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Which Entity Is Right for You in Sri Lanka: LLC vs PLC vs Branch vs Representative Office? 

Abhishek Kumar
01 Dec, 2025 01 Dec, 2025
Business entity types in Sri Lanka

Sri Lanka is a developing country that offers exciting and growing opportunities for businesses. As you plan to start a business in the beautiful island country, choosing the right entity is an important decision for entrepreneurs.  

Each type of entity will give you different benefits and affect your company’s taxation, liability and ownership. You will have to choose the right structure in order to leverage the benefits and enjoy the operational flexibility. The choice of entity will also affect your tax compliance and compliance with the local regulations. In addition to this, it is also important to understand the business registration process, compliance obligations and documentation required for each specific entity.  

Looking to enter the South Asian Market? This blog will help you differentiate between LLC vs PLC and Branch vs Subsidiary to understand and choose the best entity for your business registration in Sri Lanka.  

Guide to Opening a Business in Sri Lanka  

Sri Lanka is located in a geographically strategic location along the important shipping routes of South Asia. The country has an educated and skilled workforce, investor-friendly policies and an ideal investment environment. Sri Lanka is becoming a favourite destination for business as the country has shown resilience in recovering its economy and offers an excellent support system for both local and foreign entrepreneurs.  

In Sri Lanka, you can choose from various legal entities to start a business, such as an LLC if you want limited liability and no minimum share capital, but if you wish to raise capital for your company, you can select a PLC, which will allow you to list your company on the stock exchange.  

To legally operate your business in Sri Lanka, the first step is to choose the right legal entity depending on your business activity. After which, you will have to fill out the application form with the documents through the official website of the Registrar of Companies (RoC). 

Types of Entities in Sri Lanka for Doing Business  

Sri Lanka has different types of legal entities for business; each type is different and offers tailored benefits for the businesses. Therefore, it is important for you to choose the right entity for business operations. The different types of entities for business setup in Sri Lanka are: 

  • Sole Proprietorship: A structure for single individuals who are looking to start a business in Sri Lanka as the sole owner. It allows you to have 100% control over business operations.  
  • Limited Liability Company (Pvt Limited Company): A Limited Liability Company is a structure that is preferred by both foreign entrepreneurs and residents in Sri Lanka. It offers limited liability and does not have any minimum share capital requirement.   
  • Public Limited Company (PLC): A Public Limited Company (PLC) is a structure for companies that are seeking to raise capital from the public. PLCs can be listed on the Sri Lankan stock exchange. It offers limited liability, and the personal assets are protected from company loss.  
  • Offshore Companies: An offshore structure is for companies that are registered in Sri Lanka but conduct business activities outside of the country. An offshore company must be registered with the Registrar General of Companies in Sri Lanka. 
  • Branch Office: A branch office is a structure for foreign companies in Sri Lanka. It allows you to conduct business activities that generate profit and allows 100% foreign ownership. You will have to register your branch office with the Sri Lankan Ministry of Finance and Planning.  
  • Representative Office: A representative office is also a structure for foreign companies in Sri Lanka, but it is not allowed to conduct business activities that generate revenue or engage in investment activities.   

Best Entity for Business in Sri Lanka: How to Choose the Right Entity 

The best entity for business will depend on your business goals. Here are a few points to consider while choosing a legal entity in Sri Lanka between an LLC, PLC or a branch and representative office.  

  • Number of Owners  
  • Liability 
  • Capital Investment  
  • Cost and Time Required  
  • Tax Implications 
  • Future Plans 

Comparison of LLC vs PLC in Sri Lanka 

A legal entity for private companies is the Limited Liability Company (LLC), and for public companies it is the Public Limited Company (PLC). An LLC is a preferred structure for entrepreneurs and small businesses in Sri Lanka. It is a distinct legal entity with limited liability and flexible operations. However, a Public Limited Company (PLC) in Sri Lanka is a structure for public companies, preferred by larger corporations. PLC can be publicly traded on the stock market and is allowed to raise capital by selling shares.  

