The Treasury has issued a new Public Enterprises Circular introducing a revised framework to govern sponsorships, donations, Corporate Social Responsibility (CSR) initiatives, and indirect business-related promotional expenses undertaken by State-Owned Enterprises (SOEs). The measures, effective from 1 January 2026, aim to strengthen financial discipline, transparency, and alignment with national development priorities.
Issued by Treasury Secretary Dr. Harshana Suriyapperuma, Public Enterprises Circular No. 01/2025 directs all SOEs, including commercial corporations, statutory boards, fully or majority-owned government companies, and state banks, to adopt stricter controls and reporting systems relating to non-core expenditure.
1% Expenditure Cap and Prohibition on Treasury Funds
Under the new rules, total annual spending on sponsorships, donations, CSR, and indirect promotional activities cannot exceed 1% of the SOE’s actual recurrent expenditure from the previous financial year. Treasury budgetary provisions are strictly prohibited from being used for any such spending.
Boards of Directors are required to ensure all expenditures are non-political, non-personal, justified by scope, and fully aligned with the Government’s broader development agenda. No commitments may be made without prior approval.
Strengthened Governance and Strategic Alignment
SOEs must update their strategic plans as per national governance guidelines, ensuring that all such activities support the entity’s long-term roadmap.
SOEs are also expected to improve dividend contributions to the State. Based on quarterly financial performance, entities should endeavour to declare interim dividends or levies to the Treasury, and must remit at least 30% of profit after tax annually to the Consolidated Fund, subject to future operational needs.
Reporting Requirements Tightened
The circular introduces new mandatory reporting and monitoring obligations, including:
- Quarterly expenditure summaries to the Department of Public Enterprises, detailing budgets, spending to date, balances, and approving authorities.
- A dedicated internal register for all approved spending for audit purposes.
- Full disclosure of such expenditure in annual reports.
- Submission of updated strategic plans to the Treasury at least 15 days before each financial year begins.
Old Guidelines Revoked
Section 12.1 of PED Circular No. 01/2024 will be revoked from 1 January 2026, with all SOEs required to fully comply with the revised framework thereafter.
Source : Ada Derana Biz