A family office is a dedicated setup—people, processes, and entities—built to manage a family’s wealth, investments, businesses, properties, philanthropy, and succession planning in an organized, professional way. In Sri Lanka, the “right” family office design depends less on buzzwords and more on (1) what assets you have, (2) where they sit (Sri Lanka vs overseas), (3) who is being served (one family vs multiple families), and (4) whether you’ll do regulated activities like managing funds or advising beyond your own family.
This guide walks you through the full build—from strategy and entity design to Sri Lanka’s company law, beneficial ownership reporting, foreign exchange rules, tax fundamentals, compliance, hiring, governance, and operating model—so you can set up a single family office in Sri Lanka (or a multi family office in Sri Lanka) with fewer surprises.
Important: This is practical information, not legal/tax advice. Sri Lanka rules can change and may depend on your facts. Use this as a blueprint to brief your attorney, tax advisor, and corporate secretary.
Table of Contents
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What Is a Family Office?
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Why Families Set Up Family Offices
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What “Counts” as a Family Office in Sri Lanka?
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Step 1: Decide Your Family Office Type (SFO vs MFO vs Outsourced)
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Step 2: Clarify Scope (The Biggest Driver of Structure)
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Step 3: Choose the Sri Lanka Entity and Ownership Architecture
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Step 4: Beneficial Ownership Reporting (Newer Compliance Reality)
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Step 5: Foreign Exchange and Cross-Border Money Flows
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Step 6: Licensing and Regulatory Perimeter
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Step 7: Tax and Fiscal Design (Sri Lanka-Specific Realities)
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Step 8: AML, KYC, and “Source of Wealth” Readiness
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Step 9: The Family Office Operating Model (People, Process, Tech)
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Step 10: Governance That Actually Works (Constitution + Committees)
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Step 11: Step-by-Step Setup Process (Sri Lanka Execution Plan)
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Key Documents to Prepare Early (Practical Checklist)
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Ongoing Maintenance: What a Family Office Must Keep Doing
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Choosing Banks, Custodians, and Investment Partners (Simple Criteria)
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Typical Costs (Realistic Ranges, Not Promises)
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Common Mistakes to Avoid
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FAQ: Family Office Setup in Sri Lanka
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Closing Note
What Is a Family Office?
A family office is a structured way to professionalize how a family manages wealth across generations. It combines:
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people (family members, executives, finance staff, advisors),
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processes (controls, reporting, approvals, investment governance), and
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entities (companies, trusts, holding structures, philanthropic vehicles)
…to deliver ongoing oversight and coordination across assets, risks, and family decision-making.
A family office can be as lean as a virtual coordination function or as robust as a fully staffed organization with an investment team, finance team, legal capability, risk controls, and governance bodies like an investment committee.
Why Families Set Up Family Offices
Families commonly set up family offices to:
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reduce fragmentation (multiple accounts, properties, companies, advisors)
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improve transparency (one consolidated view of assets, liabilities, and cash flow)
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strengthen succession planning (avoid disputes, clarify decision rights)
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create consistent investment governance (policy, committee decisions, reporting)
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improve compliance readiness (bank KYC, beneficial ownership, documentation)
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institutionalize values (education, philanthropy, family constitution)
In practice, many family offices evolve in stages: a family starts with informal coordination, then gradually formalizes processes, and eventually incorporates a dedicated entity once complexity and risk justify it.
What “Counts” as a Family Office in Sri Lanka?
A family office typically provides a bundle of services such as:
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investment strategy and portfolio oversight (public markets, private equity, real estate, venture)
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treasury and cash management
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tax planning and reporting coordination
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estate and succession planning
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governance (family constitution, councils, dispute resolution)
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philanthropy (foundations, donor-advised plans, structured giving)
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risk management (insurance, cyber, key-person risk)
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administration (bill pay, reporting, concierge, document vault)
In practice, Sri Lanka family offices often begin as a lean “family office function” inside an existing business group, then formalize into a dedicated company once complexity grows.
