Setting Up a Company on Sri Lanka's South Coast: A Lawyer's Guide for Foreign Investors (2026)

From the ramparts of Galle Fort to the surf breaks of Weligama, Ahangama, Midigama and Hiriketiya, Sri Lanka's south coast has become one of Asia's most compelling places to build a business. Boutique villas, surf camps, cafés, co-working spaces and wellness retreats are opening every season, many of them founded by foreign investors.

Getting the legal foundation right at the outset is what separates a business that scales from one that unravels at the first dispute, bank audit or land transaction. This guide sets out how a foreign investor establishes a company on the south coast, and where the real risks lie.

Can a foreigner own a company in Sri Lanka?

Yes. A foreign national may incorporate a private limited company under the Companies Act No. 7 of 2007 and, in most sectors, hold 100% of its shares. There is no requirement for a Sri Lankan partner or local shareholder.

A limited number of sectors are closed to foreign investment or subject to ownership caps or prior approval, among them money lending, pawnbroking and smaller-scale retail trade. Before you incorporate, confirm that your intended activity is open to foreign capital. It is a five-minute question for your lawyer and a very expensive one to get wrong.

The incorporation process, step by step

1. Structure the investment. Decide who holds the shares, whether a holding company abroad should own the Sri Lankan entity, and how profits will be repatriated. This step determines your tax and exit position for years.

2. Reserve the company name through the Registrar of Companies' online system (eROC).

3. Prepare the constitutional documents: Articles of Association tailored to your shareholding, plus the statutory forms and the consents of each director and the company secretary.

4. Appoint a company secretary. Every Sri Lankan company must have a qualified company secretary.

5. Provide a registered office address in Sri Lanka, if you do not already have one.

6. File and incorporate through eROC. Once documents are in order, incorporation typically takes a few weeks, depending on the Registrar of Companies' processing times.

7. Post-incorporation compliance: tax registration (TIN) with the Inland Revenue Department, a bank account, the register of beneficial owners, and any sector licences.

The step most foreign investors miss: the Inward Investment Account

Under the Foreign Exchange Act No. 12 of 2017, a foreign investor's share capital must be brought into Sri Lanka through an Inward Investment Account (IIA) opened with a licensed commercial bank. Money routed informally, through a friend's account or in cash, creates two problems: the investment may not be recognised for repatriation of profits or sale proceeds, and the bank may decline to open the company's account at all.

Open the IIA first, fund the shares through it, and keep the paper trail. It is the single most important document set you will own.

Land: lease, don't buy

This is where most south-coast disputes begin. Under the Land (Restrictions on Alienation) Act No. 38 of 2014, a foreign national cannot acquire freehold land in Sri Lanka, and the restriction also reaches companies with significant foreign shareholding. A transfer made in breach of the Act is void.

The best route is a long-term lease of up to 99 years. A properly drafted, registered lease gives you a secure and efficient structure.

Before signing any lease in Ahangama, Mirissa, Talpe or anywhere else in Sri Lanka, insist on a title search going back at least 30 years, a licensed survey plan matched against the deed, and a lease that addresses sub-letting, assignment, renewal and the fate of the buildings you construct.

Licences for tourism businesses

Guesthouses, villas, restaurants and surf schools commonly need more than a company certificate: registration with the Sri Lanka Tourism Development Authority (SLTDA) for tourist establishments, a trade licence from the local authority (Galle Municipal Council, Weligama Urban Council and so on), and in many cases environmental and building approvals for coastal construction. Sequencing these correctly avoids the most common cause of delayed openings.

Visas: owning a company is not a right to work

Incorporating a company does not, by itself, authorise you to live or work in Sri Lanka. A tourist visa does not permit you to manage your business. Sri Lanka offers residence visa categories for investors and for employees of local companies; the right one depends on the size and form of your investment. Plan the visa alongside the company, not after it.

Why use a lawyer rather than a registration agent?

A registration agent will file your forms. A lawyer will tell you whether the structure behind them protects you: how shares should be held between co-founders, what happens if a partner leaves, whether your land lease is enforceable, and how you will take money out of the country when you exit. On the south coast, where business, land and residence questions arrive together, that difference is decisive.

Frequently asked questions

How long does it take to register a company? Once documents and the investor's paperwork are complete, incorporation through eROC usually takes a few weeks, depending on the Registrar of Companies' timelines. Opening the Inward Investment Account and the company bank account typically takes longer.

Do I need to be in Sri Lanka to register a company? No. Incorporation can be handled remotely with properly certified documents, which is how many of our overseas clients establish their businesses before they arrive.

Can my company buy the land for my villa? Generally not if the company has significant foreign shareholding. The standard structure is a registered long-term lease of up to 99 years.

Do I need a local director? Sri Lankan law does not require a Sri Lankan director for a private company, but practical banking and compliance considerations should be discussed at the structuring stage.

Speak to Online Lawyer Global

Online Lawyer Global advises foreign and Sri Lankan investors across the south coast, including Galle, Talpe, Ahangama, Midigama, Weligama, Mirissa, Matara and Hiriketiya, as well as Ella and the hill country. We handle company registration, foreign exchange compliance, land leases, contracts, trademarks and tax registration under one roof, in English, with clear fixed fees.

WhatsApp and phone: +94 77 717 8075 / +94 72 446 5556
Email: info@onlinelawyerglobal.com
Offices in Galle and Mount Lavinia

This article is general information and not legal advice. The law is stated as at November 2026.