When you begin to pursue your dreams of starting a business, it’s important to make sure that you’ve got all your bases covered.
Registering your company is by far one of the most important and basic steps of starting your own business.
Why is that? Well, when you register your company, it gets its own legal identity.
This means that your business is now completely separate from all your personal assets.
Now, even if your business has to close down and pay off large debts at some point in the future, gets sued or has other horrible and unforeseen financial losses, you wouldn’t have to sell off or lose your personal assets (eg: land, house, valuable belongings) to settle any of these issues.
Since your company has been registered, it will be considered as an entity that’s separate from you; because of this you nor your family will have to suffer personal consequences brought on by the business.
So, even though there’s several other advantages of registering a company – the protection of both yours and your family’s assets might be the most important.
When you first start a business or if you already have an unregistered business, the business’s name automatically becomes the name of the person or entity that owns it. However, if you want to name your company something else, you’ll have to register it right-away.
Once you start registering your business, you can choose to register it as ‘Doing Business As’ (DBA); also called a ‘trade name’ or ‘assumed name.’ This will allow you to name your company however you see fit.
By doing this, you guarantee the protection of your unique business name. This also helps you;
There are a few types of legal entities that you can choose to register your business as. In this article, we’re going to talk about how you can get registered as a ‘Private Limited Company.’
A Private Limited Company is a privately held company for small businesses. You need a minimum of two employees, one shareholder and one director to start one of these. The number of owners a Pvt Ltd Company can have is also capped at 50.
Private Limited Companies are great because they limit the risks of owning a business and it provides the company owners and their personal assets legal protection.
Unlike Public Limited Companies, PVT LTD Companies can’t trade their company stock on the stock market. You can also impose restrictions on ownership to protect your business from hostile takeovers.
So, how can you register a Private Limited Company? Let’s take a look!
How do you find a unique name for your company? Well, once you have a couple of business name ideas in mind, you can easily search through the Department of the Registrar of Companies’ website to check whether your company name has already been taken or not.
If the search results don’t show any companies with the same name, you’re all set. In-case there’s already another business with the same name as yours, it’s always safe to have one or two alternative names on hand. You can also check if your company name is available here.
In addition to this, we recommend that you reserve a domain name that’s identical or at least closely related to your company’s registered name.
Personally, we use Lankahost to buy all our .lk domain names. If you want an international domain and hosting, Godaddy is a pretty great place to get one too.
When you’ve decided on a business name, you can reserve it with the Registrar of Companies until you’re ready to go ahead with the company registration. Once you make a business name reservation, it’s valid for three months. The company name reservation will cost you Rs. 2,000 + VAT 8%.
After you’ve gotten approval for your company name, you have to submit a few forms to the DRC (Department of the Registrar of Companies). We’ve gone ahead and attached the forms to make it easier for you.
Remember that every form must be either printed or typewritten (according to section 475). The DRC will not accept handwritten forms.
Important additional information: How to chose the right company secretary
A company can either;
You must submit 2 copies of the documents.
This will cost you Rs. 2,000 + VAT 8%.
Useful reading: How to draft your Articles of Association
After you’ve completed the previous steps, it’s finally time to notice the public of your company’s incorporation.
You can do this by publishing your company’s formation on a small blurb in the local papers (this is how it’s usually done).
This public notice should include;
This has to be published on at least one issue of a Gazette as well as on at least one issue of a daily newspaper in all three languages (Sinhala, Tamil and English).
Last but not least, this newspaper announcement has to circulate within the area of the business.
After you’ve completed all of these steps, you’ll receive a business registration certificate in two to three weeks.
Hey, we’re Simplebooks – a registered corporate secretary.
This means that Simplebooks is capable of registering your company for you.
While you’re here, make sure to check out pricing options to see what fits your business!
By the way, the Government has recently introduced “eROC” (e – Registrar of Companies).
With this service, you can register your business online!
Take a look at our step by step guide on how you can register your business online.
Need help? Get free business registration counselling!
Registering your company is only step one of running a legally compliant business in Sri Lanka. There are a few other legal processes you need to follow afterwards. Some of these include;
We recommend you speak to your company secretary or hire a professional service like Simplebooks.
Once you have a company name in mind, check whether there’s already a company with the same name from the Department of the Registrar of Companies.
Get your business name approved from the Department of the Registrar of Companies.
Submit registration forms 1, 18 and 19
Form 01 – Company Registration (Rs. 4,000 + VAT 8%).
Form 18 – Consent and Certificate of Director (Rs. 2,000 + VAT 8%).
Form 19 – Consent and Certificate of Secretary/Secretaries (Rs. 2,000 +VAT 8%)
Every form has to be printed or typewritten. The DRC doesn’t accept handwritten forms.
Submit Articles of Association
You can either;
Adopt the standard set of Articles of Association in Table A of the Companies Act of Sri Lanka
Draft your own Articles of Association.
You should submit 2 copies of the documents.
Give public notice of incorporation
Announce the incorporation of the company on at least one Gazette issue and at least one issue of a Newspaper in all Sinhala, English and Tamil languages.
The announcement should include the company registration number, registered office address and the name of the company.
The newspaper should circulate within the area of the business.
A Company Registration Number (CRN) is a unique combination of numbers used to identify your company. This is given to you when you register your business/company with the Department of the Registrar of Companies (DRC).
It costs a total of Rs. (Rs15,200) to register a Private Limited Company in Sri Lanka.
Document – Company name reservation
Price – Rs 2000 + VAT 8%
Document – Form 1
Price -Rs 4000 + Vat 8%
Document – Form 18
Price -Rs 2000 + Vat 8%
Document – Form 19
Price -Rs 2000 + Vat 8%
Document – Articles of Association (AOA)
Price -Rs 2000 + Vat 8%
Document -Certified Form 1
Price -Rs 1100 + Vat 8%
Document -Certified Articles of Association
Price -Rs 1100 + Vat 8%
– Helps you protect your personal assets
– Easier to apply for bank loans
– Helps obtain licenses and permits
– You can open dedicated company bank accounts
– Useful when registering with the Inland Department and Tax Authorities
– Helps establish brand identity when carrying out marketing activities.
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