New Companies Act Balances Transparency Gains with Investment Concerns
- CNL Reporter
- August 29, 2025
- News, Political
- New Companies Act
- 0 Comments
Sri Lanka’s newly enacted Companies (Amendment) Act No. 12 of 2025, passed on August 4, has been welcomed as a step toward stronger governance but has also sparked debate over its potential impact on private-sector growth.
The Act introduces 21 key changes to corporate law, most notably the requirement for all companies including foreign-registered entities to maintain accurate records of their beneficial owners.
Deloitte Sri Lanka describes this as a transformative reform that strengthens accountability, aligns the country with Financial Action Task Force (FATF) standards, and builds investor confidence ahead of the 2026 FATF mutual evaluation.
Other amendments include new provisions for penalties on non-compliance, clearer timelines for responding to the Registrar of Companies, and updates to long-standing ambiguities in the 2007 Companies Act. Together, these measures aim to enhance regulatory clarity and enforcement.
Yet, private-sector leaders remain cautious. They argue that while transparency is essential, the compliance costs and regulatory oversight could discourage investment—particularly foreign capital in listed entities, where beneficial ownership tracking is complex.
Critics also point out that the Marxist-oriented government’s heavy regulatory approach reflects a distrust of private enterprise, which remains the main driver of growth in a fragile economy.
Deloitte, however, views the law as an opportunity for businesses to modernize compliance systems and turn regulation into a strategic advantage. The challenge, analysts say, lies in implementation—balancing transparency with competitiveness while avoiding excessive s
