DRC Gridlock: System failures, reforms loom
The Department of the Registrar of Companies (DRC) is functioning at a snail pace as its primary online platform, the eROC system, has experienced significant slowness and service unavailability issues since the mid-2025 due to a technical collapse and expired maintenance contract.
Technical teams have been working to restore full functionality, with the system experiencing various outages and maintenance periods throughout the latter half of 2025.
Meanwhile the government is planning legislative reforms to modernise the corporate registration framework, including the potential re-registration of all active companies to update records and a new law mandating beneficial ownership disclosure.
Moreover the National Audit office in its latest report has observed that there has been a reluctance or failure by a large number of Sri Lankan companies to submit their annual reports to the Department on time.
This has been acknowledged by the DRC, which has issued special notices and highlighted the penalties for non-compliance.
To accommodate the public and potentially mitigate online issues, the DRC has designated specific days for in-person services. As of a notice dated January 13, 2026 by the department, public days are Monday, Wednesday, and Thursday.
Although 121,284 registered companies were required to file annual reports for the year 2024/2025 under review in terms of Sections131 (1) and (2) of the Companies Act, 119,295 companies, that is 98 per cent, had not complied with the order, the Auditor General Department’s recent report revealed.
Further, out of 112,586 companies that had not filed annual reports in previous years, 107,123 companies, that is 95 per cent, had failed to comply with the order.
Due to such non-filing of annual reports, the total arrears of income identified as at June 30, 2024 was Rs. 3,560 million.
Although Section 131(4) of the Companies Act provides that failure to submit an annual report to the Registrar of Companies once in every year shall be liable to a fine not exceeding Rs.100,000 and every officer of the company who commits the default shall be liable to a fine not exceeding Rs 50,000,
Complying with Sri Lanka Accounting Standards (SLAS) and International Financial Reporting Standards (IFRS) can be complex and costly, especially for Small and Medium Enterprises (SMEs), several heads of SME’s and NGO’s registered with the DRC told the Sunday Times Business.
This often requires high-cost consultancy services and internal expertise, which many companies struggle to afford or have access.
Some companies, particularly SMEs, may lack the basic knowledge and understanding of how to prepare and file their annual reports correctly and on time, they said adding that some non-operational companies mistakenly believe they are exempt from the filing requirement.
However, annual returns are mandatory regardless of operational status; non-operational companies must formally apply to be struck off the register if they wish to cease filing,
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