Overseas Company in Sri Lanka — Registration Guidelines

It is often taken in consideration that incorporation or registration of an overseas company in a foreign location is one complicated task. The major reason for which these overseas registration procedures is considered as a complicated task is because of the lack of appropriate contents and information provided online.

Well if you are a foreign investor and is looking forward to partner and bring in Foreign Direct Investment (FDI) to Sri Lanka by the means of an overseas company then here is a step by step guideline to help you reach your goal.

Company Registration Guidelines in Sri Lanka

Sri Lanka and its government has been trying their best to seek attention of foreign investors to invest in both small and large scale within the country. The country has played drastic roles in past few decades for making foreign company registrations simpler, hassle-free and straightforward to its maximum limit. This outstanding step taken by the country and its government has eventually picked up interest of various foreign investors for investing in Sri Lanka.

The country has not just made the registration processes easier but has developed several lucrative schemes, laws and limitations over investment vehicles or company types for the foreigners. Hence, whenever a foreign company shows enthusiasm to invest to do business in Sri Lanka, they are welcomed as an overseas company. The foreign companies has the facility to operate as a Branch Office in Sri Lankan soil. This is where the same business type of the similar nature, as part of the parent company in a different nation, generates revenue. The new overseas company formed in Sri Lanka can establish itself as a “Project Office”.

Although the concept of execution of the formation of the project office in Sri Lanka represents the mission and vision of the parent company. The foreign investors looking to build an oversea company in Sri Lanka can also set up a “Liaison Office” or a “Representative Office”. Well the main and only purposes of all these different phases of companies and branches registered is similar, they all intend to serve as a collaboration between the new company formed in Sri Lanka with the head office back at home.

Procedures and documents to be submitted for Registration of an Overseas Company in Sri Lanka:

1) Few documentations have to submitted by the applicants in order to register an overseas company with the Department of the Registrar of Companies (DRC). They are all shown below:

Certified copy of the charter, statutes or memorandum and articles of association of the parent company or any other instrument that clearing portraits the nature of business of the parent company. It must be kept in concern that all this documents and instruments must be submitted under specified language mentioned by the Registrar.
Form 44 — Valid details of the registered or principal office and the place of business within Sri Lanka.
FORM 45 — List of the company Directors, Secretaries and other official head.
FORM 46 — Names of the authenticated person or group of people who are resident in Sri Lanka and are able accept service documents on behalf of the company.
A recent dated certified copy of any document evidencing the incorporation of the company.
A valid authorized “Power of Attorney” authorizing the person or group of people who are said to be resident in Sri Lanka to act on behalf of the company.

2) When the overseas company get enrolled to their new office before registration in Sri Lanka and has complied with the all sort of processing of Part XIII of the Companies Act №17 of 1982 in relation to the delivery of documents and particulars, then they must comply with the requirements mentioned above.

3) If the Registrar assumes that the new proposed name of a registered overseas company would be precluded from registration, the Registrar can send a legal notice to the company to register another name and get it approved by the Registrar again.

Initial Investment of incorporation for on oversea company in Sri Lanka:

An overseas company is asked to invest an initial investment amount of USD $ 200,000 if they are planning to carry out operations in Sri Lanka. They can make the payment in different currencies if required. The payment made by the companies must be initiated through “Securities Investment Account” (SIA) that is opened in any of the commercial bank within Sri Lanka.

The overseas company must record and maintain these payment issues made in the company logs until or unless they decide to cease their business in Sri Lanka. The overseas company may also be asked to provide evidence of this remittance of payments made to the Registrar of Companies within 30 days after the registration is done.

Industries with Barriers for FDIs (As per Sri Lankan Government)

There are some boundaries and limitations set by the Government of Sri Lanka that need to be maintained over the business natures the overseas companies can initiate. Foreign Direct Investment by the overseas companies who intend to carry out this following business are not permitted;

Money Lending
Pawn Brokerage
Retail Trade with an initial capital less than USD $1 Million
Coastal fishing
Security services and security management, assessment and consulting individuals or private organizations

Foreign Direct Investments of the overseas companies in some certain businesses have a limitation of 40% of the initial capital of the company. This is not applicable to business polices with a higher percentage of foreign ownership. This limitation only applies when an authorized approval is granted from the Board of Investment (BOI);

Production of goods where Sri Lanka’s exports are subject to quota restrictions.
Growing or planting or farming of tea, rubber, coconut, cocoa, rice, sugar and spices.
Mining and primary processing of non-renewable national resources.
Timber-based industries using local timber.
Deep sea fishing.
Mass communication
Education
Freight Forwarding
Travel Agencies
Shipping Agencies

Approvals of relevant government authorities those are essential for investments in

Air transportation
Coastal Shipping
Industries involved in ammunition, explosives, military vehicles and hardware, poisonous chemical, narcotics and other addictive drugs, or security documents.
Large scale mechanized mining of gems or jewelries.
Lotteries
Other essential needs or requirements when registering an overseas company

There is a need to prepare financial statements by every registered overseas companies. Each of the companies are asked to hand over certified and authorized copies of these documents to the Registrar of Companies every year.

Certified statement copies of the parent company is asked to be required. Well, documents such as appointment of directors or secretaries and prescription of number of employees in the company are not applicable or required as the company is not an individual legal entity or separate body corporate. The overseas companies just need to keep one thing in concern that the official secretaries and the appointed attorney are resident of Sri Lanka.