Step 1: Decide Your “Family Office Type” (Because Regulation and Cost Depend on It)
1) Single Family Office (SFO)
Serves one family (often one principal + next generations). Common priorities:
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central reporting and control
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succession planning
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centralized treasury
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investment committee governance
Regulatory risk is usually lower if you truly serve only your own family and do not market services to outsiders—but you still must handle AML/KYC realities with banks and counterparties and stay mindful of licensing triggers if you start managing money for non-family.
2) Multi Family Office (MFO)
Serves multiple unrelated families. This model often:
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charges fees
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provides investment advice/management to clients
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may require capital markets licensing/registration depending on services
Sri Lanka’s Securities and Exchange Commission (SEC) framework includes licensing/registration for market intermediaries such as Investment Managers. If your MFO is actively managing portfolios or offering advisory services to third parties, you should assume regulatory engagement is likely and design accordingly.
3) Virtual / Outsourced Family Office
A small internal team that coordinates external professionals (banks, investment managers, lawyers, tax, trustees). Often the best starting point if you want structure without heavy fixed costs.
Step 2: Clarify Scope (The Single Biggest Driver of Legal Structure)
Before you incorporate anything, write a one-page scope that answers:
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Who are the beneficiaries/clients? Only one nuclear family? extended family? family trusts? family-owned companies?
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Which assets are in Sri Lanka vs overseas? (public shares, operating companies, land, apartments, USD portfolios, offshore holdings)
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Will you manage assets directly or only oversee external managers?
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Do you need staff (CFO, analyst, legal, admin) or mostly vendors?
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How will you pay for it? operating company dividends? management fees? cost allocation?
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What are the top risks to solve? succession disputes, fragmented portfolios, FX controls, governance, reporting
This scope becomes your “requirements document” for lawyers and advisors.
Step 3: Choose the Sri Lanka Entity and Ownership Architecture
Most Sri Lanka family offices use a combination of:
A) A Sri Lanka Private Limited Company (Core Operating Entity)
This is the most common “family office company” for staffing, contracts, reporting, and operations.
Sri Lanka’s Companies Act No. 7 of 2007 governs incorporation, ongoing obligations, and how private companies operate.
Why it’s used
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clear governance (directors, shareholder decisions)
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easy to hire staff and sign vendor contracts
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works well as a “manager/administrator” entity that coordinates banks, brokers, and advisors
Key design choice: The family office company can be owned by:
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the principal(s) directly; or
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a holding company; or
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a trust (often used for succession planning); or
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a mix (e.g., voting vs non-voting shares)
B) A Holding Company Structure (for Operating Businesses and Investments)
If you have multiple operating companies and investments, a group holding company can:
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centralize dividend flows
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standardize governance
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reduce fragmentation
C) Trust Structures (for Succession and Ring-Fencing)
Sri Lanka recognizes trusts under its Trusts Ordinance framework (commonly referenced as Trusts Ordinance No. 9 of 1917), including duties of trustees to act prudently and protect beneficiaries.
Trusts are especially useful for:
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intergenerational transfers
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protecting minors or vulnerable beneficiaries
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formalizing distributions and governance
Transparency note: Sri Lanka has also focused on trust-related transparency and AML concerns in line with global standards.
D) Foundations / Philanthropy Entities
Sri Lanka philanthropy is often done via:
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a company limited by guarantee (for non-profit style structures), or
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a trust deed with a charitable purpose, or
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structured giving through recognized channels (your tax advisor should confirm current treatment)
(Philanthropy structures can be extremely fact-specific—treat this as a planning topic to do after your main family office entity is stable.)
Step 4: Understand Beneficial Ownership Reporting (Newer Compliance Reality)
Sri Lanka has moved toward stronger beneficial ownership disclosure. In 2025, Parliament passed amendments to the Companies law requiring companies to verify and report beneficial ownership details within specified timeframes and with penalties for non-compliance.
Why this matters for family offices
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Family wealth structures often use layers (companies, nominees, trusts).
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Banks and corporate registries increasingly ask: “Who ultimately owns/controls this?”
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If your family office uses corporate vehicles, plan from day one to keep clean, documented ownership and control records.
