Transparency International Sri Lanka petitions Supreme Court against Clause 7 of the Companies Act Amendment, warning it undermines transparency, violates constitutional rights, and weakens efforts to fight corruption and illicit finance.
Transparency International Sri Lanka (TISL) has filed a powerful petition before the Supreme Court, challenging the proposed amendment to the Companies Act No. 07 of 2007. The anti-corruption watchdog alleges that Clause 7 of the draft law threatens transparency, enables corruption, and violates core constitutional rights, including equal protection under the law and access to public information, as guaranteed by Articles 12(1) and 14A.
The petition, filed on June 19, 2025, centers on the introduction of a Beneficial Ownership Information (BOI) register—an essential tool meant to expose the true individuals who own or control corporate entities. TISL acknowledges that while a BOI register is a crucial reform in the fight against corruption and financial crime, the current draft law fails to ensure transparency and openness. The watchdog warns that without these elements, the framework will be ineffective against money laundering, shadow ownership, and hidden conflicts of interest.
TISL’s petition highlights how opaque corporate structures are frequently exploited for transnational illicit financial flows, organized crime, terrorism financing, and covert foreign interference. It argues that only a truly transparent BOI system can unmask these networks and support Sri Lanka’s efforts toward post-crisis recovery and clean economic governance.
Clause 7, which introduces Sections 130A to 130J, is where the watchdog finds critical flaws. Under Section 130A(6), the Registrar is merely required to maintain a BOI list, but there is no obligation to make that data public or to link it to digital government databases. Even worse, Section 130D severely limits public access by restricting available information to just the name and nature of ownership, and only through individual, case-by-case requests.
According to TISL, this limited-access model hampers investigations, delays asset tracing, and deprives the public of the transparency needed to detect illicit activity. The watchdog describes it as a bureaucratic bottleneck that directly undermines Sri Lanka’s anti-corruption commitments.
The group also condemned the Bill for violating the spirit of national anti-corruption frameworks the Governance Action Plan 2025 and the National Anti-Corruption Action Plan 2025–2029 both of which promise the creation of a publicly accessible BOI registry.
TISL warns that the proposed legislation contradicts international standards, including IMF recommendations from its 2023 Governance Diagnostic Assessment. The lack of accessible BOI data, it says, obstructs vital institutions such as banks, lawyers, auditors, and compliance officers from monitoring financial integrity effectively.
The petition stresses that time is of the essence in identifying and freezing illicit assets, and that proactive disclosure, tempered with adequate privacy safeguards, is essential for timely enforcement. TISL urges the court to strike down Clause 7 as unconstitutional and protect the rights of citizens to transparency, equality before the law, and access to information.
