Starting a new business can be exciting, but the registration process is a critical stage where many entrepreneurs slip up. Mistakes made during company incorporation can delay your launch, create legal problems, or even force you to start over. The good news? With awareness and the right guidance, these mistakes are completely avoidable.
Here are the most common errors entrepreneurs make when registering a limited liability company (LLC) in Sri Lanka and how you can avoid them to set your business up for smooth sailing.
1. Choosing a Conflicting or Inappropriate Company Name
One of the first steps in registration is reserving your company name. Many entrepreneurs pick names they like without checking if they’re already in use or too similar to existing businesses. Others choose names with restricted words like “bank” or “insurance” without necessary approvals.
Consequences:
Rejection of your name reservation
Delays in starting the registration
Legal disputes if your name infringes on trademarks
How to avoid it:
🔹 Conduct a thorough name search using the Department of Registrar of Companies’ online system.
🔹 Avoid names that closely resemble existing registered names or trademarks.
🔹 If your name includes restricted words, consult a professional to get required permissions.
2. Incorrect or Incomplete Articles of Association
The Articles of Association form the constitution of your company, laying out rules for governance, directors’ powers, shareholders’ rights, and more. Using a standard template without customization can create future problems if it doesn’t suit your business model. Worse, mistakes or missing clauses can lead to rejection by the Registrar of Companies (ROC).
Consequences:
ROC rejecting your incorporation documents
Disputes among shareholders due to unclear rules
Limitations on raising capital or appointing directors
How to avoid it:
🔹 Work with experts like RegisterMyBiz to draft or review your Articles.
🔹 Customize articles to fit your company’s needs while complying with Sri Lankan law.
3. Errors in Incorporation Forms (Forms 1, 18, 19)
Forms 1, 18, and 19 are mandatory documents for registration. Many entrepreneurs rush through them, leading to mistakes like:
Misspelled names
Mismatched information between forms
Omitting signatures or important sections
Consequences:
ROC rejecting the entire application
Restarting the process and paying additional fees
Wasting valuable time
How to avoid it:
🔹 Double-check all forms before submission.
🔹 Ensure consistency across documents.
🔹 Have a professional review your paperwork.
4. Not Appointing a Qualified Company Secretary
Under the Companies Act, every LLC must appoint a company secretary. Entrepreneurs sometimes overlook this requirement or appoint unqualified individuals, thinking it’s just a formality.
Consequences:
Non-compliance with the law
Risk of fines or deregistration
Poor maintenance of statutory records
How to avoid it:
🔹 Appoint a qualified individual or a corporate secretarial firm recognized by law.
🔹 RegisterMyBiz provides experienced secretarial services to keep you compliant.
5. Ignoring Share Structure and Ownership Agreements
Entrepreneurs often allocate shares informally among founders without documenting clear ownership agreements. They also overlook issuing share certificates or recording details in the Register of Members.
Consequences:
Disputes among founders
Difficulty raising funds later
Complications when transferring shares
How to avoid it:
🔹 Determine a clear share structure during incorporation.
🔹 Issue share certificates to shareholders.
🔹 Maintain a proper Register of Members.
6. Delaying Post-Incorporation Requirements
Many entrepreneurs think getting the Certificate of Incorporation is the final step. But post-registration tasks like applying for a Tax Identification Number (TIN), registering with tax authorities for VAT (if applicable), and opening a corporate bank account are equally important.
Consequences:
Inability to invoice clients or pay taxes
Problems opening bank accounts
Risk of non-compliance penalties
How to avoid it:
🔹 Apply for your TIN immediately after incorporation.
🔹 Register for VAT if your turnover exceeds the threshold.
🔹 Complete post-registration compliance with guidance from experts.
7. Not Keeping Up with Annual Filing Obligations
Annual filings like the Annual Return (Form 15) must be submitted every year to the ROC. Entrepreneurs who ignore these obligations face fines and even risk having their companies struck off the register.
Consequences:
🚨 Penalties and late fees
🚨 Suspension of the company
🚨 Loss of credibility with banks and partners
How to avoid it:
🔹 Keep a compliance calendar with key deadlines.
🔹 Engage a professional corporate secretary who will remind you and file on time.
8. Underestimating the Importance of Board Resolutions
Some entrepreneurs skip preparing formal board resolutions for key decisions like opening a bank account, appointing directors, or entering major contracts. Without proper resolutions, banks and investors may refuse to proceed with your requests.
Consequences:
Banks rejecting account opening applications
Investors questioning your governance standards
Legal challenges over decisions
How to avoid it:
🔹 Document board resolutions for major decisions.
🔹 Maintain minutes of board and shareholder meetings.
9. Failing to Get Professional Help
Trying to navigate the entire registration process alone may seem like a way to save money, but it often results in errors, wasted time, and additional costs fixing mistakes.
Consequences:
Repeated rejections by the ROC
Longer time to start operations
Higher overall expenses due to corrections
How to avoid it:
🔹 Work with a professional service like RegisterMyBiz that specializes in company registration and compliance.
How RegisterMyBiz Can Help You Avoid These Mistakes
At RegisterMyBiz, we’ve helped countless entrepreneurs launch their businesses successfully by:
✅ Conducting preliminary name checks
✅ Drafting and reviewing Articles of Association
✅ Preparing accurate incorporation documents
✅ Acting as qualified company secretaries
✅ Guiding clients through post-registration compliance
✅ Keeping businesses compliant with annual requirements
Our experienced team ensures you avoid these common pitfalls — saving you time, money, and stress.
Conclusion
Registering a company is more than just paperwork; it’s about laying a strong foundation for your business. By understanding these common mistakes and working with professionals, you can ensure your company is properly incorporated and ready to succeed.
Don’t let preventable errors derail your entrepreneurial journey. Contact RegisterMyBiz today for expert assistance and peace of mind when registering your company.
