Sri Lanka Companies Amendment Act 2025 Reshapes Company Formation and Beneficial Ownership

In August 2025, Sri Lanka enacted the Companies (Amendment) Act, No. 12 of 2025, introducing significant changes to both company formation and beneficial ownership transparency.

The legislation allows a company to be formed with a single shareholder, removing the previous requirement for multiple shareholders and making incorporation more accessible to sole founders and closely held businesses. At the same time, the reform strengthens transparency requirements by prohibiting bearer shares and bearer share warrants.

A new beneficial ownership framework requires companies to identify the natural persons who ultimately own or control the company. The regime captures individuals holding or controlling at least 10% of ownership or voting rights, as well as persons who exercise effective control through other means.

Specified beneficial ownership information is intended to be available through the corporate registry, increasing visibility over the individuals behind Sri Lankan companies. Companies must therefore maintain accurate ownership information and comply with new disclosure requirements rather than relying solely on registered shareholder details.

The enforcement provisions are significant. Serious failures involving beneficial ownership disclosure may result in substantial financial penalties and, in certain cases, imprisonment. Penalties can reach Rs. 1 million, while serious offences may carry imprisonment of up to ten years.

The reform is notable because it moves in two directions at once. Sri Lanka has made company formation easier by permitting single-shareholder incorporation while simultaneously introducing a much stronger framework for identifying and disclosing the individuals who ultimately own or control companies. For company formation specialists, corporate administrators and compliance professionals, the changes make beneficial ownership verification an increasingly important part of establishing and maintaining Sri Lankan companies.

Official source: Sri Lanka Companies (Amendment) Act, No. 12 of 2025, enacted in August 2025.