Investing Outside Sri Lanka by Residents

 
Investing in shares of Companies Incorporated Outside Sri Lanka or Sovereign Bonds Issued by the Foreign Governments and Governmental Organizations

Under section 17 of the Exchange Control Act, any person resident in Sri Lanka requires prior permission of the Hon. Minister of Finance to acquire, hold or transfer any security outside Sri Lanka.

A general permission has been granted by Hon. Minister of Finance for persons resident in Sri Lanka to make investments in shares of companies incorporated outside Sri Lanka and in sovereign bonds issued by the foreign Governments and Governmental Organizations (foreign sovereign bonds) under the Government Gazette Notification No 1686/50 of 01.01.2011, subject to the following investment limits and other terms and conditions specified in the said Gazette.

  • Up to USD 500,000 in a calendar year, for a company listed in the Colombo Stock Exchange (CSE)
  • Up to USD 100,000 in a calendar year, for a company not listed in the CSE
  • Up to USD 100,000 (for life time), for an Individuals or a partnership
  • To participate for an Employee Share Option Scheme (ESOS) of a foreign company subject to the individual investment limits and where such foreign companies’ ESOS to all its Sri Lankan employees is less than 5% of the total shares issued by the company.

However, the following categories of resident in Sri Lanka would not be eligible to invest under the above gazette issued by the Minister.

  • A company limited by a guarantee
  • A Non-Governmental Organization (NGO) or
  • An individual, company or a partnership which has a case pending under the Exchange Control Act

Companies or individuals who need to exceed the above specified limits, can forward an application to the Controller of Exchange along with the list of documents specified in the Guidelines and Investment Checklist in order to obtain the permission of the Hon. Minister of Finance.

The investments to be made in shares and foreign sovereign bonds should be routed through an Outward Investment Account (OIA), which can be opened and maintained with a Domestic banking Unit of any licensed commercial bank in any designated currencies. However, Rupees converted for sending abroad through an OIA cannot be retained in the OIA without making the investment.

References:

 
Setting up of an Overseas Office by Companies Incorporated in Sri Lanka

A general permission has been granted by the Controller of Exchange by Gazette Notification No 1686/52 dated 01.01.2011 for any company registered under Companies Act, No.7 of 2007 or partnerships registered in Sri Lanka to make payments to persons resident outside Sri Lanka for the purpose of setting up and maintaining of any branch, liaison, marketing, agency, project, representative or other similar offices (overseas offices), subject to the conditions stipulated in the above gazette.

Payment for this purpose shall  not exceed USD 100,000 or its equivalent amount in any designated foreign currency. Funds for this purpose should be transferred only through an Outward Investment Account (OIA) opened in a Domestic Banking Unit of any licensed commercial bank.

References: