ECONOMYNEXT – Transparency International Sri Lanka (TISL) has filed legal action in the island nation’s Supreme Court challenging a Bill to amend the Companies Act No. 07 of 2007, saying that it falls short of establishing beneficial ownership.
The amendment introduces a Beneficial Ownership Information (BOI) register, which TISL contended falls short of establishing an effective and transparent register.
“Beneficial ownership of a company is a national security imperative, in as much as, anonymous or opaque corporate structures are frequently used for transnational illicit financial flows, funding of organized crime and terrorism, fronts for foreign influence operations, and laundering proceeds of crime,” TISL said.
A BOI register mandates companies disclose individuals who own or control them, thus exposing hidden ownership structures that facilitate corruption, money-laundering, illicit financial flows, conflicts of interest and tax evasion.
“Despite the importance of this, the draft Bill falls short of establishing an effective and transparent BOI register.
“Clause 7 of the Bill which adds Sections 130A–130J on BOI, restrict public access to meaningful information.
– Section 130A(6) merely obliges the Registrar to maintain a list, without mandating proactive, digital publication or integration with other state databases.
– Section 130D limits public access to only the full name and nature of ownership – and even that is released solely on an individual, upon-request basis.
This structure locks the Board of Investment behind cumbersome procedures, delays access and deprives investigators, journalists and the public of timely data, TISL argued.
“The limited information required to be disclosed at the outset is insufficient for the meaningful identification of hidden assets, conflicts of interest, and other potential unlawful activity.”
The government has promised to establish a publicly accessible online BOI register.
“By opting instead for a request-driven, partial-information model, the Bill contradicts those commitments and weakens Sri Lanka’s credibility.
“Ineffective access also conflicts with international standards, and the IMF Governance Diagnostic Assessment (2023), both of which call for open, verifiable BOI registers.
“It prevents Obliged Entities such as banks, law firms, accountants, auditors, real-estate agents, etc. access to vital information to enhance anti-money laundering efforts.
“Time is critical in asset recovery, fraud detection, and the prevention of asset dissipation.
“Watchdogs, journalists and Authorities must be able to trace, flag, and freeze assets swiftly.”
The petition requests the Supreme Court to determine that Clause 7 of the Bill is inconsistent with, and/or violates Article 12(1) and Article 14A of the Constitution that enshrines the Right to Equal Protection of the Law and Right of Access to Information. (Colombo/Jun23/2025)