Starting a company may be one of your dreams, although you may lose your assets, if your business doesn’t meet the required standards. Registering your company will separate your company’s assets and liabilities.
Sri Lanka is a perfect option in entire South Asia when you’re considering the establishment of a foreign-owned company. It’s a country with well-established and documented procedures for registering a company. Sri Lanka’s economy has in recent years increased, which is the reason why many foreign investors want to establish a company there.
However, most of these foreign investors have little or no knowledge regarding the company registration process in Sri Lanka. Therefore, below is a guide on how to register a company in Sri Lanka:
Company Name Approval
The first step of registering a new private limited company in Sri Lanka is company name registration. You can use the site of ‘Department of Registrar of Companies’ to search for a company name. It’s recommended to choose at least 4 unique names in order to reduce the possibility of name cancellation. In case the name you choose is found to be similar to an existing company, it won’t be approved whatsoever.
You must fill a company name registration Form- A16 with the correct information and then submit it to Registrar of companies. The company name approval will take around 3 business class days provided that the information is filled accurately.
Submit the Company Registration Forms
After the approval of your company name, you must submit Form-1, 18 and 19. As per section 475, all these forms must be printed and not handwritten. Below is a summary of the information required to be filled in these Forms:
Form 1 – The information required includes the No. of the company, company type, company name, proposed company’s name, registered address, director’s information, approval number, and the number of shares which involves signatures of shareholders.
Form 18 – The information required includes the No. of the company, director’s name, company name, Residential address, occupation, phone number, email address, passport number and date of appointment.
Form 19 – The information required includes the No. of the company, secretary’s name, company name, residential address, phone number, email address, registration number if any and date of appointment.
Submit Articles of Association
According to the company’s rules Act No 7 of 2007, every company must prepare an article of association which must contain the following:
- Objects of the new company.
- Rights and obligations of the company’s shareholders.
- Company’s management and administration.
Additionally, this Act also prescribes the following:
- Every private limited company won’t offer public sharing.
- The number of partners should be limited to fifty.
Give Public Notice
After everything is done, the next step is to give public notice which should be published within 30 days of the registration. The companies act prescribes that every company must publish its information in at least 3 newspapers. The information published in the newspapers should have the company name, company registration number, address, contact number, and company type among others.
You can easily open a bank account in any of the local banks in Sri Lanka. However, you need to know that no debit/credit card will be given by the banks. Only cheques and internet banking services are open to foreigners. It will take between 5 to 7 days to create a corporate bank account.
Role of Company Secretary
Below are some common secretary duties in a company:
Maintaining the registered office of a company: A company secretary must not necessarily be in possession of the address used by the company but must ensure that all correspondence sent to the address is received. He/she must ensure the company’s registered name is clearly shown outside the registered office.
Maintaining statutory records of a company: These include; minutes of board and general meetings, any charges applying to the assets of the company, and a register of directors, shareholders and debenture holders.
Looking after important legal documents: They include; the company’s seal, certificate of incorporation, memorandum and articles of association, stock transfers and share certificates, director’s service contracts, any change of name certificates etc.
Reporting on any company’s changes: These changes include; any new shares allotted, change in the board of directors’ make-up.
The Board of Investment (BOI) of Sri Lanka is the authority responsible for approving, promoting, and assisting foreign investment. It also grants a wide selection of concessions and incentives to different projects in some sectors that are export-oriented. The Board of Investment helps to maximize exports from these projects and effect technology transfer.
The Board of Investment (BOI) has 3 Export Processing Zones where raw materials, equipment and machinery can be imported duty-free, exportation of products is done. It also has 3 industrial parks.
Which Companies Need BOI Approval?
Not all companies need a Board of Investment approval in order to conduct their business. BOI approval isn’t required for private limited companies that have no intentions of hiring foreign staff.
Companies that manufacture, retail, or branch offices require permission from the Board of Investment. To obtain a BOI approval, you are instructed with the following legal aspects.
Initiate a discussion with the BOI officials about your project’s proposal, employment, investment value and target.
- Prepare an application for the BOI’s approval.
- Create a corporate bank account
- Coordinate and liaise with the BOI.
- Get the article of association approval through the legal department of the board of investment.
In conclusion, company registration in Sri Lanka isn’t complicated if you use the guidelines above. Ensure you understand all requirements to prevent unforeseen financial losses. Also, remember that Rs. 4,000 plus 15% VAT is required for company registration, Rs. 2,000 plus 15% VAT for consent and certificate of director and Rs. 2,000 plus 15% VAT for Consent and Certificate of the Secretary.