The Law Of The Country Law Company Business Partnership Essay

Published Date: 02 Nov 2017

The Companies Act (No. 17 of 1982) contains the rules, procedures, accounting and reporting requirements for companies incorporated or registered in Sri Lanka. The registration of companies, filing of accounts and annual returns are done with the Registrar of Companies.

TYPE OF COMPANIES 

As per the law of the Country one may establish the following types of companies: 

Private Companies 

A private company must consist of at least two and not more than fifty members. It must have at least one director. A private company cannot invite public subscription for its shares. 

Public Companies 

At least seven members are required to form a public company (there is no upper limit). It must have at least two directors. Public companies may invite public subscriptions for their shares or debentures and other securities, and can also be listed on the stock exchange. They cannot commence business without a business commencement certificate.

Peoples Companies

Characteristics of peoples companies are as follows;

Minimum No. of members is 50.

Normal value of the share cannot exceed Rs.10/=.

Minimum No. of Directors is 3 and each shall hold at least one share.

Directors to be elected by shareholders of company.

Directors shall retire annually but is eligible for re-election.

Director shall not be a director of another people’s company.

Off shore Companies 

A company registered within or outside Sri Lanka may register itself in Sri Lanka as an offshore company to carry on any business outside the shores of Sri Lanka. If a company registered outside Sri Lanka registers itself as an offshore company, it is deemed to have been incorporated in Sri Lanka. An offshore company cannot conduct any business in Sri Lanka.

Subsidiaries

To establish a business in Sri Lanka foreign companies can incorporate as a local subsidiary company. Following incorporation, a subsidiary in Sri Lanka must comply with all statutory requirements imposed on domestic companies. 

Branches 

A company incorporated outside Sri Lanka may establish a place of business in Sri Lanka by registering a branch office with the Registrar of Companies. Applications for registration must be made within one month of establishing a place of business in Sri Lanka. Generally approval from the relevant line ministry would be required before the registration can be completed. The liability of a branch extends to its foreign assets.

Liaison/Representative Offices 

A company incorporated outside Sri Lanka may maintain its presence in Sri Lanka through a representative office, and is of similar status to that of a branch office. It is however, prohibited from engaging in any trading or investment activity or accruing any turnover in Sri Lanka. No tax incident arises since it is not permitted to trade. Therefore, the question of permanent establishment is not relevant.

Joint Venture Company 

A joint venture can be with other Sri Lankan companies or foreign entities. A joint venture business may be incorporated or carried on as an unincorporated business similar to that of a partnership. Joint ventures have become popular in recent years; particularly in export oriented projects.

Classification or types of Registered Companies.

Follow are the types of companies that can be registered under the Provisions of Companies Act of Sri Lanka.

Companies limited by shares

The liability of the share members limited only to the remaining unpaid shares own by them. These types of companies are very common in Sri Lanka. These companies must have share capital.

Companies Limited by Guarantees

The liability of a member is limited or restricted to the amount each has undertaken to contribute to the assets of the Company in liquidation or dissolution of the same. These companies may or may not have share capital.

Unlimited Companies

The liability of a member is unlimited. These companies may or may not have share capital.

The companies which are registered under the Companies Act of Sri Lanka.

REGISTRATION PROCEDURE OF A COMPANY 

Step 1 Decide the Company Name 

A person either a professional or a member of the public who is wishing to register a company must first search the database of the registered companies for possible similar names that are already being registered. 

A company shall not be registered by a name which-

is identical with that by which a company in existence is already registered, or so nearly resembles that name as to be calculated to deceive, except where the company in existence is in the course of being desolved and signifies its concent in such manner as the Registrar requires; or

Contains the words "Chamber of Commerce", unless the company is a company which is to be registered under a licence granted under section 21 without the addition of the word "Limited" to its name.

Except with the consent of the Minister, given having regard to the national interest, no company shall be registered by a name which contains the words-

"President", "Presidential" or in the opinion of the Registrar suggests, or is calculated to suggest, the patronage of the President or connection with the Government or any department thereof; or

"Municipal" or "incorporated", or in the opinion of the Registrar suggests, or is calculated to suggest, connection with any Municipality or other local authority or with any society or body incorporated by Act of Parliment; or

"Co-operative" or "Society"; or

"National", "State" or "Sri Lanka" or in the opinion of the Registrar suggests, or is calculated to suggest, any connection with the Government or any department thereof.

Step 2 Select Request Type 

There are three types of requests

Name Approval

Name Approval & Incorporation by Members

Name Approval & Incorporation by Capitol

Step 3 Pay for name Request and Attach Memorandum & Articles of Association 

Once the availability of the Name is verified, the requestor need fill the Name search form (i.e. A16). One has to pay for the name approval a fee of Rs.265 initially. One may simultaneously submit a draft copy of the Memorandum & Articles of Association. Or this could be submitted at a later date after the name is approved. The form A 16 and the Memorandum & Articles of Association are examined by at the public information counter. More information will be requested depending on the manner in which the forms have been filled. This may be done by e-mail. If the name includes initials they will ask for what the initials stand for. 

