REGISTERING A COMPANY IN SRI LANKA Formation of a

Sri Lanka is an excellent choice among many South Asian countries in terms
of establishing a new company to do business.
Company in
The economy of this country has been stable amidst many a crisis & the
business infrastructure has dramatically increased in the last few years; this
Sri Lanka
is why more organizations nowadays are willing to start a business here.

However, most are not aware of the procedure of setting up a business in

the country. In this brochure we hope to provide a brief introduction into
the key stakeholders involved, related process, advantages & potential
pitfalls in setting up your entity.

REGISTRAR OF COMPANIES, SRI LANKA

In Sri Lanka the registration of a company lies with ‘The Department of the
Registrar of Companies, Sri Lanka’ created by statute. Contact details are,

400, D R Wijewardena Mawatha.

Colombo 10
Sri Lanka

Phone: 011-2689208

Email: [email protected]

Web: http://www.drc.gov.lk/

Companies Act,
No. 7 of 2007
[Introduction]
TABLE OF CONTENTS COMPANY REGISTRATION PROCESS

Step 1: Selecting the right type of Company

Company registration process ................................................................... 1
Before embarking on registering your company it is
Selecting the right type of company ...................................................... 2 crucial that you identify the right type of company
to register.
Selecting company name ...................................................................... 8
Based on the type of business you want to
undertake certain types of business registration
e-Registration Process (eRoC system) ................................................. 13
type maybe suitable
Miscellaneous: BOI Process ..................................................................... 18
Step 2: Selecting a Company Name
Once a company type is selected, the first step of
the registration process is to figure out a name for
your company.

This is a crucial step as this defines what your

company is going to be identified by in all future
business activities. It needs to be unique & not be
confused with any already existing businesses.

Step 3: e-Registration Process (eRoC system)

Finally, once the above is decided (type of company,
name) you get into the actual company registration
process.

This includes required documentation, & steps to

follow for registration. Given the ease of use the
online or e-Registration process is preferred, which
will be explained in detail.

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STEP 1: SELECTING TYPE OF COMPANY STEP 1: SELECTING TYPE OF COMPANY
Types of business registrations in Sri Lanka is as below,
1.2 Partnership
Type of
Business A partnership is a sole proprietorship that allows the business to have more
than one owner.
Sole Private Limited Public Limited Company Limited
Partnership
Proprietership Company Company by Guarantee

1.1 Sole Proprietorship

A sole proprietorship is the common business structure. It makes sense if
you're in a business where personal liability is not a concern. From a legal
standpoint, the owner and the proprietorship are the same.

Advantages Disadvantages
It's the easiest to set up. The owner is exposed to unlimited
legal liabilities. If you lose a lawsuit,
Profits are only taxed once on the
you could lose personal assets.
owner's personal tax returns.
The owner has complete control Borrowing money is more difficult.
of the business and makes all the Banks are reluctant to make business
decisions. loans to sole proprietorships.
You will have to rely on savings,
Tax forms are not complicated. home equity loans or loans from
family members.
Assets are easy to liquidate upon Business will be liquidated when
the death of owner. owner passes away.

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STEP 1: SELECTING TYPE OF COMPANY STEP 1: SELECTING TYPE OF COMPANY
1.3 Private Limited Company (Pvt) 1.4 Public Limited Company (PLC)
A Private Limited Company is formed lawfully with Limited Liability or A public limited company is a voluntary association of members that are
Legal Protection for its shareholders but that places restrictions on its incorporated and, therefore has a separate legal existence and the liability of
ownership. whose members is limited.

Public limited companies are listed on the stock exchange where its
Advantages Disadvantages
share/stocks are traded publicly.
No Minimum Capital required. It restricts the
transfer ability
Separate Legal Entity Status.
of shares by its
• Assets and liabilities of the business are not same as
articles.
assets and liabilities of Directors.
• Separates Management & Ownership - Managers The number of
responsible & answerable for company success or loss shareholders in
Limited Liability – If company undergoes financial distress any case cannot
personal assets of members will not be used to pay debts of exceed 50.
Company as liability of the person is limited.
Fund Raising – Unlike PLC a Pvt Company cannot raise It cannot issue
funds from Venture Capitalists or Angel investors. prospectus to
public.
Free & Easy transfer of shares compared to a proprietary
concern or a partnership Shares cannot
Uninterrupted existence – be quoted in
• It has ‘Perpetual Succession’, that is continued or stock exchange.
uninterrupted existence until legally dissolved.
• Is unaffected by the death or other departure of any
member but continues to be in existence irrespective of
the changes in membership.

