For many entrepreneurs, a Private Limited Company is a practical structure for operating a business in Sri Lanka.

It may be suitable for:

• Trading businesses
• Consultancy businesses
• IT and software companies
• E-commerce businesses
• Marketing businesses
• Tourism and hospitality businesses
• Import and export businesses
• Professional services
• Construction businesses
• Investment and holding companies

A company is a separate legal entity from its shareholders. However, registration as a company does not automatically give you permission to carry out every type of business activity.

Certain industries may require additional licences, approvals or registrations. Therefore, check the regulatory requirements for your proposed business activity before incorporation.

Choose a suitable name for your proposed company and prepare alternative names in case your first choice is unavailable or rejected.

A typical private company name ends with:

(Private) Limited

For example:

ABC Solutions (Private) Limited

Do not assume that a name is available simply because you cannot find the exact name on Google or social media. The name must be checked through the Registrar’s system.

eROC is the electronic system used by the Department of the Registrar of Companies for company-related filings and services.

The official Registrar website should be your primary source for current company registration procedures, forms and fees.

Visit the Department of the Registrar of Companies – Official Website

Submit your proposed company name through the eROC system.

The Registrar will consider whether the proposed name can be accepted. If the name is approved, you can proceed with the incorporation process.

If the name is rejected, select another suitable name and submit it in accordance with the system instructions.

Tip: Do the name reservation before spending money on company stationery, signage or other permanent branding.

Shareholders are the owners of the company. Before incorporation, decide who will hold the shares and in what proportions.

Think carefully about the ownership structure before incorporation. Changing share ownership later involves additional documentation and statutory procedures.

If foreign shareholders are involved, additional rules may apply depending on the nature of the business and applicable investment restrictions.

The Companies Act permits a private company to have a single director, subject to the applicable legal requirements.

However, there is an important point concerning the company secretary:

Where there is more than one director, a director may also act as the company secretary, provided the applicable legal requirements are satisfied.

Yes. A company is required to have a secretary in accordance with the Companies Act.

However, the secretary does not necessarily have to be a professionally qualified company secretary in every situation.

The qualification requirements depend on the applicable statutory requirements and the company’s circumstances.

Can a director also be the company secretary?

Yes. Subject to the Companies Act and applicable requirements, a director may also act as secretary.

However, the sole director cannot act as the secretary of the same company.

When is a qualified secretary required?

The qualification requirements become particularly important where the company reaches the prescribed thresholds relating to stated capital or annual turnover.

Therefore, even if you initially start with a small company, you should review your secretary requirements as your company grows.

The Articles of Association (AOA) contain the rules and governance provisions of the company.

They can deal with matters including:

• Shares and share rights
• Share transfers
• Directors
• Meetings
• Voting
• Dividends
• Notices
• Company administration
• Secretary matters

For a simple company, the applicable model Articles may be sufficient. However, companies with multiple shareholders, foreign investors or special arrangements should consider whether additional provisions are required.

Form 01 – Application for Incorporation

Form 01 contains the principal information required for incorporation.

Form 18 – Consent and Certificate of Director

Each proposed director provides the required consent and certification.

Form 19 – Consent and Certificate of Secretary

The proposed secretary provides the required consent and certification.

The current DROC process provides for system-generated incorporation documents through eROC. Always use the latest forms generated or specified by the Registrar rather than relying on old forms downloaded from unofficial websites.

View DROC Forms and Official Guidance

Director information

• Full name
• NIC or passport details
• Residential address
• Contact information
• Other information requested by eROC

Secretary information

• Full name
• NIC or passport details
• Address
• Contact information
• Qualification information where applicable

Shareholder information

• Name
• NIC/passport or company information
• Address
• Number of shares
• Shareholding information

Make sure the information entered into eROC agrees with the supporting documents.

Check all of the following:

• Company name
• Registered office address
• Business activities
• Shareholders
• Share allocation
• Directors
• Secretary
• Articles of Association
• Form 01
• Form 18
• Form 19
• Supporting identification information

Review everything carefully before submission. Errors in names, NIC numbers, addresses or shareholdings can create unnecessary complications.

