The Companies Act of the Kingdom of Bhutan, 1989

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Part – I

This Companies Act was approved by the 102nd session of the Lhengyal Shungtshog held on October 9, 1989 at Tashichho Dzong. Thimphu in suppression of the existing Companies Act, Corporate Charters and regulations.

This Companies Act, 1989 comes into effect from the 29th day of October, 1989.

Ministry of Trade & Industry

PRELIMINARY

Short Title, Commencement and Extent

1. i. This act may be called the Companies Act of the Kingdom of Bhutan, 1989.

ii. It shall come into force with effect from 29 October, 1989.

iii. It shall extend to the whole of the Kingdom of Bhutan.

Definitions

2. In this Act, unless the context otherwise requires:

i. “Administrative Ministry” means the Ministry to which a company is attached by the nature of its operations and the programme to which it pertains.

ii. “alter” and “alteration” shall include the making of additions and omissions.

iii. “Articles” means the Articles of Incorporation of a company.

iv. “Board of Directors” or “Board” in relation to a company means Directors collectively acting as the Board of Directors of the company.

v. “books and papers” means and includes accounts, deeds, vouchers, writings and documents.

vi. “capital” means amounts contributed by shareholders towards the capital of a company and includes capital credited as paid up.

vii. “Chairman” means the Chairman of the Board.

viii. “company” means any company limited by shares incorporated under this Act as a company.

ix. “debenture” means a document acknowledging debts to persons and includes debenture stock, bonds or any other security of a company having fixed interest rate and specified maturity period whether secured or unsecured.

x. “Department” means the Department of Trade and Industry of the Government (entrusted with the administration of this Act or such other authority as may be prescribed from time to time.)

xi. “Director” means a director of a company appointed as a member of the Board under this Act.

xii. “document” means and includes summons, notices, requisitions, orders or other legal processes and registers whether issued, sent or kept in pursuance of this or any other Act or otherwise.

xiii. “Foreign Company” means a body corporate not incorporated under the laws of Bhutan.

xiv. “Government” means the Royal Government of Bhutan.

xv. “Government Company” means a company where the full capitalization has been provided by the Government.

xvi. “Holding Company” means a company which holds more than 50 per cent of shares of another company namely its subsidiary and the term ‘subsidiary” shall be construed accordingly.

xvii. “Joint Sector Company” means a company where the majority capitalization has been provided by the Government.

xviii. “Managing Director” means the managing head of a company or the chief executive officer who exercises overall management of the company.

xix. “Persons” include an individual, a company, a Government agency and any body of persons recognised as a separate legal entity.

xx. “Private Company” means a company where the majority or full capitalization has been provided by the private sector.

xxi. “prospectus” means any document issued to the public inviting offers from the public for subscription or purchase of any share in or debenture of a company.

xxii. “shares” means shares in the share capital of a company.

xxiii. “shareholder” means a person who holds shares in the company and whose name is listed in the Register of Shareholders.

xxiv. “in writing” means and includes printing, typing, writing by hand and other modes of representing or reproducing words in visible

form.

xxv. “family” shall be construed to have the same meaning as defined in the law of the land.

xxvi. Words importing masculine gender also include the feminine gender.

xxvii. Words importing the singular number also include the plural number and vice versa.

The Companies Act of the Kingdom of Bhutan, 1989

Part – II

Incorporation Of A Company And Matters Incidental There to

Mode of Forming an Incorporated Company

3.

i. Any two or more persons associated for any lawful purpose may, by subscribing their names to an Article of Incorporation and complying with the provisions of this Act in respect of registration, form an incorporated company having the liability of its shareholders limited by the Articles to the amount, if any, unpaid on the shares held by the, provided that, a non-Bhutanese person, including a foreign company, may not become a subscriber to the Articles without the written approval of the Government.

ii. The requirement of a minimum number of two persons shall not be applicable in case of Government Companies.

Requirements as to Articles

4.

i. The Articles shall be consist of the following clauses:

a. name clause,

b. registered office clause,

c. objects clause,

d. capital clause,

e. limited liability clause, and

f. regulations clause.

ii. The Articles shall be in the form given in Schedule-I or in a form as near thereto as circumstances admit.

iii. The Articles shall be printed, divided into paragraphs, numbered consecutively, have judicial stamps affixed and shall be signed by each subscriber, who shall add his name, address, description and occupation, if any, in the presence of at least one witness who shall attest the the signature and shall likewise add his name, address, description and occupation, if any.

iv. Any alteration to the Articles involving change in the provisions required to be included in the Articles under Section 4(i) (a)-(e) above shall be done with the approval of the shareholders and the Department, and the alternation shall be published in a national newspaper within thirty days thereof.

