How to start a business in Sri Lanka as a foreigner (2026)
Starting a business in Sri Lanka as a foreigner: moderate.
Foreign investors may incorporate a private limited company in Sri Lanka online via the eROC system under the Companies Act No. 7 of 2007, with no statutory minimum share capital and a typical timeline of 7-14 working days. Full (100%) foreign ownership is permitted in most sectors, but sectors such as export-quota goods, primary processing of plantation crops, and coastal fishing require BOI approval or are capped at 40% foreign shareholding unless the investor meets a USD 250,000 minimum investment threshold under BOI Section 16. The overall regime is accessible but requires navigating BOI rules for restricted sectors, making it moderate rather than straightforwardly easy for foreign entrants.
Legal framework
Companies Act No. 7 of 2007, administered by the Department of the Registrar of Companies (DRC); foreign investment governed by the Board of Investment of Sri Lanka Act No. 4 of 1978 (as amended), overseen by BOI Sri Lanka
Key points: starting a business in Sri Lanka
Online registration via eROC
The DRC operates the eROC (e-Registrar of Companies) platform, allowing fully online incorporation including name reservation, submission of Forms 1/18/19, Articles of Association, and payment by card; a digital certificate of incorporation is issued and can be downloaded from the eROC dashboard.
No minimum share capital
The Companies Act No. 7 of 2007 imposes no minimum paid-up capital requirement; share capital may be as low as LKR 1, reducing a common barrier for foreign entrants.
Foreign ownership limits by sector
Up to 100% foreign ownership is allowed in most sectors. Investment in voting shares of export-quota-restricted goods, plantation crop processing (tea, rubber, coconut, rice, sugar, spices), and non-renewable resource mining is restricted to 40% unless BOI grants written approval; retail trade below USD 5 million investment, coastal fishing, and pawnbroking are prohibited for foreign investors.
BOI Section 16 route for restricted sectors
Foreign investors seeking >40% (up to 100%) ownership in restricted sectors may obtain BOI approval under Section 16 of the BOI Act, subject to a minimum investment of USD 250,000; larger projects (USD 3 million+) qualify for additional tax incentives under the Inland Revenue Act No. 24 of 2017.
Resident company secretary required
At least one company secretary who is ordinarily resident in Sri Lanka must be appointed, along with at least one director, a registered local office address, and a statutory external auditor, requirements foreign founders typically fulfil through a local service provider.
Inward Investment Account & typical timeline
Foreign investment funds must be remitted through an Inward Investment Account (IIA) with a licensed commercial bank in Sri Lanka. The full incorporation process, name reservation (up to 5 working days) plus DRC approval (2-7 working days), typically completes within 7-14 working days if documents are correct.
Sources
- drc.gov.lk/en/
- eroc.drc.gov.lk/home/search
- parliament.lk/uploads/acts/gbills/english/3776.pdf
- drc.gov.lk/en/?page_id=1933
- investsrilanka.com/home/new-investor/
- investsrilanka.com/wp-content/uploads/2025/09/BOI-Investment-Guide-22.09.2025.pdf
- state.gov/wp-content/uploads/2025/09/638719_2025-Sri-Lanka-Investment-Climate-S
- drc.gov.lk/en/?page_id=2741
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