Corporate Law at Sri Lanka
Here’s an overview of Corporate Law in Sri Lanka:
🔹 Legal Framework
Companies Act No. 7 of 2007 (and subsequent amendments)
The primary statute governing the incorporation, management, and regulation of companies in Sri Lanka. It replaced the older Companies Ordinance.
Securities and Exchange Commission Act
Regulates capital markets and securities.
Inland Revenue Act (for taxation)
Other relevant laws include the Insolvency Act and Foreign Exchange Act.
🔹 Types of Companies
Private Limited Company (Ltd.)
Most common form of business entity.
Restrictions on share transfer and max 50 shareholders.
Public Limited Company (PLC)
Can offer shares to the public and list on the stock exchange.
Must have at least 7 shareholders.
Foreign Company
A company incorporated outside Sri Lanka but registered to carry on business locally.
Other forms include partnerships, sole proprietorships, and non-profit companies.
🔹 Incorporation & Registration
Companies are incorporated through the Department of Registrar of Companies (ROC).
Key requirements:
Minimum 1 shareholder and 1 director (director must be a natural person).
Registered office address in Sri Lanka.
Filing of Articles of Association and other statutory documents.
🔹 Corporate Governance
Directors owe fiduciary duties and must comply with the Companies Act and other regulations.
Annual General Meetings (AGMs) are mandatory for most companies.
Companies must file annual returns and financial statements with the ROC.
🔹 Foreign Investment
Sri Lanka encourages foreign direct investment (FDI).
No general restrictions on foreign ownership except in certain strategic sectors.
Foreign companies must register with the ROC and the Board of Investment (BOI) if applicable.
🔹 Taxation
Corporate tax rates vary depending on business activity and incentives.
Companies must comply with tax filing and payment obligations under the Inland Revenue Department.
🔹 Recent Developments
Sri Lanka has been improving corporate governance standards in line with international best practices.
Enhanced compliance requirements related to anti-money laundering (AML) and combating financing of terrorism (CFT).
Digitalization of company registration and compliance filings.
RELATED Blog
0 comments