For an LLC, you will need a minimum of one director and one shareholder, and a PLC requires two directors and two shareholders for incorporation. The difference between an LLC and a PLC is the management structure, as LLCs have a flexible management structure and can be either managed by a member or a manager. However, an PLC is managed by a board of directors.  

Key reasons to Choose an LLC or a PLC in Sri Lanka  

Limited Liability Company (LLC)  

  • Small and Medium-sized Businesses   
  • Private companies, such as family-owned businesses  
  • Limited liability and personal assets are protected   
  • Professional business firms such as consultants, doctors and lawyers, etc.   
  • Companies looking for simplified business registration and operations  
  • Shares are not easily transferable  

Public Limited Company (PLC)  

  • Large companies looking for global operations   
  • Companies looking to raise capital from the public   
  • Public limited company undergoing IPOs  
  • Easy succession even after changes in the company ownership  
  • Companies that need frequent external investment  
  • Shares are easily transferable and tradable  

Comparison of Branch vs Representative in Sri Lanka 

A Branch Office structure in Sri Lanka is designed for the existing foreign companies with no separate legal status. It is an extension of the existing foreign company in Sri Lanka; therefore, it is not an independent legal entity. However, a representative office is almost similar to a branch office, but is not allowed to conduct commercial business activities.  

Both the branch and the representative office offer tailored benefits to enter the Sri Lankan market as a foreign entrepreneur. If you wish to conduct commercial business activities and generate profit, you should choose the branch office, but if you only want to explore the market first or promote the products and services of the existing foreign company, you can choose the representative office.  

Key Reasons to Choose a Branch or Representative in Sri Lanka  

Branch Office  

  • It is not a separate legal entity and is managed by the parent company 
  • It is a low-cost and quick entry to the Sri Lankan market 
  • Risk-free market entry without the complex documentation of registering a new company  
  • Branch office is not taxed separately, and the parent company is responsible for tax, debt and financial obligations   
  • It operates under uniform policies and requires fewer administrative functions   
  • The branch office can enjoy 100% ownership in Sri Lanka   

Representative Office 

  • A Representative office is only for market research and promotion of the products and services of the parent company.  
  • It is not a separate legal entity but an extension of the foreign parent company. 
  • A Representative legal entity is not allowed to conduct commercial business activities. 
  • It has a simple and quick setup with no minimum capital requirements. 
  • The existing foreign company bears all the liability and obligations. 
  • It does not generate revenue, therefore does not have to pay any income tax.  

Comparison Table of Best Entity for Sri Lanka Company 

Reasons  LLC  PLC Branch Office Representative Office 
Purpose All types of businesses.  Businesses looking for expansion or investment.  Specific projects.  Marketing and research.  
Liability Limited liability Limited liability Responsibility of the parent company.  Responsibility of the parent company. 
Compliance Standard compliance requirement. Higher compliance requirement.  Company registration with the ROC and compliance with local laws. Simplified compliance requirements.  
Revenue Generation Allowed. Allowed.  Allowed, same as the parent company.  Not allowed in Sri Lanka.  
Raise Capital Not allowed. Yes, allowed to raise capital from the public.  No, capital is received from the parent company.  Not allowed.  
Tax  30% 30% 30% No Tax 
Preferred by Startups, Small & Medium businesses. Large corporations to raise capital. Extension of a foreign parent company in Sri Lanka. For marketing, research and promotions of the parent company. 

Updated Legal Requirements for Entities in Sri Lanka  

The regulatory authority responsible for companies in Sri Lanka is the Registrar of Companies. All the companies are also required to comply with the updated Companies (Amendment) Act of Sri Lanka. The key legal requirements of entities in Sri Lanka include: 

  • After selecting the right legal entity, register your company with the Registrar of Companies (ROC).  
  • To ensure transparency, you will have to disclose the details of beneficial ownership.    
  • Foreign companies in Sri Lanka will now have to appoint a resident company secretary, particularly for entities like a representative office.   
  • The director of any legal entity with over 70 years old will continue to be a director in their term until the next Annual General Meeting (AGM).  

