Category: Daily Financial Times

The Bar Association of Sri Lanka will conduct its first forum in relation to the present discussion on the possible amendment of the Constitution of the Republic to extend the retirement age of Judges including of Supreme Court and the Court of Appeal on Saturday, 4 July 2026.

At this first forum, the position of the Bar Association of Sri Lanka in relation to this presently discussed possible amendment will be presented for public consideration.

Opposition Leader Sajith Premadasa yesterday called for Sri Lanka to adopt a whole-of-government, science-based approach to climate resilience, warning that the country has only a ‘limited window’ to prepare for the anticipated 2026-2027 El Niño cycle, which could trigger prolonged droughts followed by severe flooding.

Addressing the National Council for Disaster Management (NCDM), chaired by President Anura Kumara Dissanayake, he stressed that climate security had become a national priority that transcends political divisions, urging all stakeholders to unite behind a long-term national resilience strategy.

‘When the lives, livelihoods and security of our people are at stake, there should be only one side, and that is Sri Lanka,’ Premadasa said, adding that his proposals were intended to constructively support the Government’s disaster preparedness efforts rather than criticise ongoing initiatives.

Citing global scientific assessments, he warned that the developing 2026-2027 El Niño-Southern Oscillation could rank among the strongest in recent decades, increasing the risk of ‘climate whiplash’, a pattern of prolonged drought followed by severe floods.

He also stressed that Sri Lanka could no longer rely on responding to disasters after they occur and must instead shift towards anticipatory governance driven by scientific forecasting, risk assessments and early preparedness.

Premadasa outlined three key priorities; making anticipatory governance the foundation of national disaster management, treating climate resilience as a whole-of-Government responsibility involving all key Ministries and agencies, and recognising that climate resilience is inseparable from economic resilience, with food, water, energy, public health, infrastructure and fiscal stability requiring an integrated policy response.

Among the measures proposed were strengthening climate preparedness, improving integrated reservoir management and water security, promoting climate-smart agriculture, modernising early warning systems through impact-based forecasting, expanding disaster risk financing, enhancing preparedness for heatwaves and public health emergencies, improving the resilience of critical infrastructure as well as establishing a National Climate Risk and Disaster Intelligence Centre to support evidence-based decision-making.

Premadasa also suggested the preparation of a Presidential White Paper on National Climate Resilience and Disaster Preparedness to provide a long-term policy framework that would outlast successive administrations. Pointing to resilience initiatives in India and Australia, he said Sri Lanka should draw on international best practices, while developing solutions suited to local conditions.

The Opposition Leader reiterated that climate change does not distinguish between governments and oppositions, political parties or communities, calling climate resilience a shared national responsibility that must be guided by science, strengthened through national unity and sustained by long-term strategic planning.

Sri Lanka has formally launched a unified digital decision support platform aimed at transforming how the plantation sector is monitored, managed and planned, marking one of the most significant steps yet toward data-driven governance in agriculture-related industries.

The Plantation Sector Decision Support System (DSS), developed under the Integrated Digital Agriculture Transformation (IDAT) program was handed over to the Plantations and Community Infrastructure Ministry last week as a State-owned digital public asset.

The system consolidates data from seven major plantation-sector institutions, including the Sri Lanka Tea Board, Tea Small Holdings Development Authority, Rubber Development Department, Coconut Research and Development bodies and the Sri Lanka Cashew Corporation.

The project was developed under the IDAT program with support from the Digital Economy Ministry with technical contributions from global institutions including the World Bank. The Gates Foundation provided the essential support and assistance for this digital initiative. The MIT ESP Institute and the Food and Agriculture Organization (FAO) of the United Nations served as general partners, offering technical expertise and support. Key partners include Connect to Care Global Chairman Chanditha Samaranayake and his team along with the Sarvodaya Institute. This platform replaces fragmented reporting systems that previously operated independently across institutions, allowing policymakers to track tea, rubber, coconut and cashew sectors through a single interface with real-time analytics, subsidy tracking, weather impact assessment and production monitoring tools.

Speaking at the launch, Minister Vidyarathna said the sector has long relied on paper-based and institutionally siloed data systems that slowed decision-making and weakened policy responsiveness.

‘Digitalisation has become a major priority sector in the country. This system will be of great help in collecting information accurately and improving efficiency across plantation exports and production,’ he said, adding that the shift marks a move toward a ‘data-based Government’ capable of more precise and timely interventions.

The Minister said the platform would strengthen farmer services, improve monitoring of Government programs and support long-term sustainability in plantation crop management, while also reinforcing Sri Lanka’s broader digital public infrastructure agenda.

Plantations and Community Infrastructure Deputy Minister Sundaralingam Pradeep, Plantations and Community Infrastructure Ministry Secretary Gunadasa Samarasinghe, Presidential Adviser on Digital Economy Dr. Hans Wijeyasuriya, Digital Economic Ministry Secretary Waruna Sri Dhanapala, Senior Members of the World Bank’s Digital Agriculture Team Santoshkumar Vasudevan and Sunil Madan, Connect to Care Global Chairman Chanditha Samaranayake and international technical partners also attended the launch.

‘Land’ has long been central to Sri Lanka’s socio-economic development and political debate. It represents not only an economic resource but, over successive phases with evolving national priorities, it has also been a touchstone of identity, sovereignty, and social equity.

The post-independence governments treated land policy as a sensitive matter of sovereignty. Early measures such as the Finance Act, No. 11 of 1963 imposed a 100% tax on transfers of land to foreigners, reflecting apprehensions about foreign dominance in land ownership, the trend continued with amendments that extended restrictions to companies with significant foreign shareholding, encompassing policy that land remain primarily under national control.

By the early 2000’s, however, Sri Lanka’s development strategy increasingly relied on attracting foreign direct investment (FDI). The post-war period after 2009 marked a sharp surge in foreign interest in real estate, with luxury condominiums, coastal resorts, and infrastructure projects dominating urban and coastal landscapes. Though the influx of foreign capital drove economic growth, policymakers and civil societies raised concerns over affordability, displacement, and speculative acquisition of prime land by foreigners which could undermine the citizens’ access to housing, making them ‘tenants in their own country.’1 These concerns gave the policy impetus for restrictive legislative measures governing foreign participation in land; leading ultimately to the enactment of the Land (Restrictions on Alienation) Act, No. 38 of 2014, implemented with retrospective effect from January 2013.

This marked a drastic policy change from taxation to prohibition. The long-standing land policy in Sri Lanka, which balanced constitutional commitments to national development, social equity, and sustainable use with the imperative to attract foreign capital had shifted decisively with the Land (Restrictions on Alienation) Act, No. 38 of 2014, which, together with subsequent amendments in 2017 and 2018, recalibrated the legal landscape for both domestic and cross-border real estate transactions.

This article undertakes a critical analysis of the Act: tracing its historical evolution, clarifying its scope, evaluating its restrictions and exemptions, and examining how certain exemptions undermine its stated policy objectives of safeguarding national interests and promoting sustainable development. 2

Historical context and legislative evolution

The regulation of foreign ownership of land in Sri Lanka has historically reflected a balance between safeguarding sovereignty and encouraging development. The Finance Act No. 11 of 1963 marked the first major statutory step, introducing a hundred percent (100%) tax on transfers of immovable property to foreigners2. The measure was in line with the government’s protectionist economic policies of the 1960’s, which sought to reduce external economic influence while promoting national ownership of key assets. Far from a mere commodity, land was cast as a strategic resource requiring protection, the guiding imperative being the retention of national ownership.

