Sri Lanka

Starting a Business in

Sri Lanka

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Sri Lanka. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 185 economies. The most recent round of data collection was completed in June 2012.

Compare Sri Lanka to 184 other economies.

YearNew business densityNumber of new limited liability companies
2011 0.109,405

  • Standardized Company

  • Legal Form: Private Limited Liability Company
  • Paid in Minimum Capital Requirement: None
  • City: Colombo

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No. Procedure Time to Complete Associated Costs
1 Apply for approval name

The reservation is valid for 3 months.
2 days LKR 500
2 The company Secretary signs a consent

According to Article 221(1) of the Companies Act (no7 of 2007), every company shall have a secretary.
The Company Secretary has to be hired before incorporation, because one of the requirements to incorporate is a consent form that the Company Secretary has to sign saying he will be the secretary for the newly formed company.

There is no specific fee schedule company secretaries. The fees vary from firm to firm, and is generally based on a quarterly retainer. The quarterly charges in the region vary between of USD$ 100 - 150 for private companies but some firms might charge up to USD 1000 annual fee for acting as Company Secretary.
1 day There is no specific fee schedule company secretaries. The fees vary from firm to firm, and is generally based on a quarterly retainer
3 Register at the Companies Registry

A company may draft or adopt the standard set of articles of association in Table A of the Companies Act of Sri Lanka. Professional charges are higher for drafting new articles of association than for adopting the standard articles.

The articles of association must be submitted in duplicate to the Registrar of Companies with the balance of documents for incorporation. No prior approval from the Registrar General of Companies is required for the articles of association. According to the new Companies Act, notaries publics are no longer required to witness the signing of the articles of association.

A flat fee of LKR 10000 as the registration fee for Form 1, and LKR 500+ 12% VAT is charged of the other two forms 18 and 19 and the articles of association. The certificate of incorporation will be received in about 3 days.

Under the new Companies Act, it is no longer required to confirm the principal directors and the situation of the registered office of the company within 14 days of incorporation. Moreover, the common seal was rendered optional.
2 days LKR 10000 as the registration fee for Form 1 and LKR 500+ for Forms 18 and 19 and the articles of association.
4 Register with tax authorities to obtain a TIN

The applicant or an authorized representative of the applicant must be physically present at the Inland Revenue Department to pick up and complete the application for a TIN number. The taxpayer identification number (TIN) and the VAT registration number (temporary) can be obtained in a day. To obtain permanent VAT registration, the applicant must submit documents proving turnover of LKR 650,000 per quarter of LKR 2,500,000 per year. This is done along with income tax registration. The procedure takes 1–3 days.
1 day no charge
5 Register with Department of Labor to obtain EPF and ETF registration

Companies must register with the Department of Labour to obtain the Employees Provident Fund (EPF) registration number. The fund is a government-owned and maintained by the Central Bank. No separate registration is required to register with the Employees Trust Fund (ETF). ETF uses the same EPF number for their monthly contributions. Companies must also pay gratuities to employees that have been employed for more than 5 years. The gratuity provisions do not apply to companies that have fewer than 15 employees. There is no pension scheme for private sector employees. Businesses that engage in activities of a dangerous nature should obtain special Factories Ordinance checkups.
1 day no charge
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