Speaker Jagath Wickramaratne today endorsed the certificate on the Companies (Amendment) Bill, which was passed in Parliament with amendments in July this year.

This bill was presented for first reading in Parliament on June 5, 2025, by the Minister of Trade, Commerce, Food Security, and Cooperative Development, Wasantha Samarasinghe. 

Following the Speaker’s endorsement, the Companies (Amendment) Bill is now enacted as the Companies (Amendment) Act No. 12 of 2025.

The amended Act introduces several provisions, including allowing the incorporation of a company with a single shareholder, extending the notice period for the public when changing a company’s name to 20 working days, prohibiting the issuance of bearer shares or bearer share warrants, requiring notification to the company regarding the issuance of bearer shares or bearer share warrants and mandating the disclosure of the bearer’s details to the company registrar within 60 days, requiring companies to divide shares within 20 days from the date of incorporation.

Further, the Act introduces new provisions related to “beneficial ownership of shares”, including disclosure of beneficial ownership information by secretaries and directors to the registrar, maintenance of records by the Registrar, making such information available to the public, mandating companies or the registrar to provide details of beneficial owners to government authorities, introducing new definitions for “beneficial ownership” and “effective control”.

Additionally, the amendments provide for empowering the registrar to extend the deadlines for companies to submit certain documents and information, allowing deregistered companies to re-register within a specified time and reclaim properties previously held by the government, expanding the scope of referring disputes to the Company Disputes Board for resolution, amending the procedure for the removal of company directors, allowing the Minister of Finance to provide allowances to certain officers of the Department of the Registrar of Companies, Setting procedures for general penalties, and providing an annex to correct errors in the Sinhala, Tamil, and English texts of the principal enactment. (Newswire)

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Transparency International Sri Lanka (TISL) has filed legal action in the Supreme Court challenging the Bill to amend the Companies Act No. 07 of 2007. 

According to a TISL statement, the petition was filed in the public interest last week (19 June).

Pointing out that the amendment introduces a critical anti-corruption tool, a Beneficial Ownership Information (BOI) register, TISL contends that beneficial ownership of a company is a national security imperative, in as much as, anonymous or opaque corporate structures are frequently used for transnational illicit financial flows, funding of organized crime and terrorism, fronts for foreign influence operations, and laundering proceeds of crime. A BOI register ensures that companies disclose the individuals who ultimately own or control them, thereby exposing hidden ownership structures that facilitate corruption, money laundering, illicit financial flows, conflicts of interest and tax evasion. This reform has been a long-standing demand of TISL and is central to Sri Lanka’s post-crisis governance agenda, which aims to restore public trust and economic stability.

TISL further states that despite the importance of this, the draft Bill falls short of establishing an effective and transparent BOI register. Clause 7 of the Bill, which adds Sections 130A–130J on BOI, restricts public access to meaningful information.

• Section 130A(6) merely obliges the Registrar to maintain a list, without mandating proactive, digital publication or integration with other state databases.
• Section 130D limits public access to only the full name and nature of ownership, and even that is released solely on an individual, upon-request basis.

TISL further notes that this structure locks vital BOI behind cumbersome procedures, delays access and deprives investigators, journalists and the public of timely data. The limited information required to be disclosed at the outset is insufficient for the meaningful identification of hidden assets, conflicts of interest, and other potential unlawful activity.

The government has officially pledged, in the Governance Action Plan 2025 and the CIABOC National Anti-Corruption Action Plan 2025–2029, to establish a publicly accessible online BOI register. By opting instead for a request-driven, partial-information model, the Bill contradicts those commitments and weakens Sri Lanka’s credibility, it said. Ineffective access also conflicts with international standards, and the IMF Governance Diagnostic Assessment (2023), both of which call for open, verifiable BOI registers. It prevents Obliged Entities such as banks, law firms, accountants, auditors, real-estate agents, etc. access to vital information to enhance anti-money laundering efforts.

TISL emphasized that time is critical in asset recovery, fraud detection, and the prevention of asset dissipation. Watchdogs, journalists and Authorities must be able to trace, flag, and freeze assets swiftly. While the incorporation of the Right to Information framework is recognised, the proactive disclosure of key information at the outset, while being mindful of data protection and privacy laws, is essential to enable the timely detection of illegal activity.

Filing its petition, TISL has requested the Supreme Court to determine that Clause 7 of the Bill is inconsistent with, and/or violates Article 12(1) and Article 14A of the Constitution that enshrines the Right to Equal Protection of the Law and Right of Access to Information. (Newswire)

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Transparency International Sri Lanka (TISL) has filed a legal action at the Supreme Court challenging the Bill issued on 06th August 2024 to amend the Companies Act No. 07 of 2007. 