The time to relook and recalibrate Sri Lanka’s land policy is now. The region is competing aggressively to secure investments, unless Sri Lanka recognises its potential and makes changes accordingly, the window of opportunity to securing long-term mandates in logistics, aviation, renewable energy, and modern agriculture will not stay open indefinitely. If reforms lag peer jurisdictions will continue to capture the projects, investment opportunities, supply chain anchors, talent, know-how, technology that could otherwise locate in Sri Lanka

Evolving foreign investment patterns and indirect foreign acquisitions through corporate vehicles brought about amendments to the Finance Act. The Finance (Amendment) Act, No. 8 of 2004 extended the hundred percent (100%) tax to transfers involving companies with more than Twenty Five percent (25%) foreign shareholding. While the extension closed a significant loophole, it retained a material gap, i.e. leases of land. Thus, foreign nationals were still able to secure long-term interests in land through leasehold arrangements, a channel that continued to expand in the years that followed.

With the end of the armed conflict in 2009, Sri Lanka actively sought foreign direct investment (FDI) as a pillar to strengthen its reconstruction and development agenda. While this inflow of capital helped accelerate economic growth, it also heightened concern amongst policymakers and public about preserving domestic ownership of land.

The cumulative pressures precipitated a policy shift toward more stringent regulation of foreign land acquisition; most notably, the 2013 Budget Speech of the President and Minister of Finance declared a prohibition on the sale of state land to foreigners. This stance, reflected in three letters dated 28December 2012, 2 March 2013, and 21 May 2013 whereby the Finance and Planning Ministry Director General instructed the Registrar-General of Lands, that no transfer of land was to be permitted to:

(a) a foreign national.

(b) a foreign company.

(c) a company incorporated in Sri Lanka with 50% or more foreign shareholding, subject to limited exceptions.

Although lacking formal legislative force, these administrative directives effectively created a nationwide regime that restricted foreign ownership of land.

The culmination of these policy shifts led to the enactment of the Land (Restrictions on Alienation) Act, No. 38 of 2014, which Parliament gave retrospective effect from 1 January 2013, thereby regularising administrative restrictions imposed in the interim. The Act imposes a categorical prohibition on freehold transfer of land to foreign nationals, foreign companies, and locally incorporated companies with Fifty percent (50%) or more foreign ownership, while introducing a distinct regime for leases of land, and prescribing associated registration and compliance requirements. In contrast to the previous tax-based framework, which permitted transfers subject to a prohibitive fiscal burden, the 2014 Act transformed the restriction into a blanket prohibition.3

Scope, objectives, and legal framework of the Act

The Land (Restrictions on Alienation) Act, No. 38 of 2014 (‘the Act’) constitutes the operative status presently governing foreign ownership of land in Sri Lanka. It is framed broadly to close indirect acquisition routes through corporate vehicles and to conserve domestic ownership of freehold land. The Act articulates its objectives through a combination of prohibitions, permitted forms of access, and limited statutory exceptions. In this way, the Act functions as the current baseline for regulating foreign access to land, replacing earlier fiscal deterrence approaches with a more rules-based framework of categorical restrictions with narrowly defined exceptions.

The objectives of the Act appear to encompass three primary policy aims. First, safeguarding national sovereignty; parliamentary debates at the Second Reading of the Bill repeatedly framed the measure as ensuring that ‘the ownership of Sri Lanka’s land remained with its citizens (as recorded in Hansard).’4 Second, protection of affordability and access; the post- war real estate boom, especially the Colombo high-end residential property market, witnessed a sharp escalation, by 2018 house prices had risen by over Fifty percent (50%), with average housing commanding values in excess of Rs. 160 million.5 This rapid growth, partly driven by foreign demand for luxury condominiums, raised concerns about affordability for locals. Third, the Act aims to ensure that FDI flows through regulated channels such as condominium ownership and long-term leases, rather than outright acquisition of freehold land. Taken together, these aims situate the Act as an instrument for conserving citizen ownership while structuring, rather than excluding, foreign investment in land.

Core prohibitions on transfer of title in land to foreigners

Section 2(1) of the Act prohibits the transfer of title in land in Sri Lanka to (a) a ‘foreigner’, (b) a company incorporated in Sri Lanka under the Companies Act where the foreign shareholding, either direct or indirect is Fifty percent (50%) or above; (c) a foreign company, and such prohibition is deemed operative from 1st January 20136

Furthermore, a significant feature of the Act is, Section 18, which provides that ‘any alienation of land effected in contravention of the provisions of this Act, shall be void and shall have no effect in law’

This statutory design, however, raises several transactional complexities. For one, the prohibition of land transfers to Sri Lankan incorporated companies with fifty percent (50%) foreign ownership. While section 2(2)(a) requires the company’s foreign shareholding to remain below fifty percent (50%) for at least twenty (20) consecutive years from the date of transfer, section 2(2)(b) of the Act extends the restrictions to instances where foreign shareholding subsequently exceeds the fifty percent (50%) threshold, whether by direct or indirect transfer of shares or through inheritance upon the death of a shareholder, the 4 original transfer of land is rendered void from the date of the increase. This is subject to limited ‘cure’ windows i.e. twelve (12) months for listed companies meeting Colombo Stock Exchange thresholds; six (6) months for other companies; after which validity is restored from the date the shareholding falls back below 50%.

Although the core purpose of the provision seems to prevent gradual alienation of land through incremental share acquisitions by foreigners, these moving thresholds generate transactional complexities, thus, title can fail mid-stream by virtue of post-closing share movements or succession events, and compliance turns into an ongoing condition. The Act reinforces this by imposing registrational gatekeeping, i.e. proof of fifty percent (50%) foreign ownership at the time of registration7 and continuing confirmations (six months) by the company secretary, with notations on the folio if the threshold is crossed.8 Accordingly, in practice, parties must draft for dynamic risk (change-of-control covenants, restrictions on indirect transfers, succession planning, and monitoring undertakings), because the statute makes corporate shareholding composition a determinant of land title over time.

Furthermore, the remedy provided by law wherein, listed companies are afforded up to twelve months, and unlisted companies up to six months, to reduce foreign ownership below the 50 percent threshold, [in terms of section S.2(2)(b)] creates instability, as the validity of title effectively hinges on the company’s ability to restructure its shareholding within strict timelines.

Lanka has significant potential to use land policy to enhance productively rather than limit it. There are number of strategic reforms where land could be utilised and monetised for the development of the country. One such area is modernisation of agriculture and utilising agricultural land in Sri Lanka. Given Sri Lanka’s strategic location Sri Lanka has a competitive advantage to utilise its land policy to develop sectoral pathways for productive land use

Furthermore, the retrospective nullification of a validly registered transfer creates uncertainty in title, thus a validly- registered title can fail mid-stream raising questions as to whom does the title reverts to, and whether innocent third parties, such as mortgagees or bona fide purchasers are protected. The Act contains no express vesting or saving provisions on these points, leaving material uncertainty at the interface with general property and registration law.

Similarly, because transfers become void ab initio from the date of crossing the threshold, later dealings premised on the title (such as mortgages or sale) lack a legal foundation.

Furthermore, although the act provides for direct or indirect foreign shareholding to not be above 50% in relation to companies incorporated in Sri Lanka, there is still no practical process for monitoring the use of subsidiaries to secure foreign ownership or trusts to obscure beneficial ownership. Thus, a foreign investor might indirectly control more than fifty percent (50%) of a company’s shares through subsidiaries, without triggering scrutiny at the level of the Sri Lankan incorporated entity. Similarly, trust arrangements may mask the true foreign beneficiary of shares where a Sri Lankan national holding a particular property for the benefit of a foreign national or a company.

However, it is pertinent to note that, in view of the Companies (Amendment) Act, No. 12 of 2025 under the new Section 130A all companies must disclose the beneficial ownership of a 5 company to the registrar at the time of incorporation or within twenty (20) working days of the issue of any shares or transfer of shares.9 The details inter- alia include full names, nationality and identity details, addresses and birth place, tax identification, details of beneficial owners of the company, nature and extent of the beneficial ownership, etc. Furthermore, such details are required to be given by every shareholder, (within ten working days of subscription of any shares, or transfer of shares);10 and every Director or Secretary of the company is required to disclose details of such beneficial interest to the Registrar.11

Furthermore, the company must maintain a record of beneficial ownership register12 and updates to the beneficial ownership must be reported to the registrar13 these obligations also apply to any offshore company incorporated outside Sri Lanka and overseas companies registered under the Companies Act.