The applicable Registrar of Companies fees must be paid according to the current fee structure.

Government fees can change, so check the current DROC fee schedule before calculating the total cost.

Remember that the total cost of starting a company may include more than the government incorporation fee.

• Company incorporation fees
• Company secretary fees
• Professional fees
• Document preparation
• Certified copies
• Bank-related documentation
• Tax registrations
• Business licences

Beneficial Ownership information identifies the individuals who ultimately own or control a company.

Beneficial Ownership requirements should not be overlooked when incorporating a new company.

The DROC provides specific guidance and an online Beneficial Ownership system for the submission of the required information.

View DROC Guidance for New Incorporations – Beneficial Ownership

Visit the Official Beneficial Ownership Portal

Once the Registrar approves the application and the required procedures have been completed, the company is incorporated.

The company then exists as a separate legal entity in accordance with the Companies Act.

Your company will have continuing statutory, accounting and tax responsibilities after incorporation.

• Open a company bank account.
• Complete applicable Inland Revenue registrations.
• Check whether VAT or other tax registrations apply.
• Obtain business-specific licences where required.
• Set up accounting records.
• Maintain statutory registers.
• Maintain board and shareholder resolutions.
• Keep Beneficial Ownership information updated.
• Monitor annual return requirements.
• Maintain proper financial records.

One of the biggest mistakes new business owners make is assuming that company registration is a one-time process.

In reality, a company has ongoing statutory responsibilities.

Depending on the circumstances, these may include:

• Annual Returns
• Changes of directors
• Changes of secretary
• Changes of shareholders
• Share transfers
• New share issues
• Registered office changes
• Beneficial Ownership updates
• Board resolutions
• Shareholder resolutions
• Maintenance of statutory registers
• Financial statements and audit requirements

An Annual Return is a statutory filing containing prescribed information about the company.

For companies to which it applies, the Annual Return is an important part of maintaining the company’s statutory compliance.

For example, Form 15 is used for the Annual Return of a company other than a company limited by guarantee.

Do not wait until the deadline to reconstruct your company records. Maintaining the statutory records throughout the year makes annual compliance much easier.

A new business may initially have a very simple structure. However, as the business grows, its statutory requirements can become more complex.

Professional company secretarial assistance can be useful for:

• Annual returns
• Statutory registers
• Board resolutions
• Shareholder resolutions
• Share transfers
• Share issues
• Director appointments and resignations
• Secretary changes
• Registered office changes
• Beneficial Ownership updates
• ROC correspondence
• Corporate record maintenance

Always check and reserve the proposed name through the official process.

Do not blindly copy an AOA without considering the company’s ownership and governance structure.

Every company needs a secretary. The question is whether the secretary needs to satisfy the prescribed professional qualification requirements.

Beneficial Ownership information is an important part of the current company registration and compliance framework.

After incorporation, the company continues to have statutory obligations. Plan for annual compliance from the beginning.

The processing time depends on the Registrar’s processing requirements, the completeness of the application and whether any clarification or correction is required.

Yes. You can use the eROC system and follow the requirements of the Department of the Registrar of Companies. However, professional assistance can be useful for document preparation and ongoing compliance.

Yes. Companies are required to have a secretary. However, the applicable qualification requirements depend on the company’s circumstances and prescribed statutory thresholds.

Yes, a director may also act as secretary subject to the Companies Act and the applicable requirements. However, the sole director cannot also be the secretary of the same company.

The qualification requirement should be considered particularly where the company reaches the prescribed stated capital or annual turnover thresholds. The commonly applicable thresholds are Rs. 500,000 stated capital or Rs. 1,000,000 annual turnover.

Always verify the current statutory requirements before relying on these thresholds.

Beneficial Ownership registration identifies the individuals who ultimately own or control a company. New companies should complete the applicable BO requirements in accordance with current DROC procedures.

The company must continue to comply with applicable corporate, tax, accounting and regulatory requirements. These may include annual returns, statutory registers, resolutions, beneficial ownership updates and other ROC filings.