Tue. Jul 16th, 2019

FDI in Sri Lanka

Foreign Direct Investment in Sri Lanka

Business Companies in Sri Lanka

5 min read
Business Companies in Sri Lanka

Business Companies in Sri Lanka

Business Companies in Sri Lanka has come along a long way since past few decades. The country and its government have indeed taken in several steps and acts to make their business sectors more lucrative and advantageous for the investors and business owners. The country has introduced several types of business companies and standards to enhance company registration policies for different level of investors coming in with different amount of fortunes to invest in. Business Companies in Sri Lanka can be classified in SIX different categories each of which differ from each other in terms of registration procedures, size and infrastructure, regulatory affairs, finace policies, laws, limitations and paid-up capital respectively. The main purpose of introduction of all these various business companies in Sri Lanka is mainly to attract and seek in attraction of various foreign investors and business owners who come along from different state in Sri Lanka to invest. Investment made by all these foreign investors and business investors does play a major role in the economic growth and economic stability of the country.

The Sri Lankan government has been trying their best to make their company incorporation procedures and business registration policies easier to understand and adapt by the both local and foreign investors, simpler, straightforward and hassle-free. The divine purpose of all these government authorities behind the outrage introduction of all these business companies in Sri Lanka to decrease the costing of company formation in Sri Lanka.
It can be now be said, one (I mean my investors friends in particular) can easily move in to Sri Lanka and with not much to invest or like go in through complex company formation procedures he or she can live up to their dream to start off their own business in Sri Lanka. And why not Sri Lanka, as the country has been proving itself on several grounds on facts like how it has been profitable and beneficial for hundreds and thousands of foreign investors who come along from various states and nations to invest their fortunes in both large and small scale among various business sectors the country Sri Lanka brings in for them.
In these article I will try my most to simply define the basic categories of all available business companies in Sri Lanka but yet it is highly recommended for all my investors friends and business owner friends to study more and more about these business companies – about their types, size, registration policies, advantages, limitations, scopes and many more – they bring along with themselves. It is very important to study about all these business companies because a wrong selection of company type to be incorporated that is most suitable to your business structure and nature can indeed bring you to big loss, company disruption, loss of huge capital or even worse.
So, as I said earlier in my article, there are mainly SIX categories of business companies in Sri Lanka that can be legally incorporated and established under the Sri Lankan government regulation and concern.

  • Sole Proprietorship
  • Partnership
  • Limited Liability Company, LLC
  • Public Limited Company, PLC
  • Overseas company
  • Offshore company

Sole Proprietorship: The sole proprietorship business types are easy to register, establish and believe me requires a very little capital to start off. It does not even ask the owners to move along with several incorporation procedures to follow in or collect several permits and licenses to work in with. Usually, foreign investors or business owners with small business plans and small investment chose such type of business policy to start off their business in Sri Lanka. Although as a mater of fact, the structure, demonstrations and outcomes of a sole proprietorship business company is almost very similar in every other nation around the world. The sole trader is considered to be the prime face of his or her company, as to say he or she is taxed at a personal income rate set by the government and is also liable for all sort of liability and obligations and other certain boundaries.
Partnership Business: believe me or not the partnership business companies in Sri Lanka is almost similar to that of the Sole Proprietorship Business companies in Sri Lanka just the fact that in case of a partnership business the ownership of the company is shared. Business partners usually share in company capital, limitations, loss, liabilities and other related issues of the business in perspective to legal issues and taxation. One thing should be taken in count above all that the Partnership business companies in Sri Lanka are never taxed as a separate or individual legal entity. Hence, each of the business partners is subjected to personal income rates.
Limited Liability Company (LLC): In Sri Lanka, the Limited Liability Company is also known as Private Limited Business Company in Sri Lanka. It is the most common type of business entity registered or incorporated all over Sri Lanka and is considered the first choice for foreign investors for the lucrative benefits and advantages the business type brings in with itself. With no minimum capital share to be deposited and One Company Director and Two Company Shareholders one can easily register Limited Liability Company in Sri Lanka. Yes, the point of consideration will be in any LLC the company secretary and at least one of the company directors has to be Sri Lankan resident.
Public Limited Company (PLC):  The name of the business policy indeed explains its character and infrastructure that the shares of all these public limited company is limited and are permitted to be issued on the stock exchange for the public. Unlike the private limited company all these public limited company usually don’t need to deposit large capital share and requires a minimum of Two Company Directors and two company shareholders and a company secretary to be incorporated and registered with in Sri Lanka. A point of be considered in terms of public limited companies in Sri Lanka that they indeed require to file annual tax returns in a yearly basis, along with audited bank account & financial statements regarding company sales and related profits. The Public Limited Companies in Sri Lanka are said to be the best choice for corporation with large investment scopes, production and manpower.
Overseas Company: The overseas company are usually considered as the branch office of any parent company which has been driven in to a different nation to spread their business, brand and make more profit. Such companies are strong with fame and holds high popularity among the locals. The good thing of all these overseas companies in Sri Lanka is that they can be fully foreign-owned. The parent company act to define the business nature, operation, product or services the company brings in for the customers. Now the point of concern for all these oversea companies incorporated in Sri Lanka that they have to be registered with the Treasury and provide a 10% branch tax on their company profit and sales.
Offshore Company
: Lastly comes out the Offshore business policies and their fundaments. Well to be frankly speaking all these offshore business companies has nothing much to explain to drive in just the fact that all these companies are registered or incorporated within Sri Lanka and is permitted to conduct business outside of Sri Lanka, but interestingly they are not allowed to run their business within the country itself.

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