TISL files Supreme Court challenge against Companies (Amendment) Bill

Colombo, June 23 (Daily Mirror) - The Transparency International Sri Lanka (TISL) has filed legal action in the Supreme Court challenging the proposed Bill to amend the Companies Act No. 07 of 2007, citing serious concerns over the transparency and effectiveness of its provisions on beneficial ownership disclosure.

The petition, filed in the public interest on June 19, 2025, focuses on Clause 7 of the draft Bill, which seeks to introduce a Beneficial Ownership Information (BOI) register — a critical anti-corruption mechanism designed to identify individuals who ultimately own or control companies.

However, TISL contends that the Bill’s current structure undermines this objective by restricting public access to vital ownership data.

TISL argued that anonymous and opaque corporate structures are widely exploited for illicit financial flows, organized crime, terrorism financing, foreign influence operations, and money laundering. Establishing a robust, transparent BOI register is essential to combat these threats and is a key element of Sri Lanka’s post-crisis governance and anti-corruption agenda.

Despite government pledges in the Governance Action Plan 2025 and the National Anti-Corruption Action Plan 2025–2029 to establish a publicly accessible online BOI register, the draft Bill, according to TISL, falls far short of these commitments.

In particular, Section 130A(6) merely requires the Registrar to maintain a list of beneficial owners without mandating proactive, digital publication or integration with other state systems. Furthermore, Section 130D limits public access to just the full name and nature of ownership — and even this can only be obtained through individual requests, introducing delays and bureaucratic barriers.

TISL warned that such a restricted and request-driven model would hinder investigators, journalists, and the public from accessing timely information essential for detecting hidden assets, conflicts of interest, and financial crimes. The organisation also noted that this approach conflicts with international standards and recommendations, including those from the IMF Governance Diagnostic Assessment 2023, which advocate for open, verifiable BOI registers.

The petition further highlights the urgent need for rapid access to ownership data in asset recovery, fraud prevention, and anti-money laundering efforts. It argues that while incorporating the Right to Information framework is welcome, proactive disclosure of key ownership details, balanced with data protection safeguards, is critical for effective oversight.

TISL is seeking a Supreme Court determination that Clause 7 of the Bill is inconsistent with Article 12(1), which guarantees equal protection of the law, and Article 14A of the Constitution, which safeguards the right of access to information.