The Hon. Wasantha Samarasinghe - Minister of Trade, Commerce, Food Security and Co-operative Development

¶ 01 Hon. Deputy Speaker, I move, “That the Bill be now read a Second time.”

¶ 02 We bring amendments to the Companies Act due to frequent reports of fraud and abuse via companies, including shell companies in the names of household staff or drivers.

¶ 03 The Financial Action Task Force (FATF), formed in 1989 by G7 and others, issues global standards on money laundering, terrorist financing and weapons proliferation financing — 40 Recommendations updated in 2012. Sri Lanka is a member of the FATF Asia-Pacific Group since 1997. We have complied with 39 of the 40 Recommendations; the remaining is Recommendation 24 on “Beneficial Ownership,” not yet in our Companies Act.

¶ 04 Attempts since 2017 stalled for obvious reasons, given hidden ownership and laundered assets. Non-compliance risks grey-listing or blacklisting, which impedes international financial dealings. Sri Lanka was grey-listed in 2010–2011 and 2017–2019. We must prevent money laundering, terrorist financing and proliferation financing to avoid such constraints.

¶ 05 Accordingly, we amend multiple sections and introduce a new Chapter on Beneficial Ownership so the Registrar of Companies can obtain and maintain records to identify ultimate beneficial owners.

¶ 06 Sri Lanka has undergone mutual evaluations in 2006, 2014 and is due in 2026. Many Asia-Pacific countries, including India, already implement beneficial ownership transparency. We will require all companies — listed, private, unlimited — to file beneficial ownership information within six months of enactment, to identify the natural persons who ultimately own or control companies. While companies are legal persons, we must know who owns, directs and benefits. Upon lawful request, such information will be available.

¶ 07 This will deter concealment of assets, laundering and unexplained wealth being funneled into the stock market. Persons acquiring, say, 5–10% stakes must disclose source of funds and tax compliance. We therefore amend principal provisions including sections 4, 11, 51, 52, and introduce new sections 130A–130E under a new Chapter on Beneficial Ownership. Consequential amendments will be made to sections 206, 211, 270, 272, 341, 424, 471, 472, 484, 487, 508, 513, 529, etc.