Companies (Amendment) Act No. 12 of 2025: Legal reforms and comparative insights

THE enactment of the Companies (Amendment) Act No. 12 of 2025 marks a significant development in Sri Lanka’s corporate legal framework. Certified on 4 August 2025, this amendment to the Companies Act No. 07 of 2007 introduces a series of legal reforms aimed at enhancing corporate transparency, governance, and compliance with international standards.

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This article outlines the key functional changes introduced by the amendment, assesses their implications for companies operating in Sri Lanka, and provides a comparative overview with Australia’s Corporations Act 2001, a benchmark from a developed jurisdiction.

Key legal changes

1. Single shareholder incorporation

Companies (excluding those limited by guarantee) may now be incorporated with a single shareholder.

This shareholder may be a natural person, a corporate entity, or the Secretary to the Treasury.

2. Prohibition of bearer shares

The issuance of bearer shares and share warrants to bearer is now prohibited. Existing bearer instruments must be converted to registered shares within 60 days.

3. Beneficial ownership disclosure

New provisions (Sections 130A-130J) require companies to maintain a register of beneficial owners. A beneficial owner is defined as a natural person who holds at least 10% ownership or exercises effective control. Noncompliance may result in fines up to Rs. 1 million or imprisonment up to 10 years.

4. Governance enhancements