Relaxation Of Property Holding Restrictions By Foreigners In Sri Lanka.
Legal News & Analysis - Asia Pacific - Sri Lanka - Construction & Real Estate
4 February, 2019
Foreign individuals, foreign companies and local companies with a foreign shareholding 50% or more are not permitted to acquire land and buildings with effect from 1st January 2013, as per the provisions of the Land (Restrictions on Alienation) Act No. 38 of 2014 (as amended). The Land Alienation Act applies to the ownership and acquisition of both state-owned land as well as land that is privately owned, and includes: (i) any interest in the land; (ii) any land covered with water; and (iii) any house or building situated on land.
根据2014年第38号“土地（限制异化）法”的规定，外国个人，外国公司和外国持股50％或以上的当地公司从2013年1月1日起不得购买土地和建筑物（ 经修正）。 “土地异化法”适用于国有土地和私有土地的所有权和收购，包括：（i）土地的任何权益; （ii）任何被水覆盖的土地; （iii）位于陆地上的任何房屋或建筑物。
The Budget Proposal for the year 2018 proposed to remove the restrictions, which limit the land ownership rights of listed companies with foreign ownership. Accordingly, Land (Restriction on Alienation) (Amendment) Act No.21 of 2018 (“Amending Act”) was enacted with effect from 1st April 2018 to give effect to the following exemptions:
Under the previous laws, the restrictions on land ownership did not apply to a condominium unit over the situated above on or above the 4th floor of a building (excluding the ground level floor and floors which accommodates only common elements). In terms of the Amending Act, any condominium parcel specified under the Apartment Ownership Law will be exempt from the application of the ownership restrictions, provided that the entire purchase consideration is paid upfront through an inward foreign remittance prior to the execution of the deed of transfer.
Any land, the title of which is transferred on or after 1st April 2018 to a company listed on the Colombo Stock Exchange, with a direct or indirect foreign majority shareholding, will not be subject to such restrictions. Therefore, any transfer of land after 1st April 2018 to a listed company with a direct or indirect foreign majority shareholding will not be prohibited.
The amendment does not validate any purchase of land by listed companies with a majority of foreign shareholders prior to the effective date. Further, it appears that restrictions on foreign ownership of land are still applicable if a listed company owning property with a majority of local shareholders subsequently increases its indirect / foreign shareholding to 50% or above. Therefore, such transactions will continue to be prohibited and void and shall have no effect in law.
For further information, please contact:
Savantha De Saram, Partner, D.L.&F. De Saram.