Practical action: maintain a private “ownership dossier”:
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share registers and shareholder agreements
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trust deeds and trustee resolutions
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identification documents for beneficial owners/controllers
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board minutes supporting control decisions
Step 5: Foreign Exchange and Cross-Border Money Flows (Critical for Sri Lanka-Based Wealth)
If your family has offshore assets, foreign income, or overseas investments, Sri Lanka’s foreign exchange rules can heavily influence how you structure accounts and transactions.
Sri Lanka’s Foreign Exchange Act No. 12 of 2017 is the core law that replaced the older exchange control regime and governs foreign assets, foreign currency transactions, and permitted capital/current transactions.
Common account rails families use (through authorized dealers/banks)
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Inward Investment Accounts (IIA): used for permitted inward investment transactions and related flows, under Central Bank / Department of Foreign Exchange directions.
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Banks also publish practical summaries of foreign currency account categories and permitted transactions (helpful to understand documentation banks ask for).
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The Department of Foreign Exchange maintains listings of regulations/orders and updates (useful for checking if a rule changed recently).
Family office implications
A Sri Lanka family office that coordinates overseas investments should design:
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a clear FX policy (who can approve outward remittances, which accounts are used, documentation standards)
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a “paper trail by default” (contracts, invoices, board approvals, investment memos)
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bank-ready compliance (source of funds/wealth packs, beneficial ownership data, tax IDs)
Because Sri Lanka’s FX environment can change via regulations, directions, and gazette notifications, build your model so it remains compliant even when documentation demands increase.
Step 6: Licensing and Regulatory Perimeter (Don’t Accidentally Become a Regulated Firm)
A classic mistake is building an MFO-like service (advising, managing money, pooling capital) under the assumption it is “just a family office.”
When you’re more likely to trigger SEC involvement
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You manage investments for multiple unrelated families for a fee
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You market portfolio management services
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You run pooled vehicles (fund-like structures)
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You act as an “investment manager” or similar intermediary
Sri Lanka’s SEC provides licensing/registration pathways for market intermediaries and has rules applicable to investment managers.
Best practice: define your service boundary in writing:
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SFO: “We oversee and coordinate; execution is via regulated banks/brokers/managers.”
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MFO: “We are an intermediary and will obtain appropriate licensing/registration and comply with SEC rules.”
If you’re unsure, structure your early phase as a governance + oversight office (investment committee, manager selection, consolidated reporting) while execution stays with licensed institutions—then expand once you have professional compliance capacity.
Step 7: Tax and Fiscal Design (Sri Lanka-Specific Realities)
Tax planning is a major reason families formalize a family office—but it must be done cleanly and within the current Inland Revenue framework.
Sri Lanka’s income tax rules are governed by the Inland Revenue Act No. 24 of 2017, with amendments consolidated through 2025, and notable changes effective April 1, 2025 via an Amendment Act.
The IRD also issues notices and publishes tax charts by year of assessment (use these for current rates/thresholds).
Typical family office tax questions to model
Should the family office be cost center or profit center?
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Cost center: expenses funded by dividends or shareholder contributions; minimal external revenue.
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Profit center: charges management fees (to family companies/trusts). This can be more “arm’s length,” but creates taxable income and transfer-pricing-type sensitivities if not done carefully.
Where is investment income taxed (entity vs individuals vs trusts)?
Depends on the asset type, residency, and the taxpayer type (individual/company/trust). Your advisor will map this using the Inland Revenue Act and current guidance.
Foreign source income and remittances
Sri Lanka’s treatment of foreign source income and exemptions has changed over time; IRD notices highlight changes effective from April 1, 2025 (so you must model the post-2025 regime, not older assumptions).
Practical tax setup checklist (what your family office should implement)
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choose accounting policies (IFRS/SLFRS as applicable, group reporting format)
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implement monthly closing + quarterly tax review rhythm
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maintain documentation for source of funds, FX conversions, contracts
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treat “related-party” payments (management fees, loans, reimbursements) with discipline
Step 8: AML, KYC, and “Source of Wealth” Readiness (A Non-Negotiable in 2026)
Even if your family office is private, you will interact with:
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banks (local and foreign),
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brokers,
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custodians,
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property counterparties,
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professional firms.
Sri Lanka’s AML framework includes the Financial Transactions Reporting Act No. 6 of 2006 and the Prevention of Money Laundering Act No. 5 of 2006.
