Overseas Company Registration In Sri Lanka – Complete Guide
Everyone thinks starting an overseas company is a complicated task. It’s difficult because there isn’t enough information provided about incorporating an overseas company online. In case you’re aspiring to partner and bring in Foreign Direct Investment (FDI) to Sri Lanka; here is a step by step process.
What suits you best?
If a foreign company shows enthusiasm to invest in Sri Lanka, you can form an overseas company. You can choose to operate as a ‘branch office’. This is where the same business, part of the parent company, generates revenue. The company can establish itself as a ‘project office,’. The execution of the project in Sri Lanka represents the mission and vision of the parent company. A ‘liaison office’ or a ‘representative office’ could be set up. The sole purpose is to serve as a collaboration between the new company and the head office/group. There’s no revenue generated here.
Submitting the Company Registration Forms
After you’ve established premises to operate in Sri Lanka, you’ll have to visit the Registrar of Companies. Here’s the list of documents you will need.
1. A certified copy of the memorandum and articles of association.
You’ll have to define the scope of the operations carried out by the new company.
2.Form 44 –Details of the registered or principal office and
the place of business within Sri Lanka
3.Form 45 – The list of directors
4.Form 46 – Names of the person/s resident in Sri Lanka authorized to accept service
documents on behalf of the company
5.Photocopies; certified of recent date, of any documents evidencing
the incorporation of the company.
If an overseas company is planning on carrying out operations in Sri Lanka , there is at least an initial investment of USD $ 200,000. This also applies to an equal amount in other designated foreign currencies. You’ll have to make the payment via a ‘Securities Investment Account’ (SIA) opened in a commercial bank in Sri Lanka. You’ll have to record and maintain these funds in the company books until this company ceases its business in Sri Lanka.
Provide evidence of this remittance to the Registrar of Companies within a span of 30 days after registration.
Industries with Barriers for FDIs
The Government of Sri Lanka has set their own boundaries when it comes to involving overseas companies. Foreign Direct Investment into companies carrying out the following businesses are not permitted;
- Money Lending
- Pawn Brokerage
- Retail Trade with a capital less than USD $1 Million
(Excluding, if an overseas company doesn’t cater to the end customer and sells in bulk to distributors.)
- Coastal fishing
- Provision of security services, including security management,
assessment and consulting individuals or private organizations
Foreign Direct Investments in the following businesses have a set limit of 40% of the stated capital of the company. This doesn’t apply to business with a higher threshold of foreign ownership. This applies if there is permission granted from the Board of Investment (BOI);
- Production of goods where Sri Lanka’s exports are subject to quota restrictions
- Growing and primary processing 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
- Freight Forwarding
- Travel Agencies
- Shipping Agencies
The approvals of relevant government authorities are essential for investments in:
- Air transportation
- Coastal Shipping
- Industries involved in the manufacture of arms, ammunition, explosives, military vehicles, military hardware, poison, narcotics, or security documents.
- Large scale mechanized mining of gems
- Further mandatory needs when registering an overseas company
Every registered overseas company has to prepare financial statements. You’ll have to hand over certified copies of these documents to the Registrar of Companies every year.
You’ll need certified statement copies of the parent company. Note, the appointment of directors aren’t applicable as the company wouldn’t be a body corporate. The prescription of number of employees isn’t needed either. Make sure, the secretaries and the appointed attorney of the overseas company live in Sri Lanka.
If you’re a company looking at a heavy investment to start, a foreign company would be the best choice. Use this to increase brand recognition, local knowledge and have access to technical skills.
Since opening an overseas company takes effort, if you need help or guidance setting up, let us know. Contact one of our members, who’ll get in touch with you shortly.