Setting up a Company in Sri Lanka

Today, Sri Lanka is ranked as the most liberalized economy in South Asia. Total foreign ownership is welcome in almost all areas of the economy, with only a few areas limited or restricted to foreigners.

The higher rankings are indicative of the more attractive investment climate in the country. For instance, Sri Lanka is ranked highly for its liberal approach to foreign investment.

Foreign companies prefer to take advantage of technically sound, high caliber, highly educated workforce available in Sri Lanka. Also wage structure is comparatively low in Sri Lanka but workers are highly dependable and hardworking.

We established our consultancy division to support the clients who wish to start-up businesses in Sri Lanka. We have highly dedicated and experienced team of professionals to help set up business establishments in Sri Lanka. Our services range from incorporation of companies to setting up of an office or factory. Also we provide very conveniently set up virtual office’s to start up businesses.

To support setting up of business in Sri Lanka, global entrepreneurs often request additional corporate services from our company. Our services include:

• Incorporation of a company – more
• The stationery and logo design
• BOI or any other ministerial approvals – more
• Register with tax authorities and obtain a TIN number
• Register with Department of Labor and obtain EPF and ETF registration
• Opening a Corporate Bank Account
• Preparation of feasibility studies and business due diligence
• Assistance with listing on the Colombo Stock Exchange
• Internal audit support and business process re-engineering
• Providing virtual office services, including renting an office or providing a business address, phone, fax, email and global call centre support.
• Accounting and Taxation
• Human resource services, recruiting, monthly payroll services, labour handling
• IT support, office computer network configuration, business website design and maintenance.

Incorporation of a company

• First search the database of the registered companies through web portal or using the books kept on the information counter of Registrar-General of Companies (ROC) for possible similar names.
• After verifying the availability of the Name, fill the name search form ( ie A16) in the web portal or manually using the form collected from the information counter of the ROC
• The form A 16 is examined by at the public information counter (if you hand over the form). More information may be requested depending on the manner in which the forms have been filled. This may be done by e-mail if portal is used. If the name includes initials please indicate what those initials stand for.
• You can either send a name search application electronically or manually.
• The Name verification document is sent to the database administrator who will run a search for similar names which he will list and submit to the Registrar-General of Companies
• The Registrar-General of Companies (or his Officers) have the sole discretion to approve the name. He may approve the name OR request more information OR a change to the proposed name. If the name is approved. Approval Number can be collected over the information counter of ROC or if sent through the portal will be emailed the following day. (This Reservation valid only for a period of 3 months from the date of application)

How to Register a Private Company

1. Obtain a name approval (as above)
2. After obtaining the name approval, Form No. 1, 18, and 19 together with two
   copies of Articles of Association should be prepared (on A4 paper). All forms
   should be printed or typewritten. (Section 475).
   ( Hand written forms will not be accepted)

Form 1 – REGISTRATION OF A COMPANY
Form 18 – CONSENT AND CERTIFICATE OF DIRECTOR)
Form 19 – CONSENT AND CERTIFICATE OF SECRETARY / SECRETARIES

Articles of the Association –

3. May be prepared according to the First Schedule (Model Article) in the Companies Act No. 7 of 2007(Page 414). or that the company adopts articles which exclude, modify or are inconsistent with the model articles.
4. The articles of a private company shall include provisions which―
   1. prohibit the company from offering shares or other securities issued by the company to the public; and
   2. limit the number of its shareholders to fifty, not including shareholders who are―
   • employees of the company; or
   • former employees of the company who became shareholders of the company while being employees of such company and who have continued to be shareholders after ceasing to be employees of the company.

If contents of the forms & articles are correct the certificate can be collected over the counter by producing the payment receipt next day.

A company shall within thirty working days of its incorporation under this Act, give public notice*of its incorporation, specifying

1. the name and company registration number
2. the address of the company’s registered office.

Board of Investment

The Board of Investment (BOI) Promotion Department is the first stop for a foreign investor. Here investors can obtain information on the investment opportunities in Sri Lanka and the incentive packages on offer.
Prospective investors are required to submit a formal application to the BOI. The form has two components:

• Approval of investment
• Approval of site

Completed forms must be submitted to the Appraisal Department. A fee is charged to process the applications. Once the completed form reaches the Appraisal Department, a case officer is assigned to assist and guide the investor throughout the approval process.

Foreign Investment Restrictions

Following the practice of most countries, Sri Lanka has a list of business activities, which restrict foreign investment and require approval by other statutory agencies.

The degree of restriction varies across different areas of investment. Foreign investment is not allowed in the following areas:

• Money lending
• Pawn broking
• Retail trade with a capital investment of less than US$1mn.
• Personal services other than for export or tourism
• Coastal fishing
• Education of students who are citizens of Sri Lanka and not over 14 years of age
• Award of local educational degrees