Guide to open a company in Sri Lanka
With a perfect location along major shipping routes of South Asia and the Far East, Sri Lanka is strategically located. Coupled with an educated workforce, Sri Lanka offers an ideal investment opportunity for businesses exploring new markets. Government incentives and preferential tax treatment all but seal the deal.
In Sri Lanka, there are several options available for setting up a foreign business. New Horizons can discuss the various options available to you and help you elect the best entity for your business. Then, our skilled representatives can assist you with all aspects of the setup process.
Streamline your entity setup
Limited liability company
A limited liability company is the most common type of entity that foreigners set up in Sri Lanka. To set up this type of entity, you must have at least one director and two shareholders who do not have to be citizens of Sri Lanka.
However, you must appoint a resident company secretary who lives in Sri Lanka. You must also have a registered address for your business. There is no minimum share capital required to set up an LLC in Sri Lanka.
Two shareholders and two directors are required to set up a public limited company in Sri Lanka. Setting up a public company in Sri Lanka can be an attractive option for foreign investors who want to raise capital in Sri Lanka. Public companies can be listed on the stock exchange. A business commencement certificate must be obtained before starting business activities for public companies.
The directors of public companies in Sri Lanka must file annual returns and submit annual audited accounts and financial statements.
Companies that are registered in other countries can register themselves in Sri Lanka. However, offshore companies are not allowed to conduct business in Sri Lanka.
Another common type of company that foreigners may create in Sri Lanka is a subsidiary. These companies are required to comply with all regulations imposed on domestic companies.
A joint venture is a business partnership between two or more companies. A joint venture can be established with another foreign company or with a company in Sri Lanka. Joint ventures can be incorporated or can operate as unincorporated like a partnership. These arrangements are particularly popular in export businesses.
Branch offices in Sri Lanka can be 100% foreign owned. The parent company defines the scope of operations of the branch office. It has an independent management team and corporate bank account based in Sri Lanka. Branch offices must be registered with the Ministry of Finance and Planning. In addition to the requirement to pay standard taxes, there is an additional 10% branch tax that the office is subject to on the profits it remits abroad to the parent company.
The parent company is liable for all obligations of the branch office.
Steps to set up a company in Sri Lanka
New Horizons can assist you with all of the routine steps associated with setting up a company in Sri Lanka, including:
- Obtaining approval for your name
- We can search for a unique name for your company via the Department of the Registrar of Companies. Names that are too similar to existing company names or that violate regulations will not be approved. We can search for the availability of your preferred name with the Sri Lanka government. We can also help you obtain a related domain name.
- Appointing a company secretary
- Sri Lanka law requires a local resident secretary to be appointed. The secretary must be appointed before incorporating the business because one of the forms that is necessary for incorporation is a secretary’s consent form. We can help appoint a suitable candidate for this position.
- Registering an official address
- You must have a local registered address to set up a business in Sri Lanka. We can register an address for you.
- Prepare company registration forms
- There are certain statutory forms that you must prepare and submit to the Sri Lanka government.
- Prepare articles of association
- You must prepare articles of association that comply with the local regulations. This document must include information about the scope of the company, rights and obligations of shareholders and management of the company. Alternatively, you can adopt the standard set of articles of association.
- Submit documents
- We submit all relevant documents to the Department of Registrar of Companies. If any supplemental documents are required to incorporate your business, we can assist with these documents as well.
- Provide public notice
- Within 30 days of incorporating your business, you must provide a public notice of incorporation that is published in the Government Gazette and a daily newspaper. Your notice should state the name of your business, the registered address and your company number.
- Open a corporate bank account
- Once your incorporation is complete, you can apply for a corporate bank account in Sri Lanka. We can help you determine which type of account is best suited for your business.
- Register for tax liability
- We can help you register and obtain a Tax Identification Number and register your business for Value Added Tax.
- Pay stamp duty
- You will need to pay a stamp duty to the Inland Revenue Department for each share of your business you issue. This must be completed within one month from your incorporation date.
- Register for an EPF number
- We can help your company register for an Employees Provident Fund number, which must be completed within 15 days of hiring your first employee.
- Obtain necessary licenses
- You may have additional licenses that you need to obtain, based upon the nature and location of your business. New Horizons’ local experts can assist you with this process.
- Obtain BOI approval
- If your company requires BOI approval to conduct business, we can help you with this process.
- Obtain SEC approval
- If your business is a public company, we can help you register and receive approval from the SEC in Sri Lanka.
You will also need to submit various fees during severals steps throughout this process.