PART - VII 
MANAGEMENT

Board of Directors 

46. i.  Every Company  shall have  a Board  of Directors  which  shall comprise at least two directors, including the Chairman. 

ii. The  management, direction, general superintendence and control of the affairs  and operations  of a company shall be vested in the Board of Directors. 

iii. The  Chairman and  the Managing Director representing the company shall  be   accountable  to  the  shareholders  for  the  affairs  and operations of the company. 

General Powers 

47. The  Board of  Directors shall  have all  the powers  necessary to carry out its functions under section 46. 

Operating Principles 

48. The  affairs and operations of a company shall be conducted by the Board in accordance with the following principles : 

a.   corporate autonomy shall be exercised subject to applicable laws, rules, regulations and policies of the Government; 

b. the  Board shall  pursue sound  and prudent financial management by keeping the  operations and  expenditures of  the company  within  the bounds of  laws and  regulations, as well as the standards of economy, efficiency and effectiveness; 

c. the  Board shall  see that corporate funds and property are handled properly and  that the  company achieves  the purposes  and objectives under its  Articles for  which funds  and property and other resources have been made available; 

d. the  Board shall  exercise the  diligence of  a faithful trustee on behalf of  shareholders while  supervising accountable  officers under their control  to prevent the incurrence of loss of funds or property, otherwise they shall be held jointly accountable with such officers. 

Appointment of Directors 

49. The  Directors of  the Board,  including the  Chairman,  shall  be appointed by  the shareholders  from among  individuals who  have  had experience  in   industrial,  commercial   or  financial  matters  and administration. 

Eligibility 

50. i. A person shall not be eligible to b a Director of a Company if- 

a.  he has not attained the age of majority; 

b. he  is not  a Bhutanese national (unless this requirement is waived by the Department); 

c. he is insolvent or of unsound mind; 

d. he  is or  ha been  convicted at  any time  of an offence involving moral turpitude  and sentenced  to imprisonment  for a  period of five years or more; 

e. he  holds directorship  of  five  or  more  companies  without  the approval of the shareholders; and 

f. his  acts or  deeds are  found detrimental  to the interests of the company. 

ii. When  any fact  arises during  the tenure  of office of a Director which makes him ineligible to continue as Director, he Board may, upon being satisfied of that fact declare his office to be vacant. 

Filling of Particulars 

51. The  following particulars  of a  Director shall be filed with the Department within thirty days of the date of appointment. 

a.  full name; 
b.  residential address; 
c.  occupation; 
d.  other directorships held and financial interest, if any; 
e.  age; and 
f.  date of appointment. 

Consent in Writing 

52. A  person shall  not be appointed for the first time as a Director unless he  has given his consent in writing to the company to act as a Director, and  a  copy  of  such  consent  shall  be  filed  with  the Department together with the particulars stated in section 51. 

Duration of Office 

53. A  Director shall,  unless his appointment is sooner terminated by the shareholders  or he otherwise ceases to be a Director, hold office for such period as the shareholders may specify in his appointment and shall be eligible for re-appointment. 

Resignation 

54. A Director may resign by giving a notice in writing to the Board. 

Retirement 

55. i.   A  Director  shall  retire  at  the  Annual  General  Meeting following the  completion of  his term of appointment provided that he shall continue  in office until the Annual General Meeting is held and shall be eligible for re-appointment. 

ii. The  first Directors of a company shall retire at the first Annual General Meeting and shall be eligible for re-appointment. 

Removal 

56. i.  A Director may be removed by a majority of the shareholders at the General Meeting. 

ii. A  Director shall  have the  right to  represent his  case at  the General Meeting. 

57. All  the shareholders  may,  by  agreeing  in  writing,  remove  a Director without  calling a  General Meeting and such removal shall be ratified at  the next  General Meeting  and the  fact recorded  in the minutes. 

Managing Director 

58. i.  There shall be for every company a Managing Director who shall be appointed  by the  Board of  Directors with  the  approval  of  the shareholders. 

ii. A  Managing Director  shall be appointed for an initial period not exceeding five  years and  shall be  deemed to  have been re-appointed unless the Board of Directors passes a resolution to the contrary. 

iii. A Managing Director shall be the member secretary of the Board of Directors and  shall function  concurrently  as  the  Chief  Executive Officer of the company and shall have substantial powers of management subject to the control and general direction of the Board. 

Meetings of the Board 

59. i.  The Board  shall meet  as often  as it  deems in  necessary or expedient for  the due  performance of  its  functions  but  not  less frequently than  four times in a calendar year and at intervals of not more than three months. 

ii. The  Chairman and  the Managing Director may, and, upon request of not less  than half the number of Directors of the Board shall, call a Board Meeting. 

iii. The  Chairman, or,  in the  event of his absence, or inability to act, a  Director elected  by the  Director present, shall preside at a meeting of  the Board and shall, where voting is equal, have a casting vote. 

iv. A  Notice in writing shall be given of the date, place and time of a meeting  provided that  such notice may be dispensed with by consent of all the Directors. 

v. The  quorum of the Board shall be a majority of the total number of Directors of the Board. 

vi. The  Board shall  take decisions at a meeting by a simple majority of the Directors present. 

vii. The  Board may,  if it  thinks  fit,  transact  any  business  by circulation of  papers, and,  a  resolution  in  writing  approved  in writing by a majority of the Directors shall be valid and effectual as if it  had been  passed at  a meeting of the Board by the votes of the Directors. 

Vacancy 

60. Any vacancy occurring in the Board of Directors shall be filled by co-option by the Board within the period specified in the Articles. 

Disclosure of Interest 

61. A  Director shall  disclose his  personal interest, if any, in any business or  matter placed  before the  Board and  shall abstain  from voting thereon. 

Minutes of Meetings 

62. i.  Minutes shall  be kept of all meetings of the Board and of its committee in bound books. 

ii. Minutes  shall contain  a fair  and correct summary of proceedings and decisions  arrived  thereto  and  shall  state  the  name  of  the Director, if  any, who  is personally  interested in any matter or who abstains from voting or who votes against any decision. 

iii. Minutes  shall be  prepared within thirty days of the meeting and signed by  the Chairman  of the  meeting or  the Chairman  of the next meeting after  copies thereof  are circulated to all the Directors and tabled at the next meeting for ratification. 

iv.  The  minutes  shall  be  conclusive  evidence  of  decisions  and resolutions passed by the Board. 

v. The  use of  the company's  seal and the purpose therefore shall be authorised by  a quorum  of Directors  and shall  be recorded  in  the minutes. 

Remuneration 

63. The  Directors may  be paid  out of  the funds of the company such remuneration and  allowances, including  sitting  fees  for  attending Board Meetings, as the shareholder may determine from time to time. 

Validity of Proceedings 

64. The  validity of  any proceedings  of the Board of Directors shall not be affected by any vacancy among the Directors or by any defect in the appointment of a Director. 

Appointment of Buying and Selling Agent 

65. i.  Non-Bhutanese persons,  including a Foreign Company, shall not be appointed  as buying  or selling  agents of  a  company  in  Bhutan without the approval of the Board. 

ii. The  Board may  authorise the  management to  appoint a  buying or selling agent  from/in other  countries in  the best  interests of the company. 

iii. A  Director of  a company or any of his family members or another company shall  not be  appointed as  buying or  selling agents  of the first mentioned company without the approval of the Board.