The Hon. Nimal Palihena

¶ 01 Hon. Deputy Chairperson of Committees, today we debate amendments to the Companies Act, No. 7 of 2007. Our aim is to establish the facilities to run the country in an orderly manner, correct ethical and legal deficiencies, and move forward. A country like ours cannot function in isolation from international standards.

¶ 02 Although proposals for such reforms go back to around 1989, for 36 years many governments did not act. The key focus today is identifying the ultimate beneficial owners within the legal personality of a company. While companies are treated as legal persons, no one examined who ultimately owns them. The Registrar of Companies registers companies and maintains lists of shareholders. Under these amendments, the Registrar is given stronger authority to obtain and maintain information and, where the public has a need, to request and obtain it.

¶ 03 Limited liability companies provide legal protection and access to capital, loans and tax concessions, but history shows misuse—money laundering and even terror financing through corporate vehicles. Therefore, identifying beneficial owners is important. It will also build confidence among foreign investors and the public. Aligning with international standards, including implementation of FATF Recommendation 24, will help increase investment and trust.

¶ 04 There has been misuse of the term “limited”—often no clarity on how capital was provided, how funds were earned, or who the real owners are. That poses a social risk. Hence, under these amendments, beneficial ownership details must be provided to the Registrar or maintained with the company secretary.

¶ 05 I also note the role of the Institute of Chartered Accountants of Sri Lanka in adopting international accounting and auditing standards suited to our environment. However, although accounting and audits are mandated, timely and proper filings with the Registrar have lagged. These amendments will make submission of information to the Registrar mandatory.

¶ 06 This reform will strengthen public trust directly and indirectly. Foreign investment last year compared to this year has grown because the international community has greater confidence in this Government, established with the National People’s Power, which has brought political stability and acts responsibly. These amendments will further enhance investment.

¶ 07 If there are suspicions about annual reports or filings, the Registrar presently lacks sufficient powers; under this Bill, the Registrar will have authority to seek information and refer matters to the proper authorities. After 36 years, adopting these significant reforms is an achievement. Our intention is not to control people by harsher laws but to encourage lawful business, development and order. I request everyone’s cooperation to pass and implement these necessary reforms.

¶ 08 Thank you.