Tuesday Aug 11, 2026
Tuesday Aug 11, 2026
Tuesday, 11 August 2026 02:08 - - {{hitsCtrl.values.hits}}
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| Heritage Partners Precedent Partner Dr. Arittha Wikramanayake |
Sri Lanka’s beneficial ownership disclosure regime under the Companies Act, No. 12 of 2025 requires urgent regulatory reforms to preserve its anti-money laundering (AML) objectives without undermining investment and creating impractical compliance obligations, Heritage Partners Precedent Partner Dr. Arittha Wikramanayake said.
From left: Registrar of Companies Sunethra Dharmakeerthi, LOLC General Insurance PLC Chairman Kithsiri Gunawardene, former SEC Director General Malik Cader, Heritage Partners Precedent Partner Dr. Arittha Wikramanayake and CBSL FIU Director General Dr. Subhani Keerthiratne
Beneficial ownership
Addressing a seminar on ‘Beneficial Ownership Compliance Under the Companies Act, No. 12 of 2025’ organised by Corporate Management Consultants, Dr. Wikramanayake said the legislation was introduced to meet international standards on combatting money laundering, terrorist financing, tax evasion, illicit financial flows, corruption, and bribery following Sri Lanka’s experience with the Financial Action Task Force (FATF) grey list and subsequent structural benchmarks.
He said the objective of the law should not be questioned, but argued that aspects of its implementation had gone beyond what international standards require and failed to account for practical limitations faced by companies operating in Sri Lanka.
“The purpose is to facilitate business, not purely to bring in a regulation which serves nobody with any use,” Dr. Wikramanayake said.
He said FATF standards require countries to impose proportionate and dissuasive sanctions for failing to disclose beneficial ownership while leaving individual jurisdictions to determine the administrative mechanisms for implementation. However, he argued that Sri Lanka’s framework imposed obligations that were difficult to fulfil, particularly where ownership structures extend across multiple overseas entities.
Dr. Wikramanayake said companies frequently face practical difficulties tracing ultimate beneficial owners through foreign corporate structures, obtaining personal information from overseas investors, and verifying such information using independent sources, despite the law requiring disclosure of the natural person exercising ownership or control of 10% or more of shares or voting rights, or otherwise exercising effective control.
He warned that integrating beneficial ownership disclosures into the company registration process could delay incorporations and complicate efforts to attract foreign direct investment (FDI).
“We are desperately in need of investment. The Board of Investment (BOI) is struggling to bring in companies into this country. Now, even without this requirement, we find it difficult to do it with all the other problems that we have. But this complicates it further,” he said.
Dr. Wikramanayake also argued that listed companies should be exempted from beneficial ownership requirements, noting that listed entities in several jurisdictions are already subject to disclosure obligations through securities market regulations. He cited the US, the UK, and Singapore as jurisdictions that provide listed company exemptions, while describing India’s approach as a hybrid model that grants exemptions where compliance is impractical.
Under the Act, companies must identify beneficial owners, maintain beneficial ownership registers, submit information to the Registrar of Companies, and update records following changes in ownership. The legislation also places disclosure obligations on shareholders, directors, Company Secretaries, and authorised officers, while non-compliance can attract fines and imprisonment.
Dr. Wikramanayake said the prospect of criminal liability had become a major concern for boards, directors, and Company Secretaries because authorised officers are required to verify the accuracy of information that may be difficult or impossible to independently confirm in complex cross-border ownership structures.
Rather than seeking amendments to the Act, which he suggested would be unlikely in the near term, Dr. Wikramanayake urged stakeholders to pursue administrative reforms by revising the prescribed beneficial ownership declaration forms through regulations.
He proposed allowing companies to disclose the steps taken to identify beneficial owners where complete information cannot reasonably be obtained, leaving the Registrar of Companies and enforcement agencies to exercise their existing investigative powers under the Companies Act where necessary.
He also encouraged Company Secretaries to maintain detailed records of all correspondence seeking beneficial ownership information and to document efforts made to comply with the law as evidence of due diligence should enforcement action arise.
Dr. Wikramanayake further urged Company Secretaries and other corporate practitioners to engage earlier in the legislative process by making submissions on proposed laws and regulations before they are enacted, arguing that many of the current implementation challenges could have been addressed at that stage.
The seminar was attended by LOLC General Insurance PLC Chairman Kithsiri Gunawardena, Central Bank of Sri Lanka (CBSL) Financial Intelligence Unit (FIU) Director General Dr. Subhani Keerthiratne, and Registrar of Companies Sunethra Dharmakeerthi. The seminar organiser, Corporate Management Consultants is led by former Securities and Exchange Commission (SEC) Director General Malik Cader, who conducted a panel discussion.
