of inactive accounts.
The initiative also aligns with broader efforts by the Colombo Stock Exchange to improve investor protection and promote confidence in the country’s capital market.
CDS encouraged investors to review the status of their accounts and ensure their personal information remains up to date to facilitate future transactions whenever needed.
Last modified: June 26, 2026
