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 189 economies. The most recent round of data collection was completed in June 2014.

Compare Sri Lanka to 188 other economies.

  • Standardized Company

  • Legal form: Private Limited Liability Company
  • Paid in minimum capital requirement: LKR 0
  • City: Colombo
No. Procedure Time to Complete Associated Costs
1 Reserve a unique company name
Agency: Registry of Companies

Searching for a unique company name can be done online via the website of the Department of the Registrar of Companies (www.drc.gov.lk). The company name reservation is valid for 3 months.
2 days LKR 1,000 + 12% VAT
2 The company secretary and director sign a consent
Agency: Company Secretary

According to Article 221(1) of the Companies Act No. 7 of 2007, every company shall have a secretary.
The Company Secretary must be hired before incorporation because one of the requirements to incorporate is a consent form that the Company Secretary must sign saying he/she will be the secretary for the newly formed company in Form 19: Company Secretary Details for Consent.

There is no specific fee schedule. The fees vary from firm to firm, and are generally based on a quarterly retainer. The quarterly charges in the region vary between of USD$ 100 - 150 for private companies but some firms may charge up to USD 1000 annual fee for acting as a Company Secretary. LKR 10,000-15,000 is usually paid per month, so per quarter the amount ranges between LKR 30,000 - 45,000. The Director must sign Form 18: Director Details for Consent.
1 day see procedure details
3 Register at the Department of the Registrar of Companies
Agency: Registry of Companies

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 Department of the Registrar of Companies with the balance of documents for incorporation. No prior approval from the Registrar General is required for the articles of association. According to the new Companies Act, notaries are no longer required to witness the signing of the articles of association.

A flat fee of LKR 15,000 + 12% VAT as the registration fee for Form 1, and LKR 1,000 + 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 15,000 as the registration fee for Form 1 and LKR 1,000 for each of Forms 18 and 19 and the articles of association + 12% VAT
4 Public Notice of Incorporation
Agency: Daily Newspapers and Government Publication Bureau

According to Section 9 of the Companies Act No. 7 of 2007, public notice must be given within a month of the incorporation of a company. The notice of incorporation specifying the name of the company, registration number, date of incorporation, and address of the registered office should be published in the Government Gazette and in any daily newspaper in three languages: English, Sinhala and Tamil. The proof of publication should then be filed with the Registrar of Companies. The newspaper publications once handed over with the payment which depends on the size of the Notice, will appear within 3-4 days. The publication in the Gazette will appear within 2 weeks of submitting the request with the payment. The Registrar of Companies accepts a copy of the receipt issued by the Government Printer as proof of publication.
3 days LKR 7,000
* 5 Register with the tax authorities and obtain a Tax Identification Number (TIN) from Taxpayer Services Unit of Inland Revenue Department
Agency: Inland Revenue Department

The applicant or an authorized representative of the applicant must be physically present at the Taxpayer Services Unit of Inland Revenue Department to pick up and complete the application for a Taxpayer Identification Number (TIN) number with supporting documents including a copy of Form 1, Certificate of Incorporation and Articles of Association.
1 day (simultaneous with procedure 4) no charge
* 6 Register for VAT with the Inland Revenue Department VAT Registration Branch
Agency: Inland Revenue Department

To obtain permanent VAT registration, the applicant must submit documents proving turnover of LKR 2,500,000 per quarter or LKR 12,000,000 per year according to Value Added Tax Act No. 14 of 2002.
1 day (simultaneous with previous procedure) no charge
* 7 Payment of stamp duty on the issued shares at Stamp Duty Branch of Inland Revenue Department
Agency: Inland Revenue Department

According to Section 50 of the Companies Act, immediately following the incorporation of a company, the company shall issue to each shareholder the shares to which that person is entitled. The stamp duty payment of the issued shares should be paid to the Inland Revenue within 1 month from the issue of share. Upon the payment, entrepreneur can obtain the receipt of payment.
1 day (simultaneous with previous procedure) 0.5% of the total stated capital in multiples of LKR 5
* 8 Give notice to the Department of Registrar of Companies regarding the issue of shares
Agency: Registry of Companies

Within 20 working days from incorporation, file Form 6: Receipt by Stamp Duty Unit for Share Issues at Registrar of Companies to show that initial share issue has been done along with a copy of stamp duty slip.
1 day (simultaneous with previous procedure) LKR 1,000 for Form 6
* 9 Register with the Department of Labor and obtain the EPF number
Agency: Department of Labour and the Central Bank of Sri Lanka

Companies must register with the Department of Labor 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 (simultaneous with procedure 4) no charge
* Takes place simultaneously with another procedure.

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