PART - VI 
ACCOUNTS, AUDIT, TAXES AND DIVIDENDS

Accounts

35. i.  Every company  shall keep  at its registered office or at such other place  approved by the Department proper books of account giving a true and fair view of the affairs of the company with respect to: 

a.   all sums  of money  received and  expended by the company and the matters in respect of which the receipt and expenditure took place; 

b.  all sales and purchases of goods and services by the company 

c.  the assets and liabilities of the company; and 

d.   such other  particulars as may be required by the Department from time to time. 

ii. Where a company has more offices than one, monthly returns showing receipts and  payments and  other necessary  details must be submitted regularly every month to the registered office by the other offices. 

iii. The books of accounts shall be kept on mercantile system based on generally accepted accounting principles. 

36. The  books of  account and  other documents at any office shall be made available  for inspection  to the  Department or  its  authorised agents at  any time  during business  hours  on  any  working  day  on receiving not less than forty eight hours notice. 

37. The  books of  account shall be preserved for a period of not less than five  years from  the close  of the  year to which it relates and thereafter the books may be destroyed only with the specific authority of the Board. 

Annual Accounts 

38. i.  Every company  shall in each year prepare its annual accounts, namely, the  profit and  loss account  and  funds  statement  for  its financial year,  and a  balance sheet  as on  the last day of the said financial year. 

ii. The  annual accounts  duly audited and approved by the Board shall be submitted  to the  shareholders for  adoption at the Annual General Meeting to  be held  within six  months of  the close of the financial year or  such extended  period which the Department, for reasons to be 
recorded in writing, may approve. 

iii. The  annual accounts  shall be  authenticated for an on behalf of the Board  by the  Chairman and  at least two Directors, including the Managing Director. 

iv. A  copy of  the annual  accounts together  with the reports of the Board and auditors thereon shall be sent to: 

a.   the shareholders  along with or  at the  same time  as the  notice convene the Annual General Meeting at which they are to be considered; 
and 

b.   the Department  within thirty  days of the Annual General Meeting indicating whether  they have  been adopted  or not  and reasons where applicable for non-adoption. 

v. Where  a company fails to comply with provisions of subsections (i) - (iv)  for any  reason, the  Department may,  on its  own or  at  the request of  any  shareholder,  issue  appropriate  directions  to  the company to have its annual accounts prepared and audited. 

Board's Report 

39. i. 
a. There  shall be  attached to  the annual  accounts a report thereon by the Board. 

b. The  report shall  be signed on behalf of the Board by the Chairman or any other person authorised by the Board. 

ii. The Board's Report shall include the following information: 

a. the state of the company's affairs and performance of each division where the company has more than one division; 

b. the dividend, if any, recommended; 

c. performance of each of the subsidiaries of the company and  its business; 

d. full  explanation on  qualification, if  any, made  by the  auditor on the annual accounts; and 

e. future plans and prospects of the company. 

Audit 

40. i.  The accounts  of each company shall be audited at least once a year and  the correctness  and fairness  of its  accounts  and  annual statements  of   financial  condition   and  results   of   operations ascertained by  auditor(s) appointed  by  the  Board  from  the  panel maintained by Royal Audit Authority. 

ii. The  remuneration of  the auditor(s) and the period of their audit shall be agreed to by the Board. 

iii. a.  In the  case of  Government and  Joint sector  Companies, the Auditor General of Bhutan shall be the ex-officio auditor. 

b. The Auditor General may designate his representative(s) from the Royal  Audit Authority  to undertake  the audit  or may appoint an  independent firm to do the audit and report thereon. 

c. The remuneration of the auditors shall be agreed to between the Auditor General and the auditors subject to the approval of the board. 

Auditor's Report 

41. i.  Every auditor  of a  company shall have right of access at all times, to  the books  and papers  of the  company whether  kept at the registered office of the company or elsewhere and shall be entitled to obtain  from   the  officers  of  the  company  such  information  and explanation as  the auditor  may think  necessary for  the purpose  of preparing his report. 

ii. The  auditor shall  make a  report to  the  Board  on  the  annual accounts and  performance of  the company  and a  copy of  the  report together  with   the  annual   accounts  shall  be  submitted  to  the Department. 

iii. The  auditor's report  shall state  whether in his opinion and to the best of his information and according to the explanations given to him, the  annual accounts give the information required by this Act in the manner so required and give a true and fair view. 

Taxes 

42. A  company shall  be liable to pay taxes levied by the Government. Annual tax  returns duly  supported with audited annual accounts shall be filed  by a  company with  the Department of Revenue and Customs of the Ministry of Finance within such time as may be prescribed. 

Dividends 

43. i.  Dividends may be declared or paid by a company only out of the profits after payment of taxes and transferring a reasonable amount of the profits  to its  general reserve,  provided that,  the  amount  so transferred shall not exceed 20% of the net profit for the year unless otherwise expressly approved by the shareholders. 

ii. In  special circumstances  dividends may  be declared  in whole or part out of income accumulated in the general reserve as the Board may deem fit  but not out of reserves created for capital purposes and not exceeding the dividend declared in the previous year. 

iii. Profits  available for  the purpose  of declaration  of dividends shall be  determined by  the Board  having  regard  to  the  generally accepted accounting  principles and  any  guide-lines  issued  by  the Government. 

44. The  Board shall  have the  power to  declare and  pay one interim dividend in  respect   of a  year and  the final dividend for any year shall be  declared by  the shareholders  at the Annual General Meeting upon the recommendation of the Board. 

45. i. Final dividend once declared shall be debt due from the company to the shareholders and shall be paid within sixty days of declaration unless the  Department extends  the time for reasons to be recorded in writing. 

ii. Dividends shall be paid by cheque or warrant issued on a bank. 

iii. A  cheque or  warrant making payment of dividend shall be sent to the shareholder  concerned within sixty days by registered post to his registered address. 

iv. Dividends  shall be deemed to have been duly paid if it is paid to the shareholder or his authorised representative.