Build a “bank-ready” compliance pack
Have these ready from day one:
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Family tree + control chart (who owns what, through which vehicles)
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Beneficial ownership declarations and IDs (NIC/passport, address proof)
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Source of wealth narrative (how wealth was created—business history, major exits, dividends, audited statements)
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Source of funds evidence for major transfers (sale agreements, board resolutions, bank advices)
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Trust deeds / shareholder agreements (if used)
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A simple internal AML policy (even if not legally required, it helps counterparties trust your governance)
Having this prepared early usually makes onboarding with banks and counterparties much smoother.
Step 9: Build the “Family Office Operating Model” (People, Process, Tech)
A family office is less about the logo and more about repeatable workflows. The goal is to make sure decisions, payments, reporting, and documentation follow the same process every time.
The 6 core functions (with Sri Lanka-friendly staffing options)
Executive / CEO function
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coordinates family stakeholders
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sets priorities, approves budgets
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runs the “family council” cadence
Finance / CFO function
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cash flow, bill pay, budgeting
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management accounts, consolidated reporting
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liaises with auditors/tax
Investments function
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asset allocation, manager selection
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investment memos and committee decisions
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performance and risk reporting
Legal / governance function
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company secretarial coordination
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contracts, board minutes, entity maintenance
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succession structures (with external counsel)
Risk + insurance + compliance
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insurance reviews
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cybersecurity and access controls
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FX policy and documentation
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AML/KYC pack maintenance
Admin / lifestyle services (optional)
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travel, property management coordination
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concierge, household staff vendors
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document vault and records
Lean staffing blueprint (typical for an SFO starting out)
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1x Head of Family Office / COO
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1x Finance manager (or outsourced bookkeeping + internal reviewer)
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1x Analyst (investments + reporting)
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1x Admin
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External: corporate secretary, tax, legal, auditors, valuation, investment managers
Technology stack (simple but professional)
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Portfolio reporting: custodian reports + a consolidated reporting tool (or excel model done well)
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Document vault: structured cloud folders with permissions + encrypted backups
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Approval workflow: two-person rule for payments + board approvals for major items
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Cyber basics: MFA everywhere, device management, password manager, incident plan
Step 10: Governance That Actually Works (Family Constitution + Committees)
A family office fails when family governance is vague. Clear rules reduce misunderstandings and help the next generation follow the same system.
Core governance documents
Family Constitution (or Family Charter)
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mission and values
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who counts as “family” for benefits
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roles, responsibilities, conflict resolution
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confidentiality and media rules
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employment policy for family members
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philanthropy principles
Investment Policy Statement (IPS)
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objectives (growth, income, capital preservation)
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target asset allocation and ranges
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liquidity needs (Sri Lanka cash needs vs offshore)
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rebalancing rules
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permitted instruments and prohibited assets
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manager selection framework
Delegation of Authority (DoA)
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who can approve payments and thresholds
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who can sign contracts
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who can open/operate bank accounts
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escalation rules
Committees (keep it lightweight but real)
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Family Council (values + big decisions)
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Investment Committee (portfolio decisions; quarterly cadence)
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Audit & Risk Committee (controls, audits, cyber, insurance; semi-annual)
Step 11: Step-by-Step Setup Process (Sri Lanka Execution Plan)
Here’s a practical sequence most families can follow. Timelines vary depending on banking KYC, the number of entities, and how complex the assets are.
