(Picture credit - sundaytimes.lk)
I'm not an expert on company law. But since we were involved with registering couple of companies, I think I can write something with my personal experience and refer you to relevant places as well. If anything here is not appropriate or incorrect, please feel free to correct it.
Who can to start a company in Sri Lanka?
As per my knowledge, I can simply say - Anyone!!
How to start a business in Sri Lanka?
Obviously, first you should have an idea as to what is the business you are planning to do. And how to do it etc. So if you are dreaming to be a businessman, just start looking out for opportunities. Start with what you know. Check how to market it. Think how you can fit in there.
If you need any help to obtain more information on developing an idea, just drop us a mail. We should be able to refer you to a place where you can get consultation. Since scope for a business is too wide, I do not wish to write all those here.
Why a company should be registered?
There are many reasons.
1. Then it gets a legal validity as a company. Otherwise it is no more than like a small grocery shop you find in the road.
2. Then your name cannot be used for anyone else.
3. You cannot expand/develop a company without registering it. There are many difficulties of carrying out a business without registering it.
4. You cannot get big customers/buyers without being a registered company. Specially corporate customers will not get any service from you unless you can issue them a bill/receipt/invoice with your registration number in it.
5. Suppliers will not trust you to do business with you.
6. When it’s a private limited company, in case of any issue with the business, a legal case should be filed against the company, not against the owner. So your liability is limited.
7. There are tax benefits such as you can claim VAT.
There are many other reasons as well but these are the basics.
What should I know before I register a company in Sri Lanka?
If you are starting a company, it’s always good to have some idea regarding the company law in Sri Lanka. When you practically involve with the business you will be guided by many other laws such as Inland Revenue Act, local government regulations, industry regulations, stock market regulations etc. But at the starting point I would say, at least you should go through the companies Act.
If you are hoping to recruit employees for the planned business, it’s good to have an idea about the "Shop and Office Employees Act".
I will guide you through the other necessary Laws and regulations in my next articles on this topic.
How to register a company in Sri Lanka
1. Read the procedure
First carefully go through the below link. It has all the information and the procedure.
2. Obtain Forms
You can obtain the forms as soft copies from this site. Or you can get it from Registrar of companies in below address.
No 400, D R Wijewardana Mawatha , Colombo 10.
If you are going there to get the forms, you have to go there between 9.00am to 2.30pm SL time. After that cash collection counter will be closed. You can give them a call and check before you go.
3. Check for the available names
You have to decide a name for your company first and then check whether it’s already taken by another company. This can be checked by below link. But I'm not sure how frequently they update this list. Many newly established company names may not be there. Best thing is you can go to Registrar of companies. Employees there will help you to find it from their data base.
4. How to select a name for a company?
If you are planning to start a small regional company which you do not plan to advertise or expand, then checking the name availability in the ROC data base is sufficient. But if you are planning to make it to a top level company in the country, there are other things as well you need to check while selecting a name.
One such thing is checking whether there is a web site by that name. Because if you need to start a web site to the company, this is important.
Another one is whether the name you propose is matching for the trade you involve in? For example a name suitable for a hardware stores would not be suitable for a women's saloon. Name suitable for a perfumary item will not go with a name of a automobile company.
5. Register the name
First you have to register the name for your company. You can do this by login in to above site. If not you can go to Registrar of companies and get it done.
You have to go to ROC and obtain an A16 form (It’s called "Application for Search" form). Once you tell them that you need to do a name registration, they will issue you the right form. You have to fill it. Then you have to present it to the cashier's counter and pay approximately Rs 418 (Rs 350+ 12% VAT+ 3% NBT+ Processing charges). In couple of days, name will be registered. You have to obtain the name registration number in order to fill the next documents.
6. Registering the company
After that you have to proceed with filling next set of documentation to register the company.
For this, you will have to find a lawyer / company secretary.
Anyway I will write another article on how to fill those forms and what are the "do’s and "don’ts in that procedure. There are many other small but important details you should know in this registering process.
Some companies should publish the name in the newspapers, there are returns to be filed annually, and there are fines involved if you don't submit things on time.
It’s true that your corporate secretary will take care of these things. But it’s always good that you also have an idea. Because when a company secretary done a mistake also, burden is with the company. So it’s good that you know what to do and when to do.
Can non Sri Lankans start companies in Sri Lanka?
Yes of course. Any foreigner can start companies in Sri Lanka. But only through the Board of Investment (BOI) Sri Lanka. There is set of guidelines which you have to follow. But BOI is offering so many benefits such as tax holidays to foreign investors. Please visit the BOI web site (I've given the link below), you have all the information in it. You can get all the contact numbers from this. If you need any more details, it’s only a phone call away.
Board of Investment - Sri Lanka - FAQs
Its advantageous to go through this Act as well.
Immigrants and Emigrants Act No. 20 of 1948
Other related sites
For more information, please refer to the below sites. Information in the internet can be slightly different with regard to cost and duration. But you can obtain almost all the details.
1. Procedure of registering a company in Sri Lanka - Registrar of Companies
2. Types of companies and Registration of a company in Sri Lanka - helpline Law.com
3. Starting a company in Sri Lanka