Step 4 Name Verification by DRC 

The Name verification document is sent to the database administrator who will run a search for similar names which he will list it out and send it to the registrar. 

Step 5 Approval of Name 

The registrar has the sole authority to approve the name and either he or his delegate authority to approve the Memorandum & Articles of Association. He will ether request for more information, a change or will approve the name. He will examine the content of the Memorandum & Articles of Association and approve the document. 

Step 6 Submission of forms 5, 36A, 46 and 47 

Once the name and the Memorandum & Articles of Association are approved the requestor has to submit forms 5, 36A, 46 and 47 and two copies of the approved Memorandum & Articles of Association. A fee of Rs 135 will be charged for each form on submission. 

Form 5 Declaration of Compliance

Form 36a Intended Location of Registered Office

Form 46 Consent to Act As A Director

Form 47 Listsof People Who Have Consented To Be Directors 

The incorporation based on the authorized share capital and charges for stamps, as well as the fee for the Articles of Association should be paid at this point. 

Step 7 Incorporation of Company 

The registrar has the sole authority to approve Incorporation. He will ether request for more information if clarifications are required on the drafts attached. He will examine the content of the Memorandum & Articles of Association and all other necessary forms and approve/reject based on the information given. The DRC may inform the applicant via e-mail once the decision has been made.

REQUIRED FORMS 

For Incorporation

Memorandum

Articles of Association

Form 5: Declaration of Compliance

Form 36A: Intended location of Registered Office

Form 46: Consent to Act as a Director

Form 47: List of Persons who have Consented to be Directors

For Commencement of Business

Form 48: Particulars of Directors or Secretaries and of any Changes Therein

Form 36: Notice of Situation of Registered Office or of any Changes Therein

FEES 

Matter in respect of which fee is payable

For registration of a company limited by shares:

If the nominal capital does not exceed Rs. 250,000 the sum of Rs. 3250.

If the nominal capital exceeds Rs. 250,000 but does not exceed Rs. 500,000 the sum of Rs. 365 for each Rs. 50,000 or part of Rs. 50,000 in excess of Rs. 250,000 for nominal capital in addition to the fee payable under (i) above.

If the nominal capital exceeds Rs. 500,000 but does not exceed Rs. 1,000,000 the sum of Rs. 190 for each Rs. 50,000 or part of Rs. 50,000 in excess of Rs. 500,000 of nominal capital in addition to the fee payable under (i) and (ii).

If the nominal capital exceeds Rs. 1,000,000 the sum of Rs. 165 for each Rs. 150,000 of nominal capital in addition to the fees payable under (i) (ii) and (iii) above.

Provided that no company shall be liable to pay in respect of nominal share capital, on registration or afterwards, any greater amount of fee than Rs. 13,575.

For registration of a Company not having a Share capital

If the number of members stated in the articles does not exceed twenty-five the sum of Rs. 1755.

If the number of members stated in the articles, exceeds twenty-five but does not exceed One Hundred, the sum of Rs. 1755 with the addition of Rs. 165 for each twenty-five members, or fraction of twenty-five members in excess of the first twenty-five.

If the number of members in the articles exceeds One Hundred but is not stated to be unlimited the sum of Rs. 2250 with the addition of Rs. 325 for each 50 members or fraction of 50 members after the first One Hundred. If the number of members stated in the articles is to be unlimited, the sum of Rs. 13,575.

For Registration of a company limited by guarantee and having a share capital or an unlimited company having a share capital.

The same amount as would be charged for registration of the company were limited by shares of the same amount as would be charged of the company had no share capital whichever is higher.

Amount to be credited to a Bank to defray the expenses of an Off-shore Company for the purpose of its office in Sri Lanka. U.S. Dollars 52,375

Amount to be credited to a Bank in Sri Lanka to defray the expenses of an Off-shore shipping Company registering vessels under Sri Lanka Flag of opportunity scheme, for the purpose of its office in Sri Lanka. U.S. Dollars 405

Registration of an Off-shore company irrespective of the nominal capital. Rs. 24,725

Registration of an Off-Shore Shipping Company irrespective of the nominal capital registering vessels under Sri Lanka Flag of opportunity scheme. U.S. Dollars 405

For registration of an increase in the share capital of any company.

An amount equal to the difference (if any), between the amount which would have been payable on first registration by reference to its capital as increased and the amount which would have been so payable by reference to its capital immediately before the increase.

Registration of a place of business in Sri Lanka by a Foreign Company.

For registration of an increase in the membership of a company limited by a guarantee or an unlimited company.

For delivery of any document by the act required to be delivered, sent, given or forwarded to, or filed with the registrar other than the Memorandum or abstract required to be delivered to the registrar by a receiver or manager or the statement required to be sent to the registrar by the Liquidator in winding-up in Sri Lanka.