Rules should know

Types of Investment

Public Private Partnerships (PPP)

Sri Lanka encourages PPP arrangements in specific investment areas which are generally centric on collaboration between the state sector institution and the investing organization. Such projects are generally long term projects of large magnitude which attempt to contribute significantly towards the economic objectives of the country. PPP projects have taken place in sectors such as infrastructure, education, healthcare and technology, and also generally tend to enhance the use of state assets towards a mutually beneficial arrangement which benefits multiple stakeholder communities including the state institutions, the community and the private investors.

The Sri Lankan government has also encouraged a number of Build Own Transfer (BOT) and Build Own Operate (BOO) arrangements for major projects during recent years and it is likely that the interest in this segment of PPP’s will continue in the foreseeable future62.

Branch Operations

Foreign companies may register branches in Sri Lanka in compliance with the provisions of the Companies Act No 7 of 200763. This mode of entry has been utilized by several multinational banks in their entry to Sri Lanka. Branch operations whilst exposing the foreign companies to the liabilities of the branch, are outside the purview of the BOI.

Investment in Shares

Investment in shares is yet another popular method for investment into Sri Lanka and there are hundreds of instances where overseas companies and individuals have invested in shares of local companies in Sri Lanka as a mode of entry.

A number of mandates, private placements and IPOs are usually available to be considered by potential investors who could also consider the investment potential in listed companies as well as in private companies where present owners might be considering a dilution of their equity holding or an outright sale64.

There are approximately 250 companies listed in the Colombo Stock Exchange, and many companies seek additional capital injections to facilitate expansion, which gives opportunity to investors who could invest in such companies65.