Tax Implications for Different Entity Types in Sri Lanka  

The tax implications for the following entities in Sri Lanka are listed below:  

Limited Liability Company: The income tax for a limited liability company in Sri Lanka is 30%. The additional tax is the Withholding Tax (WHT) on dividends, which is 15%. 

Public Limited Company: A public limited company in Sri Lanka is also subject to a standard corporate income tax of 30%. A PLC has stringent tax compliance requirements compared to an LLC, and also has a 15% tax imposed on dividends.  

Branch Office: The corporate income tax for a branch office is 30% on the income earned within Sri Lanka. You will also be required to pay an additional 10% branch tax on profits remitted to the foreign parent company.  

Representative Office: A representative office is an entity in Sri Lanka for foreign companies that does not have any corporate income tax, as this entity is not allowed to conduct revenue-generating business operations.  

Documents Required for Business Setup in Sri Lanka  

The key documents required for company registration in Sri Lanka are: 

  • Identity proof of shareholders and directors  
  • Articles of Association (AoA)  
  • Memorandum of Association (MoA)   
  • Proof of address   
  • Director Identification Number (DIN)  
  • Taxpayer Identification Number (TIN)  
  • Registered office address  
  • Form 1, form 18 and form 19 
  • Proof of paid stamp duty 

Advantages of Doing Business in Sri Lanka  

Sri Lanka is a developing country with growing opportunities for all types of businesses. The country has investor-friendly policies with easy access to the global market and excellent free-trade agreements. The advantages of starting a business in Sri Lanka include: 

  • Sri Lanka is strategically located along the major international shipping routes, with easy access to the major countries of the world.   
  • The Sri Lankan Board of Investment (BOI) offers excellent investor-friendly policies.  
  • Offers 100% foreign ownership in most of the industries in the country.  
  • Sri Lanka has shown excellent economic recovery, showing growth potential.  
  • The country offers various tax incentives and tax holidays for companies established in Sri Lanka.   
  • The country is developing in digital services, showing promising opportunities in AI.   

To Wrap Up 

When you are thinking of incorporating a business in Sri Lanka, it is important to choose the right legal entity, based on your business goals, the size of your company and the type of business. Understanding the key features that each entity offers will help you leverage the benefits to the fullest for your business operations in Sri Lanka.  

Whether you are choosing an LLC, a PLC, a branch or a representative office, ensure that the structure of the entity aligns with your business goals. As each entity will offer different levels of flexibility, ownership, liability protection, capital and compliance requirements. Choosing the right entity will support your business growth and help build a credible business in Sri Lanka.  

Choosing the right entity can feel confusing, especially if you are new to Sri Lanka’s business laws. Enterslice will provide complete guidance to help you select the most suitable entity for your business needs. With our expert professionals, you can enjoy a hassle-free business setup while we help you select the legal entity, complete the legal process and documentations from the comfort of your homes.  

Contact us today to speak with our experts or visit our website to learn more: visit https://enterslice.com  

FAQs Related to Business entity types in Sri Lanka

  1. What are the types of entities in Sri Lanka for business?   

    In Sri Lanka, there are various types of entities depending on the type of your business, business goals, taxation and liability. Therefore, it is important for you to choose the right entity while registering your company in Sri Lanka to leverage all the benefits the entity provides.  
     