Moreover, with the introduction of Sections 130A to 130J, the framework for beneficial ownership disclosure under the Companies Act has become significantly clearer and more comprehensive. These provisions establish a transparent mechanism for identifying and maintaining records of individuals who ultimately own or control companies14, including foreign shareholders and entities. By mandating detailed disclosure, periodic updates, access to authorities,15 public accessibility,16 and strict penalties for non-compliance,17 the law now provides a credible foundation for verifying and recognising genuine ownership structures, including matters involving foreign participation in land transactions. This enhanced transparency directly supports the implementation of the Land (Restrictions on Alienation) Act, ensuring that foreign ownership and control are properly identified, monitored, and regulated in accordance with national policy objectives.

Trust arrangements have often been used as a mechanism to circumvent statutory restrictions on foreign land ownership. In the case of Saroja Nisansala V Aberfoyle,18 (2011 case)19 the Supreme Court considered a matter where a Sri Lankan national had purchased land in her own name, from funds provided by a foreign national, allegedly in order to evade the payment of 100% tax on the sale. Supreme Court looking into the circumstances of the case recognised that the funds being provided by the foreign national, created a constructive trust, because the trust in itself was not unlawful under section 4(1) of the Trusts Ordinance. Court also leaned on the principle that an ‘unlawful intention bilaterally entertained is no longer an absolute bar to restitution,’ drawing both from earlier Sri Lankan case law, such as Muniyandy Natchie V Kayambo,20 and South African authority in Jajbhay V Cassim (1939). Thus, reflecting the judicial willingness to protect equitable rights. Court found rationale in preventing the unjust enrichment: in that, if the Sri Lankan holder was permitted to retain the land absolutely, the foreign financier would be left without a remedy.

Accordingly, the Sri Lankan courts have often prioritised fairness and restitution over strict adherence to statutory prohibitions. Thus, although section 2(2) of the Act is designed to prevent indirect land alienation, its operation must be weighed against competing equitable rights, even where the underlying arrangement appears to contravene statutory policy. 6

Thus, in such instances, the more pragmatic approach would be upon the determination of the beneficial interest to allow the party to use that window to rectify the transfer, and not allow a third party to make profit.

These associated complexities of the Act can be mitigated through targeted clarifications, disclosure reforms, phased amendments and practice directions with reasonable transition periods. Thus, inter- alia

(i) clarifying legal consequence of void transfers (who the title reverts to, consequence for bona fide purchases and mortgages, including proving of legal remedies for bona fide purchasers, interim mortgages etc.);

(ii) strengthening disclosures (requiring disclosure on certificates of foreign shareholding, imposition of notice requirements when the threshold criteria is approached or crossed, and imposing sanctions for misstatements); and

(iii) regulating beneficial ownership by looking through nominees and indirect control etc., would in effect enhance certainty, reduce litigation risk, and preserve the Act’s policy aims without unduly burdening compliant transactions.

Exemption to restriction on sale of lands to foreigners

The Land (Restrictions on Alienation) Act, No. 38 of 2014 provides a suite of exemptions, subsequently broadened by the Land (Restrictions on Alienation) (Amendment) Act, No. 21 of 2018. The key exemptions are set out in Section 3 of the Act, some important exemptions are as follows;

i. Condominium Ownership

Section 3(1)(b), of the Act21, No. 38 of 2014 permit foreigners to acquire condominium units (specified under the Apartment Ownership Law) on or above the fourth floor of a building. The exemption attempted to draw a balance between preserving land for nationals, while encouraging urban high-rise developments. However, the Amendment Act No. 21 of 2018, removed the floor level restriction. Foreigners are now permitted to acquire condominium units specified under the Apartment Ownership Law, on any level of a building, provided the entire value is paid upfront through an inward foreign remittance prior to the execution of the deed of transfer.

It is interesting to note that, Sri Lankan Law does not specify a maximum number of condominiums which a foreigner could purchase. Accordingly, where a foreigner purchases all units of a condominium complex/ building, the foreigner technically becomes the owner of the entire land and property, given that in terms of the Apartment Ownership Law22 where a person purchases an condominium/apartment, they become an absolute owner of the 7

individual apartment unit (parcel) and also acquire an undivided share of land and common elements.

ii. Strategic Development Projects

Another major exemption is provided for in terms of section 3(2) of the Act, which empowers the Minister, in consultation with the Minister in charge of Lands and with prior written approval of the Cabinet, to exempt from the operation of section 2, foreign entities engaged in sectors of banking, finance, insurance, maritime, aviation, advanced technology, or infrastructure development which are identified as ‘Strategic Development Projects’ (SDP’s) under the Strategic Development Projects Act, No. 14 of 2008.

However, this exemption for ‘Strategic Development Projects’ have been a topic of much debate. Proponents of the exemption argue that the Act creates a purposeful avenue to accommodate strategic, high value projects of national importance to be carried out without undue delay. Moreover, the mechanism vests considerable discretion on the Executive to facilitate projects aligned with national development goals. This exemption can thus be utilised as a tool to promote the country’s investment objectives. However, critics of the exemption contend that the executive is vested with discretionary power and although legislative intent is to provide for promotion of nationally significant investments, the extent of this power raises significant concerns regarding criteria, transparency and consistent application.

These apprehensions have been further echoed by the International Monetary Fund (IMF), with the IMF Deputy Legal Department Unit Chief Joel Turkewitz calling for the abolition of the SDP framework, citing risks of corruption and weakened fiscal accountability.23 The IMF’s Governance Diagnostic Assessment has accordingly included removal of the SDP Act as an priority recommendation for enhancing public sector transparency, aligning investment incentives with public interest, and restoring confidence in policy predictability.24

Moreover, the reliance on SDP’s reflects broader policy inconsistencies. i.e. while the Act ostensibly upholds a protectionist stance, in practice the exemption can create well connected foreign investors to bypass general restrictions, undermining the regimes integrity, equitable access and deterring public trust and investor confidence.

However, for a country like Sri Lanka it is a must to court foreign direct investments to attract capital, technology, know- how, access to new markets and expand to uncharted territories. Thus, having opportunities to attract such major FDI is in the best national interest. However, any resort to such exemption must be governed by clear objectives, and publicly available criteria which is applied uniformly, and published by Gazette, with specific time bound procedures and monitoring processors. Furthermore, such decisions should not rest purely on discretion; rather a transparent, rules-based framework that discloses beneficiaries and 8 terms are essential to ensure a level playing field for all investors, and to minimise opportunities for favouritism or corruption.

The framework for the criteria could be based on the amount of FDI, the creation of jobs, transfer of new technology, sustainable development objectives, access to new global markets etc. which is aimed at overall strategic development of Sri Lanka.

Section 3(3) of the Act introduces an exemption similar to the Strategic Development Projects exemption. The provision empowers the Minister, in consultation with the Minister responsible for Lands and with written approval of the Cabinet, to exempt foreign companies engaged in international commercial operations from section 2, where land is purchased for the purpose of locating or relocating global or regional operations, or for the establishment of a branch office, formalised by Order published in the Gazette.

At a conceptual level, section 3(2) and 3(3) are designed to attract foreign direct investment, with section 3(2) focusing on large-scale Strategic Development Projects and section 3(3) targeting multinational corporations seeking to establish regional bases in Sri Lanka. Collectively, they reflect the government’s ambition of positioning the country as a regional hub for commerce, finance, and logistics.

