SRI LANKA Law and Practice Contributed by: Ayanthi Abeyawickrama, Varners
2. Restrictions on Foreign Investments 2.1 Approval of Foreign Investments General Requirements Foreign investment in Sri Lanka is primarily gov - erned by the Foreign Exchange Act, No 12 of 2017, and is subject to certain sector-specific restrictions, approvals and compliance require - ments. Foreign investors seeking to invest in Sri Lanka must comply with the Foreign Exchange (Classes of Capital Transactions Undertaken in Sri Lanka by a Person Resident Outside Sri Lanka) Regulations, No 2 of 2021, and with other directives issued under the Foreign Exchange Act. While Sri Lanka generally adopts a liberal pol - icy towards foreign direct investment (FDI), full foreign ownership is not permitted in certain sectors, and investment in others may require special approval or minimum capital thresholds. Prohibited or restricted areas for foreign invest - ment typically include retail trade with less than USD5 million of investment, coastal fishing, and pawn-broking and certain regulated professions (eg, legal practice). These restrictions are period - ically revised by the government, and reference must be made to the most recent regulations to determine the permissibility of investment in a given sector. All inward remittances for investment purpos - es must be routed through Inward Investment Accounts (IIAs) opened with licensed commer - cial banks in Sri Lanka, and must be properly documented. Failure to comply with these pro - cedures may restrict the repatriation of returns or capital at a later stage.
claims, including those related to ship arrests, cargo disputes, collisions, salvage, crew wages and ship mortgages. District Courts The District Courts are courts of first instance for all civil matters, including family law, succes - sion, contract disputes, delict, taxation and land cases. Small Claims Courts Small Claims Courts have jurisdiction over minor civil claims not exceeding LKR2 million and have simplified proceedings to reduce caseloads in District Courts. Magistrates’ Courts Magistrates’ Courts exercise original criminal jurisdiction over summary offences and minor statutory violations. In addition, they are vested with non-summary jurisdiction to conduct pre - liminary inquiries in respect of indictable offenc - es that are to be tried before the High Courts of the Provinces. These inquiries are conducted to determine whether there is sufficient evidence to commit the accused for trial. Primary Courts Primary Courts exercise limited original juris - diction in both civil and criminal matters. Their jurisdiction extends to offences under local gov - ernment laws and by-laws enacted by Municipal Councils, Urban Councils and Pradeshiya Sab - has. In addition, they are empowered to hear disputes relating to the possession of land where such disputes are likely to result in a breach of the peace.
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