1 February, 2018
In terms of the new Exchange Control Regulations in Sri Lanka (New Regulations) that came into effect on the 20th of November 2017 Sri Lankan companies, partnerships and individuals (Resident Persons) are permitted to invest in shares, units, debt securities and sovereign bonds outside Sri Lanka subject to the following limits (Prescribed Investment Limits):
- Listed Companies – US$ 2,000,000
- Unlisted Companies – US$ 500,000
- Partnerships – US$ 300,000
- Individuals – US$ 200,000
In determining whether the Prescribed Investments Limits have been reached, the aggregate investments made by the party under the New Regulations as well as the repealed Exchange Control Act will be considered.
Investments exceeding the above mentioned Prescribed Investments Limits require special approval of the Monetary Board. An application seeking such approval must be submitted to the Head of the Department of Foreign Exchange (HDFE).
All Investments must be made through Outward Investment Accounts (OIA) maintained by Resident Persons with a licensed commercial bank in Sri Lanka. A Resident Person may only have one OIA with a single licensed commercial bank. Special approval of the HDFE is required to maintain OIAs with more than one licensed commercial bank.
All income from investments (including sale proceeds, dividends, interest, etc.) must be routed through the same OIA within 3 months of payment.
The Prescribed Investment Limits will not apply to Resident Persons who acquire or hold shares overseas without having to pay any consideration – ie. If no consideration has to be paid then the limits do not apply.
The Prescribed Investment Limits also do not apply where a person acquires shares pursuant to an Employee Share Option Scheme – ie. Where the employees of the overseas parent company’s branch office in Sri Lanka are entitled to acquire the parent company’s shares.
For further information, please contact:
Savantha De Saram, Partner, D.L.&F. De Saram.
savantha@desaram.com