However, the provision presents serious legal and governance challenges, in that the Act does not define a ‘foreign company engaged in international commercial operations’ and sets no eligibility criteria, placing wide discretion with the Cabinet. The absence of statutory guidance creates risks of arbitrariness and inconsistency, generates investor uncertainty about qualification, and weakens transparency and accountability. However, these matters can be addressed with the proper regulatory mechanism.

iv. Listed companies

The 2018 Amendment²5 introduces a significant exemption to the general prohibition by

allowing the transfer of title of any land on or after 1st April 2018, to a company

incorporated in Sri Lanka and listed on the Colombo Stock Exchange (CSE). Importantly, this exemption applies to companies with a direct or indirect foreign majority shareholding. Thus, after 1st April 2018 a listed company with a foreign shareholding exceeding 50% may acquire freehold title to land, overriding the restriction in Section 2(1)(b).

The underlying policy rationale is twofold. First, listed companies are subject to continuous disclosure obligations, which reduce the risk of opaque ownership arrangements and facilitate easier regulatory monitoring. Second, the exemption encourages foreign investment to be channelled through formal, regulated corporate vehicles, thereby supporting capital market development and economic growth. By granting this 9 exemption, the legislature sought to strike a balance between restricting uncontrolled foreign ownership and promoting foreign participation through transparent investment structures.

However, the amendment does not avail any purchase of land by a listed company with a majority of foreign shareholding prior to the effective date. Accordingly, it appears that restrictions on foreign ownership of land still applies where a listed company owning property with a majority of local shareholders subsequently increases its indirect / foreign shareholding to 50% or above. Therefore, such transactions will continue to be prohibited and void and shall have no effect in law.

Beyond the exemptions stated above, the Act provide further exemptions under section 3 that serve practical and diplomatic purposes. Thus;

Land transfers to diplomatic missions or recognised international, multilateral, and bilateral organisations are excluded from restrictions imposed by the section 2, consistent with Sri Lanka’s obligations under the Diplomatic Privileges Act.²6 land may be transferred by succession, gift, or testamentary disposition to the next of kin of a Sri Lankan owner, even where the heir is a foreigner, reflecting the principle that inheritance rights should not be curtailed by nationality.

A further exemption is granted to dual citizens, who, although holding foreign nationality, retain a recognised legal and political connection to Sri Lanka under the Citizenship Act.

The Act also addresses financial realities by exempting land transfers to banks and finance leasing institutions with foreign shareholding above fifty per cent in specific situations. These include transfers arising from the enforcement of mortgages, loan recovery, or lease agreements under the the Recovery of Loans by Banks (Special Provisions) Act, No. 4 of 1990, and other relevant legislation.

The exemptions under section 3, while inter- alia justified on grounds of diplomacy, succession, dual citizenship, or financial necessity, the broader ministerial, Cabinet approved discretionary exemptions in terms of Section 3 (2) and 3(3) create uncertainty. The result is a dual-track regime, rigid restrictions on ordinary foreigners but flexible exceptions for powerful corporate actors, international institutions, and politically significant projects. This duality can undermine both the credibility and equity of the law. A more transparent, rules- based exemption system grounded in clear statutory definitions and supplemented by a targeted tax regime would better balance the twin goals of safeguarding national sovereignty and attracting sustainable foreign investment. 10

Leases and the Land Lease Tax

Initially Land (Restrictions on Alienation) Act, No. 38 of 2014 extended to include leases of land to foreigners. Section 5(1) and 6²7 provided for foreign individual and entities to lease land, for a period not exceeding ninety-nine (99) years, subject to a fifteen percent (15%) Land Lease Tax (LLT) on the total lease value, payable upfront. This regime availed foreigners to obtain leasehold rights subject to the specified regulations.

This regime, introduced certain exceptions. Section 6 (2) and 6 (3) introduced a reduced land lease tax to 7.5 percent for specified cases, such as (a) leases to Sri Lankan-incorporated companies with =50% foreign shareholding that have operated locally for at least ten consecutive years, (b) certain group company structures, (c) condominium parcels (subject to floor/tenure conditions), and (d) land within BOI, tourism, industrial zones or other areas designated by regulation. Section 7 then fully exempt the LLT for defined categories. Which inter- alia included (a) leases to diplomatic missions and specified international organisations, (b) certain condominium leases funded by inward remittances, (c) dual citizens, (d) Cabinet approved investment structures prior to 2013, (e) Cabinet approved Gazette exemptions for Strategic Development Projects and for foreign companies establishing regional or global operations or branch office, (f) leases connected to projects of national importance.

This lease regime underwent a dramatic shift with the enactment of the Land (Restrictions on Alienation) (Amendment) Act, No. 3 of 2017. The amendment introduced a new section 5A completely abolished the Land Lease Tax to leases executed on or after 2016. Thus, at present the LLT does not apply to foreign individuals and companies and as such Foreigners and companies with =50% foreign ownership may lease land for up to 99 years without such LLT obligation.

This reform marked a clear policy departure from the original protectionist and revenue generating rationale of the 2014 Act. The removal of the Land Lease Tax was welcomed by sections of the business community and international investors, as it reduced the cost of establishing long-term projects in tourism, manufacturing, and services.

Impact of the Land (Restrictions On Alienation) Act on investors

Sri Lanka’s location, astride the main East -West sea lanes of the Indian Ocean make it a natural trade, logistic and service hub; an obvious vantage point for foreign investors. In this backdrop the land policy in Sri Lanka has evolved over time into a more investor friendly structure, where it aims to preserve citizens ownership to free hold land while opening pathways for foreign participation and attract Foreign Direct Investment into the Country.

From an Investor perspective, the Land (Restrictions on Alienation) Act now provides for a clear framework on the prohibitions and the available exemptions for foreigners, enabling 11 investors to take decisive action. Thus, the new regime has replaced ad hoc practice with defined rule based pathways. The post 2018 Act expressly channels foreign participation into condominium ownership and long-term leases (up to 99 years). The removal of the Land Lease Tax on new leases has materially benefited investors. Sri Lanka’s BOI and zone ecosystems (industrial, logistics, tourism) give land linked projects a workable framework zoning, utilities, and incentive administration within which to structure compliant deals. For investors, the combination of statutory certainty and leasehold economics reduces legal risk and makes it more straightforward than in purely discretionary regimes.

Be that as it may, the Act creates certain notable frictions. The blanket ban on direct acquisition of freehold land by foreigners’ limits collateralisation, and can increase the cost of capital for land incentive developments. Furthermore, the five (5) year bar on mortgages involving foreign parties creates complications on debt structuring, forcing heavier reliance on equity, parent guarantees, or offshore security packages just when projects are riskiest.

From a Sri Lankan standpoint there must be some level of calibration of the land policy to retain its policy aim of preserving land for the citizens of Sri Lanka while at the same time enhancing Foreign Direct Investments.

Land policy in other jurisdictions

8.1 Foreign ownership and lease of land in Singapore

Singapore regulates foreign ownership through the Residential Property Act (RPA), which sets out a comprehensive and transparent system. Section 2 of the RPA defines ‘foreign person’ broadly, including non-citizens, permanent residents, and foreign-controlled companies. Section 3(1) prohibits such persons from acquisition of land and residential property including bungalows, detached, semi-detached, terrace houses, and vacant residential land remains subject to a rigorous approval process by the Land Dealings Approval Unit (LDAU), part of the Singapore Land Authority.

Foreign individuals and entities are, however, allowed to purchase certain categories of property without prior government approval such as Private condominium and apartment units (not landed), Strata landed houses within approved condominium developments, Commercial/industrial properties (offices, shop units, certain retail spaces), Some leasehold interests (typically less than seven years).²8

The Act further provides that any transaction in breach of these provisions is void ab initio (s 3(2)). In contrast, foreign acquisition of condominiums or apartments in developments of six storeys or more is permitted without approval under section 4(1), reflecting a deliberate policy distinction between scarce landed housing and high-rise property.

