INVESTMENT LAWS - SRILANKA
Sri Lanka is positioned as the Gateway to Asia, with its open economy, superior logistics for serving as a regional trade hub, a resilient work force and ground breaking market access with the Indo-Lanka Free Trade Agreement (FTA) to the world's largest market.
The BOI's Promotion Department is the first stop for a foreign investor. Here investors can obtain information on the investment opportunities in Sri Lanka and the incentive packages on offer. Assistance can also be obtained in completing application forms and referring investors to the relevant department within the organization.
Prospective investors are required to submit a formal application to the BOI. The form has two components:
- Approval of investment
Approval of site
Completed forms must be submitted to the Appraisal Department. A fee of US$ 150, or the Rupee equivalent, is charged to process the applications. Once the completed form reaches the Appraisal Department, a case officer is assigned to assist and guide the investor throughout the approval process
A properly completed application form takes 10 working days to complete and in most instances, foreign investment approval is automatic.
However, when a project is evaluated for special concessions, four weeks are needed to complete the assessment.
For regulated sectors the relevant authorities will consider approval of foreign investment within 30 days.
If the project has met the necessary conditions, a Letter of Approval will be issued, which informs the investor of the conditions, privileges and benefits granted.
On receiving the Letter of Approval, the applicant must respond, in writing, agreeing to the terms and conditions. If any changes or special conditions and privileges are sought, they should be requested at this time.
FINALIZING THE AGREEMENT
For the agreement to be finalised investors are required to incorporate the business as a company with the Registrar of Companies and submit the following documents to the BOI:
- Memorandum and articles of association
- Name of company secretary
- Location of the registered office
Particulars of directors
List of machinery and equipment required for the project
The Letter of Approval from the BOI is sufficient to confirm to the Registrar that the foreign investment has been officially approved.
The formal Agreement is usually signed within 30 days of issuing the Letter of Approval. The Agreement will confirm the incentives and concessions the company will be entitled to under Section 17 of the BOI Act.
SERVICE FEES FOR PROCESSING OF AGREEMENTS
This fee is US$ 1,000 to cover legal costs plus US$ 1,500 for normal and infrastructure projects and US$ 500 for agricultural projects.
IMPLEMENTATION PROCEDURE FOR BOI PROJECTS
a) Site Selection
Export Processing Zones or Industrial Zones
If the investor wants to locate a project within one of the BOI administered Export Processing Zones (EPZ), he or she will be referred to the respective Director of the Zone or Zone Manager.
The EPZs have provisions for the supply of potable water conforming to World Health Organization standards, a common wastewater treatment plant, and electricity supply and telecommunication facilities.
Outside the Zones
Enterprises intending to locate outside the EPZs should contact the Project Implementation Division. This division is able to provide quick and detailed information on suitable land sites available through its land bank service.
b) Site Approval
Site locations are approved by the Engineering Approvals Department. The relevant guidelines and recommendations pertaining to site approval are included in the formal letter of site approval issued by the Director of Engineering Approvals to the investors.
c) Environment Protection Licence
Environmental Protection Licenses (EPL) are issued by the Environment Department, according to the type of project. These licences should be obtained prior to the start of operations.
The relevant inspection and license fees will be levied by the BOI. A guide on environmental norms together with other information is made available to the investor prior to the submission of applications.
d) Building Plan Approval
The Engineering Approvals Department grants building plan approval. In order to obtain such approval, enterprises should submit blueprints of architectural, layout and service plans, which are certified by a chartered architect/engineer.
All factory buildings constructed in Sri Lanka must conform to the Factories Ordinance, especially those requirements regarding health, sanitation, welfare and safety of workers. The BOI's General Guidelines for Factory Buildings can be obtained from the Promotion Department.
e) Purchase of Construction Materials
Companies approved under Section 17 of the BOI Act are entitled to purchase duty-exempt building materials for the purpose of plant/factory construction. Duty exempt materials must be first approved by the Appraisal Department and certified by the Engineering Department.
f) Purchase of Capital Equipment and Raw Materials
In order to obtain duty free approval, each enterprise must submit a detailed list of project related capital equipment, spare parts and raw materials required for operational purposes to the Appraisal Department.
g) Import of Project Related Goods and Export of Finished Goods
The Investor Services Department will liase and assist the investor in the clearance of goods for both import and export.
h) Utilities and Telecommunications
Investors locating outside the Export Processing Zones may make a formal request to the Project Implementation Department to acquire infrastructure facilities such as electricity, water and telecommunications.
The provision of infrastructure facilities within a Zone is the responsibility of the Zone Manager.
i) Visas and Work Permits
Organisations intending to employ expatriate personnel must obtain a letter of recommendation from the Appraisal Department. This letter must then be submitted to the Department of Immigration and Emigration to obtain necessary visas and work permits. Visas can be renewed on the recommendation of the Appraisal Department. It is important to note that investors should arrive in Sri Lanka using an entry visa and not by a visit/tourist/business visa.
COST OF REGISTRATION
The registration fee depends on the company's authorized share capital. The minimum share capital required to register a limited liability company is Rs 250,000.
- Minimum Registration Fee Rs. 2,825
- Maximum Registration Fee Rs.11,650
- For minimum share capital of Rs. 250,000
For share capital of Rs.7,000,000 and above
Note: Please note that a slab system is in effect for the registration fee based on the issued shared capital.