Anti-corruption watchdog Transparency International Sri Lanka (TISL) has filed a petition in the Supreme Court challenging a proposed amendment to the Companies Act No. 07 of 2007, warning that the draft law undermines transparency and weakens efforts to combat financial crime.
The public interest litigation, filed on Thursday, 19 June 2025, focuses on the introduction of a Beneficial Ownership Information (BOI) register — a key tool for identifying individuals who ultimately own or control companies. While the BOI register is a vital reform, the watchdog argues that the proposed framework lacks the openness and effectiveness needed to tackle corruption, money laundering, and hidden conflicts of interest.
In its petition, the organization contends that anonymous and opaque corporate structures are routinely exploited for transnational illicit financial flows, organized crime, terrorism financing, and foreign influence operations. An effective BOI register, it argues, is essential to unmask these networks and bolster Sri Lanka’s post-crisis governance and economic recovery.
However, watchdog representatives say the draft Bill’s provisions — especially Clause 7, which introduces new Sections 130A to 130J — fall short of this goal.
Key concerns include:
- Section 130A(6) only requires the Registrar to maintain a BOI list, without mandating public, digital disclosure or integration with other government databases.
- Section 130D severely limits public access, allowing only partial information — such as the full name and nature of ownership — and only through individual, on-request access.
“This limited-access model creates bureaucratic delays, hampers investigations, and deprives the public of vital data needed to detect hidden assets and illicit activity,” the watchdog said.
The group also criticized the Bill for contradicting Sri Lanka’s own anti-corruption pledges laid out in the Governance Action Plan 2025 and the National Anti-Corruption Action Plan 2025–2029, both of which promise a publicly accessible online BOI register.
The watchdog notes that the proposed model is inconsistent with international standards, including recommendations from the IMF’s 2023 Governance Diagnostic Assessment, and denies critical access to banks, lawyers, auditors, and other professionals obligated to monitor financial integrity.
“Time is critical in tracing and freezing illicit assets,” the petition states. “Proactive disclosure — balanced with data protection safeguards — is essential to enable timely detection and response.”
The petition asks the Supreme Court to declare that Clause 7 of the Bill violates Articles 12(1) and 14A of the Constitution, which guarantee the right to equal protection of the law and access to information.