Singapore’s framework relies heavily on fiscal instruments to regulate foreign demand and preserve affordability. The most significant of these is the Additional Buyer’s Stamp Duty 12 (ABSD), currently set at 60 per cent for foreign individuals purchasing residential property.²? This, alongside standard Buyer’s Stamp Duty (BSD) and property tax, creates steep transaction costs that deter speculative buying while generating substantial state revenue. Rather than outright bans, Singapore uses tax levers to balance openness to foreign capital with protection of domestic housing interests.

By contrast, Sri Lanka’s Land (Restrictions on Alienation) Act, No. 38 of 2014 adopts a far less nuanced approach. Section 2 imposes a blanket prohibition which is broader and more rigid than Singapore’s framework, Moreover, Sri Lanka’s Act is complicated by wide ranging exemptions under section 3, which are granted at the discretion of the Cabinet of Ministers. The absence of a transparent approval process similar to Singapore’s Land Dealings Approval Unit (LDAU), can contribute to criticism that Sri Lanka’s regime is opaque and susceptible to political influence.

An Investor Friendly Land (Restrictions On Alienation) Act

The regulation of foreign ownership and leasing of land in Sri Lanka has always been dominated by protectionist impulses, animated by concerns over sovereignty, affordability, and speculative acquisition. While these are legitimate policy objectives, the Land (Restrictions on Alienation) Act, No. 38 of 2014 has created a regime that is rigid on one hand, as it imposes a blanket prohibition on freehold ownership by foreigners; and creates inconsistent flexibilities on the other, through wide exemptions, many of which are discretionary and politically mediated.

Targeting and calibrating administrative refinements

Against this background, a calibrated approach which preserve citizen ownership of freehold land while lowering avoidable frictions should be encouraged. While comparative practice in the region which range from approval based models to designated zone openness, Sri Lanka need not import any model wholesale, rather it can refine the Land (Restrictions on Alienation) Act to maintain its sovereignty objective and improve bankability, transparency, and execution. The aim is not deregulation but better regulation with clear rules, credible disclosure, and reliable timelines.

Thus, one way is targeted modifications, alterations and amendments to the law that could ease these frictions without abandoning the ‘citizen first’ principle is (i) clarifying consequences where voidness is triggered, (ii) strengthen transparency through measures such as disclosure procedures to deter nominee circumvention while giving bona fide investors predictable compliance steps; (iii) improve bankability in the early stages, thus, consider narrowly framed lender safeguards to unlock cheaper debt especially during the initial five years; and (iv) design criteria, procedures and guidelines to tighten transparency around discretionary exemptions, making such exemptions predictable, Coupling these legal reforms with features such as time-bound permitting and strong zone level facilitation, 13

introduction of single window interface for strategic land-linked projects, etc. would preserve the Act’s sovereignty objective while making Sri Lanka a competitive FDI destination.

Policy developments

First and foremost, Sri Lanka should reconsider its categorical prohibition on freehold ownership by foreigners. The assumption underlying section 2 of the Act, that, foreign freehold title will ‘alienate’ land from the national patrimony maybe on closer inspection, misguided. Unlike commodities, land being immovable will only lead to attracting foreign investors, capital generation, development of unutilised and underutilised land (through residential, commercial, or industrial projects) which in turn generate employment, infrastructure, and long term tax revenues. A more open policy would therefore enable Sri Lanka to attract sustained foreign direct investment (FDI) in sectors such as tourism, logistics, and high-end real estate.

Comparative experience bears this out. Singapore, for example, preserving landed housing for citizens, and however complements this policy with steep fiscal disincentives such as the Additional Buyer’s Stamp Duty. Australia, likewise, allows foreign acquisitions subject to a ‘national interest’ screening process, while simultaneously imposing state-level surcharges.³° In both jurisdictions, foreign participation in land is welcomed but carefully regulated, not categorically excluded. Replacing prohibition with a calibrated, tax-based system would better balance sovereignty and openness.

Second, the complete abolition of the Land Lease Tax (LLT) in 2017 was a strategic misstep. When originally enacted under section 5 of the 2014 Act, the LLT imposed a 15 per cent levy on the total lease value of land leased to foreigners for up to 99 years. Although criticised for imposing a significant upfront burden, the LLT served a dual purpose: it generated immediate foreign currency inflows into the Treasury and ensured that foreign lessees contributed to state revenue in proportion to the long-term benefits derived from Sri Lankan land.

By abolishing the LLT through the 2017 Amendment, Sri Lanka eliminated this valuable fiscal instrument, thereby foregoing substantial deposits that could have bolstered foreign reserves during periods of economic vulnerability. A reformed LLT structured to spread payments over the lease term, or tiered according to land value and project type could be reintroduced. Such a tax would re-establish a revenue stream.

Also, Sri Lanka should establish a transparent, rules based approval system modelled on Singapore’s Land Dealings Approval Unit (LDAU) or Australia’s Foreign Investment Review Board (FIRB). Such a body would evaluate applications for foreign acquisitions or leases according to published criteria, including the scale of investment, economic contribution, employment generation, and compliance with environmental and planning laws. Decisions 14 should be subject to judicial review to prevent abuse of discretion. Transparency would reduce uncertainty for investors while enhancing accountability for policymakers.

The way forward

In today’s context it is axiomatic that Sri Lanka must push forward in their objectives of attracting Foreign Direct Investment (FDI). Thus, enhancement of FDI is a practical necessity for the next stage of economic growth in the nation. While several key factors work in collaboration to influence Foreign Direct Investment into the country, an investment friendly land policy is a central lever. Accordingly, the land policy, while safeguarding and preserving national sovereignty must be geared to create pathways that attract foreign investment.

The Land (Restrictions on Alienation) Act, No. 38 of 2014 and subsequent amendments have strived to maintain this balance. However, Sri Lanka’s land policies need to be upgraded in line with contemporary trends in order to keep pace with regional and global developments. Thus, land policy must be strategically aligned with objectives of enhancing Foreign Direct Investment.

A glance at advanced nations demonstrates a trend to pair sovereign concerns with regulated openness towards foreign participation of land. Foreign participation is calibrated through permits and regulatory procedures, condominium ownership/ leasing regulations, intensives, stamp duty surcharges and approval regimes rather than a blanket prohibitions. Even historically restrictive nations such as Singapore, have adopted various mechanisms such as approval processes to regulate land ownership and relax land policies to capture the opportunities of global market.

Nations like the United Arab Emirates (notably Dubai) actively encourage foreign participation in real estate and land markets. Dubai allows foreigners to hold freehold title in designated zones and long term lease or usufruct interests elsewhere, with clear registration pathways. These models channel capital through defined tenures, approvals, and fiscal tools, providing predictability without surrendering policy control.

By contrast, Sri Lanka’s current restrictive approach could lead to strategic isolation and missed opportunities. Unlike the early 1970’s and 1980’s where countries in the region adopted closed economy policies, today many regional peers have opened up their economies and compete for investments. Sri Lanka has not fully matched that shift in its land regime.

Contemporary regional economies depend on openness, sustained investment inflows, and integration with global markets. Without competitive channels for FDI, Sri Lanka risks losing out on capital, expertise, know-how, technology and market access impeding Sri Lanka’s progress toward its next stage of development. Accordingly, Sri Lanka’s land policy must be calibrated to serve as an instrument for economic advancement rather than a deterrent of FDI. 15

Sri Lanka has significant potential to use land policy to enhance productively rather than limit it. There are number of strategic reforms where land could be utilised and monetised for the development of the country. One such area is modernisation of agriculture and utilising agricultural land in Sri Lanka. Thus, land policy should incentivise cultivation and agro processing projects that employ local farmers, supports technology advancements, and increase agricultural export. Such initiatives align with Sri Lanka’s investment objectives by generating foreign exchange, upgrading value chains, and raising rural incomes.