FDI Allowed - 100% Foreign Direct Investment is allowed

Builds Credibility - The particulars of the company are
available on a public database. Improves credibility

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STEP 1: SELECTING TYPE OF COMPANY STEP 1: SELECTING TYPE OF COMPANY
1.6 Public company limited by guarantee
1.6 Public company limited by guarantee (Contd…)
A public company limited by guarantee is most often formed by non-profit Advantages Disadvantages
organizations such as sports clubs, workers’ co-operatives and
Exempt from corporate income Subject to more annual disclosure
membership organizations, whose owners wish to have the benefit of
tax if surplus funds are from obligations.
limited financial liability. members’ contributions.
Requirements of reporting in
A PUBLIC COMPANY LIMITED BY GUARANTEE DOES NOT HAVE accordance with law.
ANY SHARES OR SHAREHOLDERS, BUT IS OWNED BY
GUARANTORS WHO AGREE TO PAY A PRE-DEFINED AMOUNT Can apply to be registered as a Professional assistance is required for
charitable organization or setting up / incorporation.
OF MONEY TOWARDS COMPANY DEBTS institute of public character.
Professional service provider’s
assistance is required for regular or
ongoing statutory compliance

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 STEP 2: SELECTING A
COMPANY NAME “A BRAND FOR A COMPANY IS
LIKE A REPUTATION FOR A
PERSON.

2.1 Importance of Company Name YOU’RE BRAND IS WHAT OTHER

PEOPLE SAY WHEN YOU’RE NOT
A Company Name is one of the most crucial IN THE ROOM”
decisions to make at the beginning of setting up a
business. It defines your company in terms how - Jeff Bezos
it’ll be identified in the future.

It will also suggest to a potential client the type of

business you engage in basis the meaning or other
visual elements that go together with it such as
the logo.

In summary it is important because,

1. All legal dealings with regard to your

company is based on the company name. Selecting a unique, catchy, communicable,
meaningful name for your business is crucial.
2. Gives the first impression about your business
It should not restrict you in the long run but
3. It summarizes the type of business you
engage in rather enable you to build a lasting
reputation with your clients & customers.

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 STEP 2: COMPANY NAME 2.3 Legal Requirements &
Restrictions
2.2 Tips in selecting a good name According to the Companies Act No.7 of 2007
What do you need to be aware of when selecting a certain requriements & restrictions exist in
proper Company Name? You should not regret your selecting a company name
decision later on. Below are some tips in selecting a
really good name Restrictions :-
1. Avoid hard-to-pronounce/spell names • A listed company should end with the words
Eg: Cadabra vs Amazon “Public Limited Company” or “PLC”.
2. Don’t pick names limiting future growth
Eg: ABC Photography vs ABC Studios • A limited company should end with “Limited”
3. Go for simple, yet catchy names or “Ltd”.
Eg: Apple, Google, Nike
• A private company should end with “(Private) 2.3 Legal Requirements & Restrictions
4. Check for similar established business
Limited” or “(PVT) Ltd”.
names/trademarks Requirments:-
5. Check availability of .com domain name • Your company name should not be registered by a
name which is identical to the name of an existing
registered company (local/overseas). However,
when determining above, the following will be
disregarded;
o The words “the” “company”, “and
company”, “company limited”, “and
company limited”, “limited”,
“unlimited”, “(Private) limited”, “Public
Limited Company”
o type and case of letters, accents, spaces
between letters and punctuation.
o ”and” or “&”
• It should not contain the words “Chamber of
Commerce”
• It should not be registered by a name that may be
found “misleading” by the Registrar.
• Avoid words such as; “President”,” Presidential”
“Municipal”, “incorporated”, “Co-operative”,
“Society”, “National”, “State” or “Sri Lanka”.
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STEP 2: SELECTING A COMPANY NAME STEP 3: E-REGISTRATION PROCESS (EROC)

3.1 Introduction
2.4 How to select a Company Name
Now that it’s clear on the Do’s & Don’ts in Name selection, how do you The Department of Registrar of Companies, Sri Lanka is enabled by statue to
actually go about selecting the best name for your requirement? Following process & register companies wishing to operate from within Sri Lankan soil.
steps illustrate a structured approach to do this,
Traditionally this was a manual process but recently the Sri Lankan
1. Reflect on your business idea – Government has introduced “eRoC” online service to streamline the
• Think about the purpose of your business & the application process for ease of use. Under this scheme via the
products/services you intend to provide through it. http://www.drc.gov.lk/en/ website by following the below process you can
• Think how that would change in the future & other different register your company with the Government.
businesses, territories/countries you may branch out into.

