Many companies who are looking at expanding into Sri Lanka face with two challenges. Whether or not to start and entity, or to tie up with an umbrella company who can take up the entire set up and administration hassle away from you. Many opt for an umbrella company who would deal with the complex tax and regulations on behalf of your company. Second and the most important would be to select the right umbrella company for your company. Finding the right umbrella company could be a challenge itself, which is why ExroAsia has listed down few things to consider when selecting an umbrella company for your expansion in Sri Lanka.
Track Record and Experience
It is important that the Umbrella Company you choose has a good track record, clients who can vouch for them with good references and feedback in different subject matters. It is easy to start an Umbrella Company but it is not easy to be in the business for long unless they are ethical, proficient and follow required procedure while serving clients all across the globe.
Expertise in Labor Law and Regulations
Like every other country, Sri Lanka has its own set of regulations and legal compliances for labor. Labor department in Sri Lanka always considers the employee perspective and is known to be partial towards the employee if there is any breach in regulations and bylaws. Any setup or entity in Sri Lanka needs to abide by the strict regulations and statutory compliance to operate smoothly in the long run. It is important that the Umbrella Company has a team who are experts in local labor laws and regulations.
Have a Board of Local Directors Who are Qualified and Suitable to take on the Responsibility
In Sri Lanka statutory obligations go beyond corporate liability into personal liability for the directors and therefore, it is important to have local directors within the country. Directors who would be able to take ownership of the liabilities and deal with labor issues. It is necessary to do a background check on the directors as there haves been instances where companies have appointed individuals without a suitable background, as namesake directors, and ended up in a disaster.
Don’t opt for a Shell Company in Sri Lanka
A shell company is a corporation that only exists in paper, without a physical office or actual employees. While a shell company might serve the purpose for many other entities in different instances, it is not advisable to select a shell company as your Umbrella Company. It is necessary to conduct a proper background check to see if the company exists in the given address, if there are physical people living in Sri Lanka who would take up responsibility for your company’s compliance and employees.
Before making a decision, it is required do a thorough fact check on the company, local directors, and financial status of the company, history and track record. After all Umbrella Companies are there to support your expansion, to make it smooth and hassle-free and not to expose the client to future liabilities.
Speak to our experts at ExroAsia for advice on Umbrella Companies or consultancy in expansion.