In order to do that Sri Lanka must continue to evolve and match the competitiveness in the region. Given Sri Lanka’s strategic location Sri Lanka has a competitive advantage to utilise its land policy to develop sectoral pathways for productive land use. With a clearer more bankable scheme, land can support modernise Maritime services, Aviation and MRO (making Sri Lanka a hub for maintenance, repair and overhaul for aviation needs. Thus, Sri Lanka could host third party MRO’s if land policy supports long-term hangar/apron leases, bonded warehousing, streamlined customs, and international approvals, clear bankable land/lease terms and BOI or airport-zone facilitation which will attract investors and lenders.) Information technology (IT) industries, renewable energy zones, energy infrastructure (oil refining and storage) etc.

Realising this potential requires land regulation to evolve towards a more is simplified, transparent, predictable, liberalised and investment oriented regulatory framework that allocates land efficiently (principally through clear, bankable leases and strata routes), protects the public interest, and gives investors certainty. When properly aligned this agenda would enable Sri Lanka to utilise its land resources productively to support sustainable economic growth and strengthen its role as a regional economic centre.

The time to relook and re calibrate Sri Lanka’s land Policy is now. The region is competing aggressively to secure investments, unless Sri Lanka recognises its potential make changes accordingly, the window of opportunity to securing long-term mandates in logistics, aviation, renewable energy, and modern agriculture will not stay open indefinitely. If reforms lag peer jurisdictions will continue to capture the projects, investment opportunities, supply chain anchors, talent, know-how, technology that could otherwise locate in Sri Lanka. Acting now aligns land policy with FDI objectives while the opportunity is still within reach.

Bibliography

Sri Lanka, Parliamentary Debates (Hansard), Vol. 222, 20 October 2014, Pg. 979

K Kanag – Isvaran and Sankhitha Gunaratne, ‘A Look at the Land (Restrictions on Alienation) Act No 38 of 2014 Clarity or Uncertainty’ [2015] XXI Bar Association Law Journal 14-21

Sri Lanka, Parliamentary Debates (Hansard), Vol. 222, 20 October 2014, Pg. 959

The foreign demand for rupee-denominated Government securities gathered significant momentum, with holdings rising for a third consecutive week.

The week ending 25 June recorded a substantial net inflow of Rs. 14.51 billion, the largest weekly foreign inflow in over three years, since 8 June 2023, driving total foreign holdings up to Rs. 135.86 billion.

The outcome at last Fridays Treasury Bond auction saw the yield curve flattening from the 4-year duration to the 10-year duration as the term premiums were seen narrowing.

The entire offered amount of Rs. 60 billion was raised at the first phase of the auction while the direct issuance window will be opened for an additional 10% of the offered amount on each duration at its weighted averages until 3.00pm today (30 June).

The bids received to accepted amount ratio stood at a staggering 3.17 times.

Maturity-wise the results were as follows:

The shorter tenor 15.10.30 maturity was issued at a weighted average yield of 11.44%, marginally above its pre-auction secondary market rate of 11.35%-11.40%.

The 15.03.35 maturity was issued at the weighted average yield of 11.88%, below its pre-auction secondary market rate of 11.85%-12.00% (see table for details of the auction).

The secondary Bond market remained largely range-bound during the week, with yields consolidating despite some volatility.

Strong buying interest, particularly in the 2030 maturities, briefly pushed yields lower midweek before profit taking prompted a partial reversal. Activity moderated ahead of the Treasury Bond auction as investors adopted a wait-and-see approach. Overall, market activity remained healthy while yields ended the week slightly higher on the short end, while the rest of the yield curve was broadly unchanged.

In the secondary Bond market, the 15.03.28 maturity changed hands within the range of 10.60%-10.6225%, while the 01.05.28 maturity traded within the range of 10.64% to 10.60%. The 15.10.28 maturity traded within the range of 10.6550% to 10.6350%.

Moving into the 2029 segment, the 15.06.29 maturity changed hands at the rate of 10.92%, while the 15.12.29 maturity touched a weekly low of 10.90%, before trading back up at 11.00%.

In the 2030 space, the 01.03.30 maturity changed hands at the rate of 11.05%. The 01.08.30 maturity touched an intraweek low of 11.14%, before trading back up to 11.30%. Similarly, the 15.10.30 maturity traded down to a low of 11.15% prior to the auction, before trading up to 11.40%.

Further along the curve, the 15.01.33 maturity changed hands within the range of 11.60%-11.55%. The 01.11.33 maturity traded within the range of 11.65% to 11.60%. The 15.06.34 maturity traded within the range of 11.70% to 11.65%.

Corporate restructuring is simultaneously an art and a science. It is a discipline that demands both technical mastery and strategic judgment, the capacity to identify the right instrument for the right purpose, and the wisdom to deploy it with precision. For advisers, in-house counsel, and finance professionals operating in Sri Lanka’s evolving regulatory landscape, this dual competency has never been more consequential.

The science: Knowing the toolkit

The first imperative is command of the available tools. Corporate restructuring does not operate in a vacuum. It draws from a rich body of statute and practice; the Companies Act No. 07 of 2007, the Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act, No. 12 of 2026, the Foreign Exchange Act, the Securities and Exchange Commission Act, and the Bills of Exchange Ordinance etc, each contributing a distinct set of instruments that the skilled practitioner must know with fluency.

Companies Act: The primary instrument box

The Companies Act provides the broadest and most frequently deployed toolkit. At the capital structure level, a company may issue new shares, ordinary, preference, or redeemable , through a public or private placement, or conduct a rights issue to raise fresh equity from existing shareholders on a pro-rata basis. Share consolidations reduce the number of shares in issue by combining multiple shares into one unit, whilst share splits achieve the inverse, increasing liquidity by subdividing existing shares. Bonus issues capitalise retained earnings or reserves by issuing script shares to existing shareholders, restructuring the equity base without any cash movement.

On the distribution side, the Act contemplates cash dividends, in-specie dividends (where assets rather than cash are transferred to shareholders ) and scrip dividends, where shareholders receive new shares in lieu of a cash payout. Each carries a distinct commercial rationale and a distinct tax profile.

The Act also governs reductions of capital, a powerful mechanism enabling a company to return surplus capital to shareholders by coupling with share buyback, write off accumulated losses against stated capital, or simplify a complex capital structure. Undertaken by special resolution and, where required, court confirmation, a capital reduction can fundamentally reposition a company’s balance sheet. Share buybacks provide a related tool, enabling a company to repurchase its own shares from the market or from specific shareholders, concentrating ownership and returning value without a formal dividend.

At the structural level, amalgamations under the Companies Act allow two or more companies to be fused into a single combined unit with assets, liabilities, and undertakings succeeded to by the amalgamated company by operation of law.

Schemes of arrangement, sanctioned by court, offer a flexible framework for reorganising shareholding, settling creditor claims, or restructuring group entities, provided the requisite statutory majorities and judicial approval are obtained.

Beyond capital, the Act governs the conversion of a company’s legal form, from private to public, from a guarantee company to a share company, as well as the voluntary liquidation and striking off of entities that have served their structural purpose within a group.

Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act, No. 12 of 2026: Restructuring under stress

Successful corporate restructuring is about more than just knowing the law; it is about using the right tools to solve the right problems. Whether you are navigating the Companies Act, managing financial distress under the new insolvency laws, or handling cross-border regulations, each step requires careful planning. Most importantly, tax considerations should never be an afterthought, they must be a part of the initial strategy to ensure the process adds real value rather than unnecessary costs

The Rescue, Rehabilitation and Insolvency (Corporate and Personal) Act introduces a distinct and specialised set of tools for companies navigating financial distress.