Phase 1 — Design (Weeks 1–4)
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inventory assets (Sri Lanka + offshore), liabilities, insurance, key documents
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map stakeholders and decision rights
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pick SFO vs MFO vs outsourced model
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define regulatory boundary (oversight vs management services)
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draft target structure (company/holdco/trust layers)
Deliverables
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structure diagram (entities + accounts)
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one-page scope + service catalog
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governance draft (constitution outline + IPS outline)
Phase 2 — Incorporation and legal foundations (Weeks 3–8)
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incorporate Sri Lanka private limited company (family office company) under Companies Act framework
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appoint directors, company secretary (via corporate services provider)
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open bank accounts (expect KYC depth)
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set up beneficial ownership compliance processes (especially post-2025 amendments)
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if using trusts: draft trust deed + trustee onboarding per Trusts Ordinance duties
Deliverables
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incorporation documents, board minutes, share register
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beneficial ownership filings/records workflow
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KYC/source-of-wealth pack
Phase 3 — Financial controls and reporting (Weeks 6–12)
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choose accounting system and chart of accounts
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set payment approval controls and two-person checks
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build consolidated reporting templates (net worth, cash flow, portfolio, commitments)
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appoint auditor/tax advisor and set annual calendar aligned to Inland Revenue rules
Deliverables
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monthly close checklist
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quarterly reporting pack
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tax compliance calendar
Phase 4 — Investments and FX architecture (Weeks 8–16)
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formalize IPS and committee cadence
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choose custodians/brokers/managers
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document FX policy under Foreign Exchange Act realities
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set up relevant account rails (e.g., IIA where applicable; align with Central Bank directions)
Deliverables
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investment committee charter + memo template
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manager due diligence checklist
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FX documentation standards
Phase 5 — Stabilize operations (Month 4 onward)
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hire/retain core team
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finalize constitution and family education program
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implement philanthropy structure (if desired)
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review structure annually for tax/regulatory changes
Once the structure is in place, the next step is to make sure the office runs smoothly day to day. The sections below cover the practical items that usually cause delays later—documents, routines, and partner selection.
Key Documents to Prepare Early (Practical Checklist)
This section does not replace the ownership dossier or KYC pack you already maintain. It is a practical “gather it early” list that helps your advisors move faster and helps banks onboard you with fewer questions.
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Family tree and a simple ownership/control chart (entities + beneficial owners)
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NIC/passports + address proof for key individuals (directors, shareholders, trustees, protectors where relevant)
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Company documents for key entities (incorporation, forms, registers, director lists)
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Share registers and shareholder agreements (if any)
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Trust deeds and trustee resolutions (if any)
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Audited financials or management accounts for the main operating businesses
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Proof of major wealth events (sale agreements, dividend history, exits, asset sale documents)
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Bank statements / bank advices for major transfers (source of funds trail)
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Asset list with rough values (property, listed portfolios, private investments, deposits)
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Insurance schedule (life, property, medical, key-person) and any existing policies
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Existing wills, succession documents, or family governance documents (even drafts)
Ongoing Maintenance: What a Family Office Must Keep Doing
Setting up the structure is the start. A Sri Lanka family office works well when the routines are simple and consistent.
Monthly
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cash position review (local + foreign currency, upcoming payments)
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bill pay with two-person approvals
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bookkeeping update and basic management accounts
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update the document vault (contracts, invoices, board resolutions, bank advices)
Quarterly
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consolidated net worth and portfolio reporting
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investment committee meeting and minutes (even if no big changes)
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FX policy check: large remittances, documentation completeness
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compliance pack refresh if banks request updated information
Annually
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audit and tax filings (where applicable)
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entity housekeeping (registers, minutes, director/shareholder updates)
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insurance review (coverage gaps, renewals, key-person risks)
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governance review (family constitution, IPS, delegation limits)
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“what changed?” review: new assets, new beneficiaries, new risks
This is one of the main differences between an informal wealth setup and a professional family office model.
Choosing Banks, Custodians, and Investment Partners (Simple Criteria)
Even if you run a single family office in Sri Lanka, you will rely on banks, custodians, brokers, and external investment managers. The goal is not to have “the most famous name,” but to have partners who can handle your needs and your documentation style.
Here are practical criteria you can use:
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KYC/AML experience: do they handle complex ownership, trusts, and group structures without constant confusion?
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Reporting quality: do they provide clean statements, performance reports, and transaction history that you can consolidate?
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FX capability and clarity: do they explain documentation needs clearly for outward remittances and foreign currency flows?
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Service team stability: will your relationship manager change every few months?
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Digital access and controls: strong online banking, maker-checker controls, and permissions for multiple users
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Product fit: local cash management vs global custody vs private banking vs corporate banking needs
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Fees and transparency: clear fee schedule; no surprises
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Governance comfort: do they accept committee-led decision making and proper documentation, or do they push shortcuts?
