On Jun. 18, SRI CB issued gazetted order re Foreign exchange act.
SRI CB issued gazetted order under Foreign exchange act, no. 12 of 2017; this order limits outward remittances made by an emigrant, suspends making certain payments.
Follows SRI CB Mar. 2021 issued regs under foreign exchange act, see #100927.
Also follows SRI CB Jun. 2023 order re migration allowance, remittance, see #178627.
Document dated Jun. 18, 2024, received from SRI CB Jul. 5, summarized Jul. 10.
Overview of Order
Order limits outward remittances made by emigrant under initial migration allowance in terms of the general permission granted in part I of schedule to Regulations no. 3 of 2021 published in Extraordinary gazette notifications no. 2213/36 (of Feb. 3, 2021).
Limits it up to USD 100k or equivalent in any other designated foreign currency.
Order suspends making payments via Outward Investment Account for the purpose of making investments overseas by a person resident in Sri Lanka in terms of the general permission granted in part I of schedule to the Regulations no. 1 of 2021.
Which were issued in Extraordinary gazette notifications no. 2213/34 of Feb. 3, 2021, excluding investments made by certain eligible investors in ordinary shares of a firm outside Sri Lanka, for purpose of expansion of business overseas as defined below.
Namely, companies incorporated in Sri Lanka and listed on Colombo Stock Exchange (CSE), up to USD 500k or equivalent in any other designated foreign currency.
Or companies incorporated in Sri Lanka and not listed in CSE, up to USD 150k or equivalent in any other designated foreign currency, or an amount less than or equal to 20% of net assets of investor firm as per prescribed audited financial statements.
Namely, of the latest financial year, whichever is lower; and excludes investments made by a company incorporated in Sri Lanka in the ordinary shares of a company outside Sri Lanka for the purpose of expansion of business overseas, on a proviso.
Provided that such investment is entirely financed via a permitted foreign currency loan obtained by the investor company from a person resident outside Sri Lanka.
The circular also provides a number of other alternative provisos/conditions.
Other Limitations and SRI CB Discretion
Order limits outward remittances on capital transactions via Business Foreign Currency Accounts held by persons resident in Sri Lanka for purpose of expansion of business overseas, up to USD 200k or equivalent in any other designated foreign currency.
Limits outward remittances on capital transactions via Personal Foreign Currency Accounts held by persons resident in Sri Lanka, up to USD 20k or equivalent in any other designated foreign currency; order includes mechanism for SRI CB discretion.
Order also gives the SRI CB discretion with respect to investments which exceed the limits which are specified in general permission granted in Regulations no. 1 of 2021.
Effectiveness
This order is valid up to Dec. 20, 2024, being 6 months from Jun. 20, 2024.
Order published in extraordinary gazette notification no. 2363/26 rescinded Jun. 18.
