Company Registration in Sri Lanka

Sri Lanka, strategically located at the crossroads of major shipping routes in the Indian Ocean, offers a dynamic and investor-friendly environment for entrepreneurs and foreign investors. With a liberalized economy, modern infrastructure, and supportive government initiatives, Sri Lanka has become an attractive destination for company formation in South Asia.

Whether you're looking to establish a local business or a foreign-owned company, Sri Lanka provides a streamlined registration process through its centralized Registrar of Companies (ROC). Additionally, investment incentives, access to regional markets, and an educated workforce make it a promising base for both startups and multinational expansions.

Types of Business Entities for Company Registration in Sri Lanka

When registering a company in Sri Lanka, investors and entrepreneurs can choose from various business structures depending on their objectives, ownership preferences, and operational needs. The most common types of business entities include:

1. Private Limited Company

• The most popular business structure in Sri Lanka.

• Requires a minimum of 1 and a maximum of 50 shareholders.

• Shareholders’ liability is limited to their share capital.

• Separate legal entity, able to own property and enter into contracts.

2. Public Limited Company

• Suitable for larger businesses that intend to offer shares to the public.

• Requires a minimum of 7 shareholders.

• Subject to stricter regulatory and disclosure requirements.

• Can be listed on the Colombo Stock Exchange.

3. Sole Proprietorship

• Owned and managed by a single individual.

• Simple to set up but does not provide limited liability.

• Owner is personally liable for all business debts.

4. Partnership

• Two or more individuals or entities carry on business together.

• Can be either general or limited partnerships.

• General partners have unlimited liability, while limited partners’ liability is restricted to their investment.

5. Branch Office of a Foreign Company

• A foreign company can register a branch to carry out business activities in Sri Lanka.

• Branch office operates as an extension of the parent company.

• Requires registration with the Registrar of Companies.

6. Liaison Office

• Acts as a representative or communication channel of a foreign company.

• Cannot engage in commercial activities or earn income.

• Primarily used for market research, promotion, or coordinating with clients.

Eligibility Criteria for Company Registration in Sri Lanka

Before registering a company in Sri Lanka, certain eligibility requirements must be met. These criteria ensure compliance with the country’s legal framework and smooth processing of the registration.

 1. Minimum Number of Directors and Shareholders

• Private Limited Company: Minimum 1 director and 1 shareholder (can be the same person).

• Public Limited Company: Minimum 2 directors and 7 shareholders.

 2. Directors’ and Shareholders’ Residency

• At least one director must be a resident of Sri Lanka.

• Shareholders can be individuals or corporate entities, local or foreign.

 3. Company Name

• The proposed company name must be unique and not similar to existing registered names.

• It should not contain prohibited or misleading words.

 4. Registered Office Address

• The company must have a local registered office address in Sri Lanka.

• This address will be used for official correspondence.

 5. Capital Requirements

• No minimum paid-up capital requirement for private companies.

• Public companies usually have higher capital requirements depending on business activities.

 6. Compliance with Regulatory Restrictions

• Certain industries may require special licenses or approvals (e.g., banking, insurance, telecommunications).

• Foreign ownership may be subject to sector-specific restrictions.

Procedure for Company Registration in Sri Lanka

Registering a company in Sri Lanka involves several key steps governed by the Registrar of Companies (ROC). Below is the typical process:

Step 1: Name Reservation

• Submit a proposed company name to the ROC for approval.

• The name must be unique and comply with legal standards.

• Name approval typically takes 1–2 working days.

Step 2: Prepare Incorporation Documents

• Draft the Articles of Association and Form 1 (Declaration of Compliance).

• Prepare Form 18 (Particulars of Directors, Secretary, and Registered Office).

• Ensure all documents are signed by the directors and shareholders.

Step 3: Submit Application for Incorporation

• File the signed documents along with the name approval with the ROC.

• Pay the prescribed registration fees.

Step 4: Issuance of Certificate of Incorporation

• Upon verification, the ROC issues a Certificate of Incorporation, officially recognizing the company as a legal entity.

• This usually takes 3–5 business days after submission.

Step 5: Register with the Department of Inland Revenue

• Obtain a Taxpayer Identification Number (TIN).

• Register for Value-Added Tax (VAT), if applicable.

Step 6: Register with Other Relevant Authorities

• Depending on your business, register with:

  • Sri Lanka Export Development Board (EDB)

  • Board of Investment (BOI) (for investment incentives)

  • Local municipal authorities for trade licenses.

