Story
Dubai-based small business owner sought our assistance with setting up a tea business in Sri Lanka, and they were working on a tea brand. The client’s interest was to open a business in Sri Lanka for exporting tea to the UAE.
“If you’re a foreign domiciled applicant, Counselit Company Secretary will help you file incorporation forms and get your company started in less than 2 weeks and our trademark agents will help you file and register a trademark to protect your business name or product name”
The Challenges
Does 40% foreign ownership rule apply to me?
In Sri Lanka, 100% foreign owned companies are only allowed in IT services, contruction and tourism sectors. Any foreign owned company entering into tea manufacturing business in Sri Lanka can only hold 40% of the ownership of company shared. This means a foreign owned company is legally required to work with a Sri Lankan national or a company as their local partner.However, the client's business activities did not invovle any value addition to the tea before exporting. They did not manufacture tea but still tea is one of the Sri Lankan Exports subjected to Internationally determined quota restrictions, therefore we advised the client to partner with a local company or local individual as a shareholder. The client agreed to proceed with 60% sharreholding.
Should I get BOI approval for my tea business?
Foreign investment up to 40 % of equity in a company proposing to carry on a business activity listed growing and primary processing of tea, rubber, coconut, cocoa, rice, sugar and spices. need to obtain approval from BOI. However, the client overcame the requirement for BOI approval by giving 40% of equity capital to local business partner.How do I obtain export license?
The client needed to register as an exporter with the Export Development Board, Sri Lanka Customs and Inland Revenue Department for TIN and VAT.
Results
Prepared incorporation forms
Drafted articles of association
Public notice of incorporation
Ownership of business premises confirmed with deed of lease agreement
TIN Registration
Obtained export licenses from Tea Board
Registration with SL Customs
