Rules should know

Setting up a Business

Forming a Company

Procedure of forming a company in Sri Lanka is as follows 74:

1. Reserve a unique company’s name.

2. The company’s secretary signs the consent.

3. Register at the Department of Registrar of Companies.

4. Public Notice of incorporation- A public notice is required to be given within a month from the incorporation of the company which is stated in Section 9 of the Companies Act No. 7 of 2007. The notice carrying the details of the company name, date of incorporation, registration number and address of the office are supposed to be published in Government Gazette as well as in any of the daily newspaper in English, Sinhala and Tamil languages.

5. Register with the tax authorities and obtain a Tax Identification Number (TIN).

6. Register with the Department of Labor and obtain the EPF number.

Registered Overseas Company

1) Any company or body corporate incorporated outside Sri Lanka, whose business has been granted permission for the purposes of the Exchange Control Act, subject to the exclusions, limitations and conditions, published in the Government Gazette No. 1232/14 of 19th April 2002; and

(a) has, after the appointed date, established a place of business within Sri Lanka; or

(b) has, before the appointed date, established a place of business within Sri Lanka and continues to have an established place of business within Sri Lanka on the appointed date,shall, within one month from the date of establishment of its place of business within Sri Lanka, deliver the following documents to the Department of Registrar of Companies for registration75 :

1. a certified copy of the charter, statues or memorandum and articles of the company, or the instrument constituting of defining the constitution of the company, and where that instrument is not in an official language of Sri Lanka or in English, a translation of that instrument in such language as may be specified by the Registrar;

2. a list of directors of the company, containing such particulars with respect to the directors as are by this Act, required to be contained with respect to directors, in the register of directors of company in the prescribed manner;

3. the name and addresses of one or more persons with residence in Sri Lanka, authorized to accept on behalf of the company, service of documents and of any notice required to be served on the company in the prescribed manner;

4. a statement containing the full address of the registered of principal office of the company in the country of origin and the principal place of business of the company with in Sri Lanka;

5. a certified copy, certified of recent date, of any document affecting or evidencing the incorporation of the company;

6. a valid Power of Attorney authenticated by the seal of the company authorizing the persons or person with residence in Sri Lanka to act on behalf of the company.

2) The Registrar, upon receipt of the above documents, may register the company and issue a Certificate of Registration in the prescribed form.

3) A company incorporated outside Sri Lanka shall not establish a place of business within Sri Lanka or be registered as an overseas company, where the business being carried on by that company does not conform to the stipulation made by or under the Exchange Control Act76.

- Types of Businesses

Companies with limited liability77

Private Limited Liability Companies

Shareholders minimum 2 –maximum 50

Directors minimum 1

Public Limited Liability Companies

Directors minimum 2

Listed Companies (listed on Colombo Stock Exchange)

.

- Laws and Regulations on Forming a Company

The major legislative enactment on forming a company is Companies Act No.7 of 2007 and it covers the following types of companies78.

  • Incorporation of Private Liability Companies
  • Incorporation of Public Limited Liability Companies
  • Registration of Foreign Companies
  • Registration of Off-shore Companies
  • Incorporation of Unlimited Companies
  • Incorporation of Public Quoted Companies
  • Incorporation of Guarantee Companies
  • Incorporation of Associations
  • Registration of Auditors and Company Secretaries.

You may find more details on registration procedure and the list of documents required for incorporation of a business, commencement of business, and commencement of a public company by visiting the following link: http://www.drc.gov.lk/App/comreg.nsf?Open .