At the pre-insolvency end of the spectrum, the rescue procedure provides a court-sanctioned statutory moratorium, a suspension of creditor enforcement actions, during which a licensed insolvency practitioner is appointed to assess the viability of the business and formulate a rescue plan. The rescue plan itself is a remarkably flexible restructuring instrument: it may provide for the full or partial write-off of debt, the conversion of debt to equity, deferred or rescheduled payment arrangements, the disposal of non-core assets, operational downsizing, or any combination thereof, subject to approval by the prescribed majority of creditors.

Where a company or individual is insolvent but retains underlying viability, the rehabilitation procedure offers a court-supervised framework for structured repayment and reorganisation, balancing creditor recovery with the preservation of the enterprise as a going concern.

For companies beyond rehabilitation, corporate liquidation , whether voluntary or court-ordered, governs the orderly realisation of assets and the settlement of creditor claims in the statutory order of priority; within a group restructuring context, the deliberate liquidation of a redundant or loss-making subsidiary can itself constitute a purposeful restructuring step.

Cutting across all of these procedures is a critical tax dimension: the Act amends Section 175(6) of the Inland Revenue Act to confer super-priority status on APIT obligations arising after the appointment of an insolvency practitioner, ranking such obligations ahead of secured and unsecured creditors alike, a provision that carries direct and material consequences for the design of any rescue or rehabilitation transaction.

Capital markets as a restructuring vehicle

For listed companies, the Securities and Exchange Commission Act and the Listing Rules of the Colombo Stock Exchange introduce an additional layer of both constraint and opportunity. Initial public offerings and secondary listings are themselves restructuring events, transforming the shareholder structure and the governance architecture of an enterprise.

Takeovers and mandatory offers, governed by the SEC’s Takeovers and Mergers Code, regulate the acquisition of controlling interests and trigger obligations that must be carefully navigated in any share-based restructuring. Rights issues by listed companies are subject to SEC oversight, as are share buybacks conducted through the exchange. The substantial acquisition of shares and the disclosure of material interests impose transparency obligations that shape the sequencing and structure of any group reorganisation involving a listed entity.

Foreign Exchange Act No. 12 of 2017: Managing the cross-border dimension

Where restructuring has an international dimension, whether through foreign shareholders, cross-border intra group transfers, offshore financing arrangements, or the repatriation of dividends, the Foreign Exchange Act becomes a central regulatory framework.

Inward and outward remittances, the issuance of shares to non-residents, the grant of intragroup loans across borders, and the pledging of Sri Lankan assets to foreign lenders all require Central Bank approval or compliance with the relevant directions issued thereunder.

A restructuring that overlooks foreign exchange rules, whether at the design stage or in execution, risks regulatory non-compliance that can unwind an otherwise sound transaction.

Structuring intragroup obligations

Less commonly considered in restructuring discussions, the Bills of Exchange Ordinance nonetheless plays a practical role in formalising intragroup financial arrangements. Promissory notes and bills of exchange are instruments frequently employed to document intra group loans, deferred consideration obligations, and vendor financing arrangements within a restructured group. Their proper execution, endorsement, and enforcement are governed by the Ordinance, and their characterisation has direct implications for stamp duty exposure and, in certain circumstances, withholding tax obligations on interest payments.

The art: Deploying the right tool

Knowledge of the toolkit is only the starting point. The art lies in selecting and combining the appropriate instruments to suit a specific set of commercial, legal, and financial circumstances.

A restructuring designed to separate a profitable subsidiary from a distressed holding entity demands a different configuration from one intended to consolidate group shareholding ahead of a capital markets transaction.

A management buyout calls for different instruments than a cross-border intra group reorganisation. The skilled practitioner reads the circumstances, the commercial objective, the stakeholder map, the regulatory environment, the timeline, the exit horizon, and constructs a solution that is both legally coherent and commercially effective.

The tax dimension: Where success or failure is determined

If science and the art define the framework, it is the tax dimension that ultimately determines whether a restructuring succeeds or fails. Every instrument in the toolkit carries tax consequences.

Capital reductions, amalgamations, and in-specie distributions each may or may not trigger income tax analysis, particularly around capital gains, and the application of transfer pricing rules to intragroup transactions.

Stamp duty is attached to certain instruments. VAT implications arise where asset transfers are structured as going concern disposals or where in-specie distributions involve taxable supplies.

Withholding tax obligations on dividends, interest, and royalties must be mapped against any applicable double tax treaties where cross-border elements exist.

The Exchange Control dimension adds a further layer: the tax treatment of remittances and the characterisation of intragroup funding as debt or equity can differ significantly across regulatory frameworks.

Failure to integrate tax planning from the earliest stage of restructuring design, not as an afterthought but as a foundational input, can transform a commercially sound transaction into a costly liability. Conversely, a well-structured, tax-efficient reorganisation creates genuine and durable value.

In short, successful corporate restructuring is about more than just knowing the law; it is about using the right tools to solve the right problems. Whether you are navigating the Companies Act, managing financial distress under the new insolvency laws, or handling cross-border regulations, each step requires careful planning. Most importantly, tax considerations should never be an afterthought, they must be a part of the initial strategy to ensure the process adds real value rather than unnecessary costs. By balancing technical knowledge with practical, clear-headed decision-making, professionals can effectively guide companies through change and position them for long-term stability.

(The author, an Attorney-at-Law (LLB), FCMA(UK), CGMA, FCMA, was awarded Tax Practice Leader of the Year 2024 (ASPAC) by International Tax Review (ITR) and was a top-four finalist for Tax Litigation and Disputes Practice Leader of the Year)

Colombo Dockyard PLC (CDPLC) successfully concluded its 43rd Annual General Meeting (AGM) on 25 June 2026, marking its first AGM following the acquisition of a majority stake by Mazagon Dock Shipbuilders Ltd., (MDL), India.

The Company said the new strategic alignment with MDL is expected to unlock fresh growth avenues, enhance technical capabilities, and strengthen Colombo Dockyard’s competitive position in the regional maritime sector.

A key priority going forward will be expanding its footprint in the Indian market, leveraging MDL’s strong industry linkages. Colombo Dockyard is targeting deeper engagement with major Indian maritime players, including the Dredging Corporation of India (DCI) and the Shipping Corporation of India (SCI), as part of its growth strategy.

Chairman Capt. Jagmohan (Retd) described the partnership as a significant turning point, positioning the Company to scale operations and capture new market opportunities. He also expressed total confidence in the current Colombo Dockyard management team and workers to turn around the Company.

From left: S. Senthi Nandhanan, Vish Govindasamy, Chathura Wickrematileka, Ruchir Agrawal, Managing Director and CEO Thimira S. Godakumbura, Chairman Capt. Jagmohan (Retd), Biju George, Chaminda Gunasinghe, Chanaka Jayamaha, and Dilrukshi Kurukulasuriya

Managing Director and CEO Thimira S. Godakumbura presented the annual review of operations and outlined the Company’s forward outlook, highlighting steady performance across shipbuilding, ship repair, and heavy engineering segments despite a challenging global environment. He emphasised a renewed focus on market expansion, operational efficiency, and capitalising on opportunities arising from stronger Indo-Sri Lanka maritime collaboration.

Shareholders approved all resolutions at the AGM, including the adoption of financial statements and other statutory matters.

With MDL’s backing, Colombo Dockyard is positioning itself to accelerate growth, deepen regional integration, and reinforce its role as a leading maritime hub in the Indian Ocean – continuing its odyssey of excellence.

The new Board of Directors include Chairman Capt. Jagmohan (Retd), Managing Director and CEO Thimira S. Godakumbura, Ruchir Agrawal, Biju George, Vish Govindasamy, S. Senthi Nandhanan, Dilrukshi Kurukulasuriya, Chaminda Gunasinghe, Chathura Wickrematileka and Chanaka Jayamaha.