Typical Costs (Realistic Ranges, Not Promises)
Costs vary widely based on complexity, staffing, and whether you build in-house or outsource. The figures below are broad, practical ranges for a single family office in Sri Lanka and are meant only for planning and budgeting discussions with advisors.
A) Formation & One-Time Professional Fees
These are usually incurred in the first 3–6 months.
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Company incorporation & corporate secretarial setup:
LKR 150,000 – 500,000 -
Legal structuring (shareholders’ agreements, trust deeds, basic governance documents):
LKR 500,000 – 3,000,000+ (can be higher for complex trust or cross-border structures) -
Tax structuring & initial registrations:
LKR 250,000 – 1,500,000 -
Beneficial ownership, KYC, and compliance documentation:
LKR 100,000 – 500,000
Typical one-time setup range:
LKR 1 million – 6 million+, depending on complexity.
B) Fixed Annual Run-Rate
These are your recurring “keep the office running” costs.
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Core staff (lean SFO team of 3–5 people):
LKR 6 million – 25 million+ per year
(Head of Family Office, Finance, Analyst, Admin; varies widely by seniority) -
Office, IT systems, reporting tools, cybersecurity:
LKR 1 million – 5 million per year -
Audit, tax, legal retainers, corporate secretarial:
LKR 750,000 – 3 million per year
Typical annual fixed run-rate:
LKR 8 million – 35 million+
(For a virtual / outsourced family office, this can be much lower.)
C) Variable and Transaction-Driven Costs
These depend on activity levels.
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Valuations, due diligence, transaction legal:
LKR 250,000 – 5 million+ per transaction -
Specialized cross-border tax or structuring advice:
LKR 500,000 – 3 million+ per project -
Cybersecurity reviews, incident response, data protection:
LKR 150,000 – 1 million+ per year
How to Think About the Budget
Rather than asking “How much does a family office cost?”, the better questions are:
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Do we want a lean oversight office or a fully staffed investment and finance team?
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Will we manage investments directly or only coordinate external managers?
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How complex are our trust, succession, and cross-border structures?
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How demanding will our banking, reporting, and compliance requirements be?
A virtual or outsourced single family office in Sri Lanka can operate in the low seven-figure LKR range annually, while a fully built, professionally staffed single family office can run into the tens of millions of LKR per year.
The right number is the one that matches your asset size, risk profile, and governance ambitions.
Common Mistakes to Avoid
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Building an MFO without recognizing licensing/compliance triggers (SEC perimeter risk).
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Ignoring beneficial ownership obligations until a bank or registrar forces a rushed cleanup.
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Weak FX documentation for cross-border movements—leading to blocked transfers or delayed onboarding.
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No delegation matrix (everyone can approve everything = operational risk).
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No succession mechanics (trusts, shareholder agreements, governance) until conflict appears.
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Overcomplicated structures copied from other countries without Sri Lanka tax/FX/legal fit.
FAQ: Family Office Setup in Sri Lanka
Is a family office legal in Sri Lanka?
Yes. There’s no “family office act” you must use. Most families use a private limited company (and sometimes trusts/holding companies) under Sri Lanka’s general legal framework.
Do I need an SEC licence to run a single family office?
Often, a true SFO that serves only the family and does not solicit outside clients can operate as an internal wealth governance function. But if you start providing investment management/advice services to non-family clients (multi family office behavior), you may trigger licensing/registration requirements under SEC frameworks and rules for investment managers.
What are the most important “Sri Lanka-specific” issues?
For most families:
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Foreign exchange rules and account structures
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Tax compliance under the Inland Revenue Act (post-2025 changes)
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Beneficial ownership reporting and transparency
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Bank KYC/source-of-wealth readiness (in practice, driven by AML laws)
Can I use a trust for succession planning in Sri Lanka?
Yes—trust concepts and trustee duties are recognized in Sri Lanka’s trust law framework, and transparency expectations have increased due to AML considerations.
Closing Note
Setting up a family office in Sri Lanka is mainly about clarity and discipline: define your scope, design a simple structure that fits Sri Lanka’s legal and foreign exchange realities, build bank-ready documentation, implement strong governance, and run professional monthly reporting. Start lean if needed—then scale into a more formal entity and team as complexity and risk increase.
