Sri Lanka: How to Start a Business: Registration, Capital, and Foreign Ownership Explained

In: Company Registration, Company Registration Sri Lanka

Sri Lanka offers exciting opportunities for entrepreneurs, but navigating the legal and financial landscape is crucial for success. Whether you’re a local entrepreneur or a foreign national looking to invest, understanding the registration process, capital requirements, and ownership laws is essential.

1. Business Registration in Sri Lanka

To legally operate a business in Sri Lanka, you must register with the Registrar of Companies (ROC). The process includes:

Selecting a business structure (Sole Proprietorship, Partnership, Private Limited Company)
Reserving a business name
Submitting required documents (Articles of Association, director details)
Obtaining a Business Registration Certificate

A diagram showcasing types of business registration, including unincorporated and incorporated entities, to guide business setup and company formation. — *Explore the different types of business registration—unincorporated and incorporated—to choose the best structure for your company formation with Ananda Sirisena and Co.*

2. Single Director Company in Sri Lanka

A Private Limited Company (Pvt Ltd) can be registered with a single director, making it a popular choice for small businesses. This structure offers limited liability protection and allows for future expansion.

3. Starting a Corporation in Sri Lanka

Corporations in Sri Lanka must comply with Company Law regulations, including appointing directors, filing annual returns, and maintaining financial records. Incorporation provides credibility and tax benefits.

4. Requirements for Starting a Business

Key requirements include:

Business registration with the ROC
Taxpayer Identification Number (TIN) from the Inland Revenue Department
Opening a corporate bank account
Obtaining necessary licenses for regulated industries

5. Minimum Capital Required

The capital required depends on the business type. Some businesses can start with minimal investment, while others—such as manufacturing or retail—require significant funding for equipment and inventory.

6. Can Foreign Nationals Start a Business in Sri Lanka?

Yes, but foreign ownership regulations vary by industry. Some sectors allow 100% foreign ownership, while others restrict it to 40% or require local partnerships. Foreign investors must also obtain a Business Visa.

7. Doing Business in Sri Lanka as a Foreigner

Foreign entrepreneurs must comply with Sri Lanka’s investment laws, including:

Registering with the Board of Investment (BOI)
Meeting minimum investment thresholds
Understanding tax policies and repatriation rules

However, there are ways to start a business in Sri Lanka without BOI approval, allowing room for small investors to establish companies. If you’re interested in exploring these options, schedule a time with us to discuss the possibilities available to you.

8. How Many Directors Are Required?

A Private Limited Company can have a single director, but larger corporations typically require multiple directors for governance.

9. Can I Start a Business with No Money?

Bootstrapping is possible! Entrepreneurs can start service-based businesses, leverage crowdfunding, or seek government grants to minimize upfront costs.

10. Business Opportunities in Sri Lanka

Popular business ideas include:

E-commerce and online retail
Tourism and hospitality
Export-import businesses
Agriculture and food processing