SANASA Development Bank PLC (SDB bank) has announced that Executive Director/CEO Kapila Ariyaratne will step down from his position with effect from 6 October 2026, in accordance with the terms of his contractual arrangement with the Bank.

He will concurrently cease to serve on the Board of Directors on the same date.

SDB bank also announced Manoj Akmeemana, presently serving as Deputy Chief Executive Officer, as Chief Executive Officer with effect from 7 October 2026 subject to the approval of the Central Bank of Sri Lanka, This transition is in line with the Bank›s formally approved succession plan for the position of Chief Executive Officer.

Akmeemana was appointed as Deputy CEO in January this year. He is a highly accomplished banking professional with over 35 years of experience in the financial services sector. Prior to joining SDB bank, Akmeemana held several senior leadership roles at Sampath Bank PLC, building a reputation for delivering results in complex, high-impact functions spanning credit, risk, and operational oversight. He last served as Senior Deputy General Manager – Credit Control, Credit Administration, Recoveries and Legal, leading teams focused on strengthening credit discipline, improving monitoring frameworks, and ensuring alignment with regulatory and internal policy requirements.

Kapila, a renowned banking professional with extensive experience in the financial sector, joined SDB bank as CEO in October 2024. Previously he served as the Director/Chief Executive Officer of Seylan Bank PLC for over a decade. Prior to that he served at Nations Trust Bank PLC, People’s Bank PLC, ABN Amro Bank, Arab National Bank (Saudi Arabia), and Mashreq Bank in Sri Lanka.

Sampath Bank PLC and Sri Lanka Ports Authority (SLPA) have jointly launched the first real-time USD payment solution for the maritime industry, eliminating traditional manual payment processes and streamlining foreign currency transactions across the country’s shipping and logistics ecosystem.

The initiative marks another industry-first innovation from Sampath Bank and a significant step forward in the digitalisation of trade-related financial services.

Powered by Sampath Bank’s FC Quick Connect platform, the solution enables shipping lines, freight forwarders, logistics providers and other port users to make instant USD payments to the SLPA, with real-time settlement and automated notifications improving speed, transparency and operational efficiency across the sector.

Developed in response to the Ports Authority’s transition to USD-based billing for selected services, the initiative addresses a long-standing need for a faster and more reliable payment mechanism capable of handling growing transaction volumes within the industry.

The platform integrates Sampath Bank’s transaction banking capabilities and digital infrastructure to deliver an end-to-end digital payment experience, replacing traditional manual payment processes with instant settlement and real-time visibility for both customers and the SLPA.

Sampath Bank PLC Managing Director/CEO Sanjaya Gunawardana said: ‘The collaboration demonstrates how private-sector financial institutions and public-sector organisations can work together to remove operational bottlenecks and improve efficiency in critical economic sectors. The solution delivers secure, real-time payment capabilities that enhance convenience, strengthen transparency and support the continued modernisation of port-related services. As another industry-first innovation from Sampath Bank, this initiative reflects our commitment to developing technology-led financial solutions that respond to evolving industry needs while supporting national economic priorities.’

SLPA Chairman Dr. Parakrama Dissanayake said: ‘Digital transformation within the maritime sector is essential to strengthening Sri Lanka’s position as a regional logistics hub. Sampath Bank has consistently demonstrated a strong commitment to innovation, and this initiative represents another important milestone in advancing digitalisation across the country. More than a banking solution, it is a strategic initiative that will enhance efficiency, effectiveness and competitiveness within Sri Lanka’s maritime sector.’

Beyond addressing immediate payment requirements, the solution establishes a scalable framework that can be extended to other port operators and maritime service providers in the future. Its implementation is expected to enhance customer experience, improve cash flow efficiency and support faster trade facilitation across the industry.

The Civil Aviation Authority of Sri Lanka (CAASL) successfully inaugurated the 21st Steering Committee Meeting (SCM) of the Cooperative Aviation Security Program – Asia Pacific (CASP-AP) on 23 June 2026 in Negombo, Sri Lanka, bringing together aviation security leaders, policymakers, and technical experts from across the Asia-Pacific region.

A key highlight of the Opening Ceremony was the official transfer of the CASP-AP Chairmanship from Singapore to Sri Lanka. During the ceremony, Captain Daminda Rambukwella, Director General of Civil Aviation and Chief Executive Officer of the Civil Aviation Authority of Sri Lanka, assumed the Chairmanship of CASP-AP for the 2026-2027 term. This significant milestone reflects the confidence placed in Sri Lanka’s leadership within the regional aviation security community and underscores the country›s growing role in advancing aviation security cooperation across the Asia-Pacific region.

Addressing the gathering, Captain Daminda Rambukwella reaffirmed Sri Lanka’s commitment to maintaining the highest standards of aviation security and highlighted the importance of collaboration, innovation, and knowledge-sharing in responding to evolving security challenges. He emphasised that strong regional partnerships remain essential to ensuring the safety, security, and resilience of the global aviation system.

The 21st CASP-AP Steering Committee Meeting has attracted more than 70 delegates representing 22 Member States and participating States, including the United States of America, Australia, New Zealand, Malaysia, Singapore, Hong Kong (China), Viet Nam, and several South Asian countries, together with representatives from across the Asia-Pacific region. The meeting also welcomed representatives from the International Civil Aviation Organisation (ICAO), including officials from the ICAO Asia and Pacific Regional Office in Bangkok, Thailand, and ICAO Headquarters in Montreal, Canada, together with senior officials of the Civil Aviation Authority of Sri Lanka (CAASL) and representatives of regional aviation organisations. The strong international participation underscores the importance of regional collaboration and collective efforts to strengthen aviation security across the Asia-Pacific region.

ICAO Asia and Pacific Office Regional Director Tao Ma commended Sri Lanka for its continued commitment to strengthening aviation security and fostering regional cooperation. He emphasised the importance of collaborative efforts among Member States in addressing evolving aviation security challenges and acknowledged the valuable contribution of CASP-AP in enhancing aviation security capabilities across the Asia-Pacific region. He also congratulated Sri Lanka on assuming the CASP-AP Chairmanship and expressed confidence in the country›s leadership in advancing the program›s objectives during its tenure.

As the principal decision-making body of CASP-AP, the Steering Committee Meeting plays a vital role in reviewing program activities, setting strategic priorities, promoting capacity-building initiatives, and enhancing collaboration among Member States. The forum provides an important opportunity for stakeholders to address emerging aviation security challenges, exchange best practices, and support the effective implementation of international aviation security standards and recommended practices.

The Opening Ceremony was attended by Ports and Civil Aviation Minister Aruna Karunathilake, Deputy Minister Eng. Janith Kodithuwakku, Ministry Secretary W.W.S. Managala, Civil Aviation Authority of Sri Lanka Chairman Sunil Jayaratne, Director General and CEO Captain Daminda Rambukwella, ICAO Asia and Pacific Office Regional Director Tao Ma, and representatives Lita Lee, Tony Blackiston, Wee Sihui Glory, Civil Aviation Authority of Singapore Acting Deputy Director-General and CASP-AP outgoing Chair together with distinguished delegates representing CASP-AP Member States, participating States, and partner organisations.

The Steering Committee Meeting will review the progress of CASP-AP activities, discuss strategic priorities, evaluate ongoing projects, and identify future initiatives aimed at further strengthening aviation security throughout the Asia-Pacific region. The deliberations will facilitate the exchange of experiences, best practices, and technical expertise among participating States and organisations.

The first day of the meeting concluded successfully with productive discussions and active participation from delegates, reaffirming the collective commitment of CASP-AP Member States to maintaining robust and effective aviation security frameworks throughout the region.

As the host State and newly appointed Chair of CASP-AP, Sri Lanka remains committed to working closely with ICAO, CASP-AP Member States, and international partners to promote a safe, secure, and sustainable aviation environment across the Asia-Pacific region.