Issuing a statement, TISL said the amendment introduced a much-needed anti-corruption tool to Sri Lanka’s legal framework – a Beneficial Ownership register. A publicly accessible beneficial ownership register creates a legal requirement for companies to disclose the identities of individuals who ultimately own or effectively control them and benefit from their returns. This transparency is crucial in combating corruption, conflicts of interest for public officials, money laundering, and terrorist financing, as it enables the tracing and exposure of hidden financial activities and illicit enrichment. Beneficial ownership registries are also vital for the effective implementation of crucial laws such as the upcoming Proceeds of Crime Act. 

Despite this welcome introduction, there are serious concerns over the efficacy of such a register, given how the Bill is drafted. It is vital that the Beneficial Ownership register is effective and transparent and not merely superficial. Without universal applicability, loopholes are created that undermine the entire purpose of the register. If certain companies are exempt or vital information is hidden, the register loses its effectiveness, allowing illegal activities to continue unchecked, thereby defeating the purpose of the objectives of the introduction of beneficial ownership law. 

Challenging the said serious concerns, TISL’s petition, filed last week (Sep 13) points out that Section 130A (10) of the Bill exempts Offshore Companies incorporated outside Sri Lanka and registered under the Companies Act or overseas companies registered under the Companies Act from disclosing beneficial ownership information, where such companies are required to comply with the beneficial ownership registration in the respective countries of incorporation.  

Exempting offshore and overseas companies from disclosing Beneficial Ownership information enables and encourages the establishment of shell companies (inactive companies created for fraudulent purposes such as money laundering), which are used as vehicles for corruption and illicit gain. 

Furthermore, this does not necessarily ensure that such overseas companies have registered in compliance with the Beneficial Ownership registration requirements in the respective countries. Moreover, such an exemption undermines transparency and increases the risk of conflicts of interest as Beneficial Ownership information is not widely available through the Registrar of Companies. Additionally, it requires less information from companies where the beneficial and legal owners differ, a distinction that has no reasonable connection to the internationally accepted purpose of beneficial ownership registration. TISL notes that this provision, not only undermines transparency and accountability but limits legal avenues available to prevent and deter corrupt business practices.  

The petition states that this exemption creates a discriminatory classification between offshore companies, overseas companies, and other local companies, violating the fundamental right to equal protection of the law (Article 12(1) of the Constitution, as only domestic companies are subjected to disclosure requirements. 

TISL further notes in the petition that Section 130D allows details of the beneficial owners of a company to be made available to the public, only upon a request for inspection by a member of the public, and the details of the beneficial owners of the company have been limited to their full names and the nature and extent of Beneficial Ownership of the company. 

Information relating to beneficial owners of a company should be publicly accessible to ensure the effective implementation of the registry. Proactive disclosure of the beneficial owners of companies will not only reduce the risk of corruption but will also promote fair competition by revealing connections between companies that might otherwise be hidden. Beneficial Ownership transparency aids citizens, journalists and civil society to identify true owners of companies whereby the risk of exposure deters illegal activities. Additionally, it helps improve investor confidence by ensuring that companies are operating transparently and helps licit businesses avoid unknowingly engaging in fraudulent activity. 

In its petition, TISL also raises the concern that Article 14A of the Constitution – the Right to Access Information is hindered by this Bill. By limiting the disclosure of beneficial ownership details to only names and ownership extent, Section 130D fails to provide the public with sufficient information to exercise their right to access meaningful information. 

Both the Civil Society Governance Diagnostic Report of Sri Lanka and the IMF-supported Governance Diagnostic Assessment of Sri Lanka recommend to the government to implement a publicly accessible Beneficial Ownership registry. The IMF Governance Diagnostic recommendation to finalise and implement regulations to support the provision of beneficial ownership information as required by the Companies Act and to establish a public beneficial ownership registry is now converted to an actionable point in a Government Action Plan mandated in the most recent IMF review agreement that was signed in June 2024. 

The petition requests the Supreme Court to determine that Clause 7 of the Bill is inconsistent with, and/or violates, Article 12(1) and Article 14A of the Constitution that enshrines the Right to Equal Protection of the Law and Right of Access to Information, and therefore, for it to be passed into law only if approved by a two-thirds majority vote of all members of Parliament, as required by Article 84(2) of the Constitution. TISL has filed this petition in the public interest, naming the Attorney General as the respondent. (Newswire)

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