Corruption in Sri Lanka is usually treated as a problem of the public sector. Bribes for licences, procurement fraud, and political abuse dominate the conversation. But a report by Verité Research highlights that the private sector plays an overlooked role. It compares Sri Lanka’s laws with the United Nations Convention Against Corruption (UNCAC), with a focus on areas where private companies shape or exploit corrupt outcomes. Its findings are clear. Corporate wrongdoing is hard to prosecute, especially as most businesses fall outside the law’s scope.
But what counts as private sector corruption? It takes on several forms. One is private-to-public corruption. This includes bribes to public officials for benefits. Another is private-to-private corruption, where businesses engage in illicit practices with each other. A third involves the private sector acting as an enabler of corruption. Legal gaps enable these forms of corruption to survive behind weak oversight. Yet reforms still focus on the public sector, while the private sector remains largely unaddressed.
One problem in addressing these gaps is coverage. The Anti-Corruption Act applies only to large firms designated as “Specified Business Enterprises.” These include listed companies, financial institutions, or businesses that cross certain thresholds for assets, turnover, or staffing. But this excludes most of the private sector, where SMEs make up over 75% of registered firms, and fall outside the law’s scope. There is also a problem of corporate liability. Prosecuting a company requires proving that someone in a leadership position intended to commit the offence. But this doesn’t reflect how decisions are made in modern firms, where power is dispersed.
Yet, the penalties for bribery and the definition of corporate liability under the Anti-Corruption Act remain unchanged. It states that any company guilty of bribery will be fined a maximum of Rs.1 million, which for larger firms is a trivial sum. Even where stricter sanctions exist, their scope is limited. New procurement rules introduced in 2024 allow blacklisting of firms that unduly influence outcomes. But they fail to cover other forms of misconduct, such as bribery during the bidding process or undisclosed conflicts of interest. As a result, key parts of the corruption cycle remain untouched.
Against this backdrop, with the passage of the Companies (Amendment) Act, No. 12 of 2025, meaningful steps have been taken to address these issues. While previously, companies weren’t obligated to disclose their beneficial owners, the amendment requires companies to make this information available. Non-disclosure is an offence that carries penalties up to Rs.1 million or 10 years imprisonment.
With the passing of the amendments to the Companies Act, a crucial blind spot has been addressed. However, the harder tasks remain to close existing legal loopholes. If left unaddressed, the consequences will be felt beyond economic numbers. Therefore, unless private sector accountability is brought into the fold, Sri Lanka’s fight against corruption will remain incomplete and its economic recovery at risk.
Companies Act Amendment Aligns It With Global Standards: Deloitte
The amended Act contains 21 amendments, which go beyond compliance.
Changes to the Companies Act passed recently will help align the country’s legislation with international standards, enhance transparency, and improve the regulatory framework for businesses, Deloitte Sri Lanka and Maldives, a multi-disciplinary professional services firm, has said.
“The legislation improves regulatory framework for business operations, enhances transparency, and aligns Sri Lanka with international standards such as those set by the Financial Action Task Force (FATF) and the Asia-Pacific Group on Anti-Money Laundering (AML),” Deloitte said.
The amended Act contains 21 amendments, which go beyond compliance, Deloitte points out, and will build investor confidence and help Sri Lanka position itself as a trusted and competitive business hub.
“These reforms will challenge companies to raise their standards, but they will also create a level playing field that benefits the entire economy,” Disna Perera, Director – Corporate Secretarial of Deloitte Sri Lanka and the Maldives, said.