Step 7: Open a Corporate Bank Account

• Use your Certificate of Incorporation and other registration documents to open a business bank account.

Various Taxes Applicable to Registered Companies in Sri Lanka

Registered companies in Sri Lanka are subject to several types of taxes levied by the government. Understanding these taxes is essential for compliance and effective financial management.

 1. Corporate Income Tax

• Standard corporate tax rate: 24% on taxable income.

• Small and medium enterprises (SMEs) with turnover less than LKR 50 million may be eligible for a lower rate.

• Certain sectors and businesses registered under the Board of Investment (BOI) may enjoy tax holidays or reduced rates.

 2. Value-Added Tax (VAT)

• Standard VAT rate: 8% (as of recent updates; subject to change).

• Applies to the supply of goods and services exceeding the threshold of LKR 75 million in annual turnover.

• VAT-registered companies must file monthly VAT returns.

 3. Economic Service Charge (ESC)

• A turnover-based tax, generally at 0.5% on gross turnover.

• Offsettable against income tax liability.

 4. Withholding Tax

• Withholding taxes apply to certain payments such as dividends, interest, rents, and royalties.

• Rates vary from 5% to 15% depending on the payment type.

 5. Nation Building Tax (NBT)

• Levied on certain goods and services at 2%.

• Businesses with turnover exceeding specified limits must register and remit NBT.

 6. Stamp Duty

• Imposed on legal documents such as lease agreements, share transfers, and loan agreements.

Documents Required for Company Registration in Sri Lanka

To complete the company registration process in Sri Lanka, you will need to prepare and submit the following documents:

 1. Name Reservation Approval

• Official approval from the Registrar of Companies for your proposed company name.

 2. Articles of Association

• The company’s constitution outlining the rules, regulations, and objectives.

 3. Form 1 (Declaration of Compliance)

• Signed by a company director or secretary confirming compliance with the Companies Act.

 4. Form 18 (Details of Directors, Secretary, and Registered Office)

• Information on company directors, secretary, and the registered office address.

 5. Identification Documents of Directors and Shareholders

• Copies of valid passports or national IDs for all directors and shareholders.

 6. Proof of Registered Office Address

• Utility bills, lease agreements, or property documents verifying the company’s local address.

 7. Payment of Registration Fees

• Proof of payment for ROC registration fees and any other statutory charges.

Benefits of Company Registration in Sri Lanka

Registering a company in Sri Lanka offers numerous advantages for entrepreneurs and investors looking to establish a credible and sustainable business presence in the region:

 1. Legal Recognition and Separate Entity

• A registered company gains its own legal identity, separate from its owners, providing limited liability protection.

 2. Access to Regional and International Markets

• Sri Lanka’s strategic location offers businesses access to key markets in South Asia, Southeast Asia, and beyond.

 3. Investment Incentives and Tax Benefits

• Companies registered under the Board of Investment (BOI) can benefit from tax holidays, duty exemptions, and other incentives.

 4. Skilled and Cost-Effective Workforce

• Sri Lanka boasts a well-educated, English-speaking workforce ideal for various industries, including IT, manufacturing, and services.

 5. Enhanced Credibility

• Registration enhances your company’s credibility with customers, suppliers, investors, and financial institutions.

 6. Easier Access to Funding

• Registered companies can raise capital through equity, loans, or investment more easily than unregistered entities.

 7. Compliance with Local Laws

• Registration ensures compliance with Sri Lankan business regulations, avoiding legal penalties and operational interruptions.

Why Choose YKG GLOBAL for Company Registration in Sri Lanka?

Choosing the right partner for your company registration journey can make all the difference. Here’s why YKG GLOBAL is your trusted choice for company registration in Sri Lanka:

 Expertise in Sri Lankan Corporate Law

• Our team has extensive knowledge of local laws, regulations, and procedural nuances ensuring smooth registration.

 Fast and Efficient Service

• We streamline the entire registration process, minimizing delays and administrative hassles.

 End-to-End Support

• From name reservation to tax registration and compliance advisory, we handle every step for you.

 Global Experience with Local Insight

• With over 40 years of experience and thousands of successful registrations worldwide, we combine international standards with Sri Lankan market expertise.

 Dedicated Customer Support

• You get a dedicated account manager who guides you through the process, answers your queries, and ensures transparency.

 Transparent Pricing

• No hidden fees or surprises—just clear, competitive pricing tailored to your business needs.