18 Oct 2025 8 12 pm BCom2022P3 E COM3502 Lec Mr Amesh Pathirana p2gi

Sri Lanka Companies Act No. 7 of 2007 Overview
📌 The Act's title, date of operation, and the legal status and capacity of a company are established under the initial sections.
⚖️ A company incorporated under this Act has the capacity to undertake any legal business or activity and enter into any transaction, subject to existing written law in Sri Lanka or other countries.
📑 Different types of companies include limited companies (by shares), unlimited companies, and companies limited by guarantee (those not issuing shares).
✍️ Articles of Association must detail objectives, shareholder rights/obligations, and company management/administration procedures.

Key Provisions for Private Companies and Shareholder Relations
🚫 Private companies are prohibited from offering shares or securities to the public and must limit shareholders to 50 (excluding employee/former employee shareholders).
🧾 Private companies may unanimously dispense with keeping an interest register by a shareholder resolution.
💵 Before distribution (dividends), authorization by the board and approval by shareholders via ordinary resolution is generally required, unless articles state otherwise.
➕ Solvency test requires the company to pay debts as they fall due and ensure assets value is greater than liabilities and stated capital.

Accounting and Compliance Requirements
📑 Every company must maintain accounting records that correctly record and explain transactions, enabling determination of financial position and preparation of audited financial statements.
💰 Failure to keep required accounting records can result in a fine not exceeding 200,000 rupees for the company and any officer in default.
⏱️ The board must ensure financial statements are completed within 6 months after the balance sheet date, certified, and signed by two directors.
🇨🇭 Accounting records must generally be kept in Sri Lanka, though exceptions can be permitted by the Registrar if not prejudicial to the national economy or shareholder interests.

Colombo Stock Exchange (CSE) Functionality and Listing
📊 The CSE website displays market indices like ASPI (All Share Price Index) and S&P 20, turnover, and share volume, reflecting market performance trends.
📂 Corporate disclosures, financial reports (quarterly/annual), and watchlist information are accessible via the CSE portal.
🛠️ To trade, one needs to open a CDS account (Central Depository System) via an authorized stock broker, which are listed on the website.
📜 Companies seeking listing must comply with the Companies Act, the Securities and Exchange Commission Act No. 36 of 1987, and the Listing Rules of the exchange.

Financial Reporting Standards and Guidance
📚 The CA Sri Lanka website provides access to numerous resources, including webinars and official publications like the Sri Lanka Accounting Standards bound volume 2025.
📖 Financial statements, such as the Statement of Financial Position (Balance Sheet) and Statement of Comprehensive Income (Income Statement), must give a true and fair view of the company’s affairs.
🗣️ The speaker advises relying on English versions of accounting standards, as they are the prevailing standard for use and research.

Key Points & Insights
➡️ Proactive Research: Students must actively refer to credible sources like the Parliament website for acts and the CSE portal for regulatory and financial data, especially when preparing for exams.
➡️ Investment Suggestion: Consider investing in the CSE, as returns over 5 years are often better than fixed deposits, though acknowledging the inherent fluctuation risk.
➡️ Mandatory Compliance: All registered companies, regardless of type (PLC/Pvt Ltd), face severe financial penalties (fine up to Rs. 200,000) for non-compliance with accounting record keeping duties.
➡️ Career Planning: Third-year students should focus on planning their next 5 to 10 years, gaining solid knowledge, and seeking good working environments to ensure future resilience.

📸 Video summarized with SummaryTube.com on Feb 25, 2026, 09:20 UTC