By: Staff Writer
October 13, Colombo (LNW): The newly enacted Companies (Amendment) Act No. 12 of 2025 has sent ripples across Sri Lanka’s corporate landscape, marking one of the most significant legal overhauls in nearly two decades. Enforced under the guidance of the International Monetary Fund (IMF) as part of its broader governance reform agenda, the amendment introduces mandatory beneficial ownership (BO) disclosure, demanding unprecedented transparency from corporate entities.
Introduced on August 4, 2025, the reform strengthens the Companies Act No. 7 of 2007, compelling businesses to reveal their ultimate owners to regulators. According to experts at a recent Deloitte Sri Lanka webinar titled “Reforming Today for a Resilient Tomorrow,” the amendment will reshape how companies operate, govern, and report.
Delivering the keynote, Dr. Harsha Cabral, PC and Chairman of the National Savings Bank, traced Sri Lanka’s evolving corporate law journey, noting that institutions such as the FATF, World Bank, and UNODC have long urged transparency to combat money laundering, tax evasion, and corruption. The new Act aligns Sri Lanka with international standards, enforcing strict accountability obligations on directors, secretaries, and shareholders.
Cabral described the move as “a cultural shift, not merely a legal update,” that will alter corporate behavior. Under the amendment, entities must disclose any individual holding 10% or more of ownership, a requirement expected to expose layered ownership structures previously hidden behind shell companies and nominee accounts.
Shivandini Liyanage, Senior Vice President Legal Enforcement & Compliance at the Colombo Stock Exchange (CSE), revealed that the Central Depository Systems (CDS) will begin overhauling its internal systems to comply with the law. Though regulations are yet to be finalized, companies will be required to modernize data management systems, train staff, and strengthen due diligence.
Meanwhile, Registrar of Companies Shyama Harshani announced that seven mandatory BO forms (B01–B07) will soon be introduced through the eROC portal, with all beneficial ownership data stored in a centralized registry accessible to regulators—and partially to the public. Companies that fail to comply will face hefty penalties and regulatory sanctions, she warned.
Corporate compliance teams, already stretched thin by new ESG and financial reporting standards, are bracing for additional costs. According to Deloitte’s panelists, many small and medium-sized enterprises (SMEs) lack the digital infrastructure to meet these demands, raising fears of uneven compliance across sectors.
In response, Deloitte unveiled its Green BO Flow, an automated system that digitizes ownership data collection while promoting paperless, ESG-compliant operations. The firm’s Director of Corporate Secretarial Services, Disna Perera, said the reform “raises the bar for corporate governance,” urging companies to view compliance not as a burden but as a competitive advantage.
However, industry insiders note that increased transparency could expose politically linked entities and dormant shell companies creating friction in a corporate ecosystem long accustomed to opacity. While the IMF-backed reform aims to rebuild global confidence, the immediate challenge for Sri Lankan firms will be balancing compliance costs with operational efficiency amid a tightening regulatory net.
In essence, the Companies (Amendment) Act No. 12 of 2025 represents more than just a reform—it’s a litmus test for Sri Lanka’s commitment to corporate integrity in the post-crisis era.
