Business Law
This domain tests the commercial law framework a finance professional operates in: company law, contract, employment obligations and the instruments that make transactions enforceable. Sri Lankan commercial law is Roman-Dutch in origin, overlaid by English statutory commercial models, so expect questions that mix both.
Company law under the Companies Act No. 7 of 2007
- Shares have no par value; distributable profit is tested through the solvency test rather than a capital-maintenance rule.
- Directors owe duties of good faith and the care of a reasonably diligent person; a director with a conflict must disclose it.
- Minority shareholders have statutory remedies for oppression; the company secretary and audit requirements apply unless the company qualifies for an exemption.
Employment and statutory payments
- EPF: 8% employee and 12% employer on the defined earnings.
- ETF: 3% employer.
- Payment of Gratuity Act No. 12 of 1983: half a month's wages per completed year of service after five years' continuous service.
Worked example
An employee retires after 10 completed years with a last monthly salary of LKR 60,000. Half a month's wages = LKR 30,000. Gratuity = 30,000 × 10 = LKR 300,000, payable by the employer; it is not an EPF benefit and is not reduced by EPF balances.
Traps that cost marks
Applying a par-value dividend rule that the 2007 Act abolished; confusing gratuity with EPF/ETF; assuming every contract needs consideration in the English sense rather than checking the Roman-Dutch requirement of causa; forgetting that land transfers require notarial attestation and registration under the Prevention of Frauds Ordinance; quoting employment thresholds without checking the current gazette.