2. Brainstorm & Shortlist potential Names –

• Basis the above, list out names that best represent above.
• Be mindful of the earlier tips in selecting these names
• If at a loss for ideas you can mix & match dictionary words

3. Check availability & propose –

• Conduct internet searches to validate domain name
availability for shortlisted names
• Check eRoC company name database for potential conflicts
• Check with Trademark office for similar names registered
• Pick the best one out of remaining names that you feel best
represents your business vision.

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STEP 3: E-REGISTRATION PROCESS (EROC) STEP 3: E-REGISTRATION PROCESS (EROC)
3.2 Name Reservation
3.3 Submitting Company Registration Forms + Articles
Basis the unique name you created basis the earlier instruction you can of Association
begin the name registration process as 1st step.

Firstly, you need to verify if the company name is unique through the Once the Name is approved you can move to the next step in the eRoC system
website of “Department of the Registrar of Companies.” By conducting a which is the actual Company Registration step.
Name Search at - https://eroc.drc.gov.lk/
Following Five activities are needed to be followed in completing this step –
If approved you can proceed to next step if not need to repeat by
providing another alternate name shortlisted for a fresh name search. 3.3.1. Fill company details
Each name search costs LKR 2,203.20/=. Once the name is approved, you’ll 3.3.2. Give shareholder details
be receiving a confirmation email from eRoC. 3.3.3. Download and fill relevant documents
3.3.4. Upload completed documents
3.3.5. Complete payments

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 3.3.2. Give shareholder details
STEP 3: E-REGISTRATION In the next page under stakeholders, you enter
details of directors, company secretaries &
3.3.1. Fill company details shareholders.

Here after selecting the type of company, you enter All their individual details need to be entered herein
into the below form the following basic company separately. If multiple you can use ‘Add New’ button
information - Registered office address, Province, to enter multiple details
District, Divisional Secretariat Division, Grama
Niladhari Division, Postal code, E-mail address of the
company

3.3.3. Download and fill relevant documents

3.3.4. Upload completed documents
Once above step is completed system generates
The key additional document
Form 1, Form 18 and Form 19. This needs to be
submitted here is the Articles
downloaded, required details manually entered,
of Association. The registered
signed & re-uploaded.
company secretary you
selected can ideally draft this
with your concurrence. Mainly
it contains all details from
articles or business purpose to
ownership, registration addresses, bank accounts etc.

3.3.5. Complete payments

Following payments to be made finally to complete

submission either Debit/Credit card
Form 1 – Company Registration (Rs. 4,000 + VAT)
Form 18 – Consent and Certificate of Director (Rs. 2,000
+ VAT)
Form 19 – Consent and Certificate of
Secretary/Secretaries (Rs. 2,000 + VAT)

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STEP 3: E-REGISTRATION PROCESS (EROC) MISCELLANEOUS: BOI PROCESS
3.4 Public notice of incorporation
Board of Investment (BOI) approval is required for mainly Foreign
Once everything is completed with the
registration, it’s time to give public
Direct Investments (FDI) seeking to either setup new operations
notice of incorporation. Public notice within Sri Lanka or take-over/partner with an already existing
shall be published within 30 (thirty) local venture.
days of company registration.

According to the company Acts, every

BOI is empowered under BOI Law (Board of Investment Law No. 4
company needs to publish their of 1978) to approve such FDI investments as either,
information in three languages in the
newspapers plus be in at least one 1. Projects with concession (under Section 17 of BOI Law) –
issue of the Gazette. Able to grant exemptions from laws such as Customs,
Following information needs to be enhanced capital allowances etc., subject to fulfilment of
declared such as registered business address, company name, contact the investment threshold (min US$ 3 Mn) or any other
number, company registration number, and company type, etc. specified requirement.

3.5 Bank Account + Tax Registration 2. Projects without concession (under Section 16 of BOI Law) –
With earlier step the company registration is now almost complete. With These projects governed under normal laws of the country
the registration details you can now open a Bank Account in the name of and are subjected to Custom Laws and Exchange Control
your company. Also, you need to parallelly register with the Inland Regulations. The approvals granted are only to;
Revenue Department to manage your tax remittances. • Enable the entry of foreign investment
• Setup a new company with foreign shareholding or
• Allocation or issue of new shares in an existing non-
BOI company to the foreign investors
CONGRATULATIONS!!! You’re now
the proud owner of a Brand-New Legal Entity
which you can call your own to engage in the In any of the above cases the standard Company registration
process mentioned in this brochure is applicable with the
business of your dreams!
Department of Registrar of Companies.

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