    Types of Entities in Sri Lanka  
    Sole proprietorship: The simplest structure, preferred by individual owners.  
    Partnership: This structure is for two or more people willing to partner and do business. 
    Limited Liability Company (LLC): This is a legal entity with limited liability and no minimum capital requirement.  
    Public Limited Company: This legal entity is for larger companies that require raising capital from the public.  
    Overseas Company: This structure is for companies registered within Sri Lanka but offering business services outside of the country. 
    Branch Office: This legal entity is for existing foreign companies that are allowed to conduct business operations and generate revenue.  
    Representative Office: This is also a legal entity for existing foreign companies to do business in Sri Lanka without generating revenue.  

  2. What is the difference between LLC vs PLC in Sri Lanka?  

    The difference in LLC vs PLC in Sri Lanka is that a limited liability company is for small and medium-sized businesses, and a public limited company is for larger corporations. An LLC is an entity whose shares are not publicly traded, whereas in a PLC, the shares are traded on the stock exchange to raise capital.  

  3. What is the difference between a branch and a representative office in Sri Lanka?  

    In Sri Lanka, both the branch and the representative office are designed for existing foreign companies. A branch office is a legal entity that allows you to conduct commercial business activities that can give you an income, whereas a representative office only allows non-commercial business activities without generating an income, such as conducting market research for the existing foreign company. 

  4. Is Sri Lanka a good country to do business?   

    Yes, Sri Lanka is a good country to do business in, as it has shown resilience in economic recovery with the help of IMF programs and international aid. The country also has a strategic location that offers easy access to the major global markets. Along with that, it offers excellent incentives, tax holidays and investor-friendly policies, making Sri Lanka an excellent country for business.  

  5. What is the best entity for foreign entrepreneurs in Sri Lanka?  

    The best entity for foreign entrepreneurs in Sri Lanka is the Limited Liability Company (LLC), also known as Private Limited Company (Pvt Ltd). This entity is the simplest and popular structure that is preferred by startups and small and medium-sized businesses.  
     
    Limited Liability Company (Pvt Ltd) 
    Preferred By: Most businesses in Sri Lanka, especially startups, including the small and medium-sized businesses.  
    Ownership: LLCs are owned by private shareholders with limited liability obligations 
    Key Features: Requires at least one shareholder and one director, with no restrictions on nationality and no minimum share capital requirement.  

  6. Does Sri Lanka have a minimum capital requirement?   

    In Sri Lanka, under the Companies Act of 2007, there is no minimum capital requirement for most standard entities. However, public limited companies will have to meet the capital requirements set by the Colombo Stock Exchange (CSE).  
    Foreign companies looking to enter the Sri Lankan market as a branch office or an overseas company will need a minimum foreign remittance of USD 200,000. For retail trade within Sri Lanka with foreign ownership, you will need a minimum capital of USD 5 million.  
     

  7. What is the meaning of Pvt Ltd in Sri Lanka?  

    In Sri Lanka, a Pvt Ltd is a private limited company that is privately owned by shareholders, and the liability is only toward the investment in the company. However, transfer of shares is restricted and cannot be offered to the general public. To legally operate a PLC in Sri Lanka, you will have to register with the Registrar of Companies (ROC).  
     

  8. Can an LLC become a PLC? 

    Yes, an LLC can become a PLC through the conversion process by obtaining permission from all the shareholders. However, LLCs will have to ensure compliance with the Companies Act and meet the requirements set by the regulatory authority. You will also have to prepare mandatory documents like the AoA and MoA to convert an LLC to a PLC.  
     

  9. Are PLCs taxed more heavily than LLCs? 

    No, in Sri Lanka, public limited companies are not taxed more heavily than a limited liability company. Both entities have the same standard tax rate of 30% on their worldwide earnings. However, PLCs are subject to stringent regulations and a higher tax burden because of their double taxation requirement on distributed earnings.  

  10. What is a Branch vs a Subsidiary in Sri Lanka?  

    A branch is a legal entity for an existing foreign company to establish a presence in Sri Lanka. It is an extension of the foreign company and is not a separate legal entity. However, a subsidiary is a separate legal entity and, unlike a branch office, it is an independent company with its own legal obligations.  

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