Registering private limited company as a foreigner

Foreign shareholding in Sri Lankan companies

Any person resident outside Sri Lanka may acquire, hold or divest shares issued by Companies incorporated in Sri Lanka under the Companies Act, No. 7 of 2007, subject to the exclusions and limitations below.

Exclusions:

The permission shall not apply in respect of voting shares of a company proposing to carry on or carrying on any of the following businesses:

  • Pawn broking.
  • Coastal fishing (as defined by the Minister to whom the subject of fisheries is assigned).
  • Retail trade where capital contributed by persons resident outside Sri Lanka will be less than USD 5 Million.

Limitations: Up to 40%

The permission shall apply in respect of voting shares in a company carrying on or proposing to carry on any of the following businesses, only up to 40% of the number of fully paid voting shares of such company or if a special approval has been granted by the Board of Investment of Sri Lanka for a higher percentage of foreign investment in any company, only up to such higher percentage:

  • Production of goods where Sri Lanka’s exports are subject to internationally determined quota restrictions.
  • Growing and primary processing of tea, rubber, coconut, cocoa, rice, sugar and spices.
  • Mining and primary processing of non-renewable natural resources.
  • Timber-based industries using local timber.
  • Deep-sea fishing (as defined by the Minister to whom the subject of fisheries is assigned).
  • Mass communication.
  • Education.
  • Freight forwarding.
  • Travel agencies.
  • Shipping agencies.

Further Limitations:

The permission shall apply in respect of voting shares in a company carrying on or proposing to carry on any of the businesses specified below only up to the percentage of the number of fully paid voting shares of such company for which percentage either general or special approval has been granted by the relevant legal or administrative authority established by the Government of Sri Lanka set up for the approval of foreign investments in such businesses:

  • Air transportation.
  • Coastal shipping (as defined by the Minister to whom the subject of shipping is assigned).
  • Industrial undertaking as specified in the Second Schedule to the Industrial Promotion Act, No. 46 of 1990, namely:
  • Any industry manufacturing arms, ammunition, explosives, military vehicles and equipment, aircrafts and other military hardware.
  • Any industry manufacturing poisons, narcotics, alcohol, dangerous drugs and toxic, hazardous or carcinogenic materials.
  • Any industry producing currency, coins, or security documents.
  • Large-scale mechanized mining of gems.
  • Lotteries.