This guide covers everything you need to know about registering your business in Sri Lanka, with a focus on simplifying the process and helping you navigate the local business landscape.
As a foreigner, If you are interested in setting up a company in Sri Lanka, it’s important to understand a few key aspects before diving into the registration process. Here are the most crucial considerations:
1. Rules and Restrictions for Foreign Ownership
Different industries in Sri Lanka impose varying limits on foreign ownership. While some sectors allow full (100%) foreign ownership, others restrict ownership to 40% or prohibit it altogether. Here’s a breakdown:
Industries Reserved for Sri Lankans Only:
- Pawn Brokering
- Money Lending
- Security Services (Private or Public)
- Coastal Fishing
- Retail Trade (if the investment is less than $5 million USD)
Industries with 40% Foreign Ownership Cap:
- Education
- Travel Agencies
- Mass Communications
- Freight Forwarding
- Shipping Agencies
- Timber-based Industries (using local timber)
- Mining and processing of non-renewable natural resources
- Agriculture-related industries (Tea, Rubber, Cocoa, Spices, Rice, and Sugar)
Industries Requiring Line Ministry Approval: Certain industries require special approval from the relevant Line Ministry, and the percentage of foreign ownership will depend on that ministry’s discretion. These industries include:
- Air Transportation
- Coastal Shipping
- Large-scale Mechanized Gem Mining
- Lotteries
- Military Equipment Manufacturing
- Currency, Coins, and Security Documents
- Arms, Ammunition, and Explosives
- Drugs and Poisons
Industries Allowing 100% Foreign Ownership:
- All other industries not mentioned above allow full foreign ownership, making Sri Lanka an attractive destination for foreign businesses.
2. Permission from the Board of Investment (BOI)
Not all foreign businesses require BOI approval, but industries like manufacturing and retail do. Obtaining BOI approval typically requires an investment of around $5 million USD. Here’s what you need to do:
- Consult with BOI: Discuss your business intentions and goals with the BOI.
- Submit an Application: Prepare and submit your application for BOI approval.
- Open a Corporate Bank Account: You’ll need to open a corporate bank account in Sri Lanka.
- Name Check: Verify that your proposed business name is available with the Registrar of Companies.
- Get the Articles of Association Approved: The Articles of Association define how your company will operate.
- Present the Share Certificate: Finally, submit the share certificate as proof of your company’s structure.
Your Guide to Registering a Company in Sri Lanka
Now that you’re familiar with the rules, it’s time to dive into the steps to get your foreign company registered in Sri Lanka.
Step 1: Get Your Company Name Approved
The first step is choosing a name for your company. You can check the availability of your desired company name on the Registrar of Companies’ website. If the name is too similar to an existing company, it won’t be approved.
Step 2: Complete the Registration Forms
Once your company name is approved, you’ll need to fill out several forms, including:
- Form 1 (Section 4): Includes the company name, address, type, directors, and number of shares.
- Form 18 (Section 203): Lists company name, director details, and appointment date.
- Form 19 (Section 221): Provides company information and details of the company secretary.
Important: All forms must be printed and handwritten forms are not accepted.
Step 3: Obtain the Articles of Association
The Articles of Association govern your company’s operations and must adhere to the Sri Lanka Company Act of 2007. This document will outline your company’s regulations and must be submitted for approval.
Step 4: Issue a Public Notice
Next, you’ll need to issue a public notice in at least three local newspapers. The notice should include your company name, type, address, and registration number. This helps make your company official in the eyes of the local community.
Step 5: Acquire a Corporate Bank Account
Finally, open a corporate bank account under your company’s name. Ensure that your bank account offers internet banking and other necessary facilities to make business operations smoother.
Simplifying the Process with Professional Help
Registering a foreign company in Sri Lanka can be a complex process, but it doesn’t have to be. At BPO.lk, we specialize in helping foreign companies navigate the legal and procedural requirements for registration. From company secretarial services to corporate banking and BOI approvals, BPO.lk offers comprehensive support to make your business setup a seamless experience. If you require more information or a free consultation on business registration, please visit our business registration service page or call us at +94 112 700 960. We’re here to assist you every step of the way. To set up a free consultation, click here.