Name

5. i. The name clause of the Articles shall specify the name of the company as approved by the Department.

ii. A change of name shall not affect any right or obligation of a company, or render defective any legal proceeding by or against it.

Registered Office

6. The registered office clause of the Articles of a company shall give the name of the city, town or village where the registered office of the company is situated.

Service of Documents

7. A document may be served on a company or an officer thereof by sending it to the company or officer at the registered office of the company by registered post or by leaving it at its registered office.

Publication of Name and Address of Registered Office

8.

i. Every company shall paint or affix its name and address of its registered offices outside its every office in easily legible characters in Dzongkha.

ii. Every company shall mention in all its business letters, in all its letter heads, invoice, orders for money or goods and in all its notices, Share Certificates and other publications, the following.

a. its name,

b. logo,

c. address of its registered office,

d. the fact that it is incorporated in Bhutan and, in the case of a Government Company, the fact that it is wholly owned by the Government, or, in case of a Joint Sector Company, the fact that it is a Joint Sector Company, or in the case of a Private Company, the fact that it is a Private Company.

iii. Every company shall have its name mentioned in all bills of exchange, promissory notes, endorsements, cheques and letters of credit signed by or on behalf of the company.

i. The objects clause of the Articles shall specify the objects for which the company is incorporated and the objects shall be lawful.

ii. Subject to the provisions of this Act and to other applicable laws a company shall have all powers necessary an incidental to the carrying out of the objects specified in the objects clause.

iii. Actions taken by a company which are outside or beyond the scope of the objects given in the Articles of Incorporation shall be unlawful and the Directors and officers of the company shall be liable to penalty as prescribed in section 80.

****pital

i. The authorised capital of each company shall be prescribed in the capital clause of the Articles.

ii. The authorised capital of a company shall consist of two kinds of shares, namely:

a. Ordinary Shares having equal face value that shall entitle the holder thereof to the right to vote on every resolution placed before the General Meeting of the company.

b. Preference Shares that shall confer on the holder preferential rights as to payment of dividends at a fixed rate on a cumulative or non-cumulative basis, or repayment of capital in case of liquidation of the company, or the right to participate fully or to a limited extent in any surplus which may remain after the entire capital has been repaid.

Limited Liability

1. i. The limited liability clause of the Articles shall state that the liability of the shareholders is limited.

ii. The liability of a shareholder shall be limited to the extent of shares issued by the company and accepted by the shareholder.

Regulations

12. The regulations clause of the Articles shall, inter alia, provide for the following matters

a. any specific right that may be conferred on, or any particular requirement, condition or other matter to be fulfilled by a shareholder or a group of shareholders;

b. the manner in which the business of the Board shall be transacted and the procedures to be followed at Board meetings;

c. the delegation of powers and functions by the Board to the Managing Director, other Directors and officers of the company;

d. the constitution and management of staff and superannuation funds for the employees of the company;

e. the form and manner in which contracts binding the company shall be executed;

f. the form in which the balance sheet of the company shall be drawn up and in which the accounts, including annual accounts, shall be maintained;

g. generally for the efficient conduct of the business of the company.

Registration

13. i. A company shall file with the Department the following documents in connection with the registration of the company:

a. the Articles of Incorporation,

b. names of the first Directors (including the Chairman and the Managing Director) together with their consents in writing,

c. a declaration by the proposed Managing Director (or secretary) of the company or any other person specified by the Department from time to time stating that the Articles comply with the provisions of this Act or any rule made by the Department in connection with registration. The department may on scrutiny accept such declaration as sufficient evidence of compliance.

ii. The documents referred to in clause (i) above shall be accompanied by a fee as prescribed by the Department from time to time.

iii. If the Department is satisfied that all the requirements aforesaid have been complied with and that the company is eligible to be registered under this Act, it shall retain and register the

Articles and certify in writing that the company is incorporated under this Act.

iv. A Certificate of Incorporation issued by the Department shall be in the form given in Schedule – II and shall be deemed to be conclusive evidence of registration and compliance of matters precedent and incidental thereto.

v. The Articles shall from the time of registration bind the company and the shareholders thereof to the same extent as if it had been signed by the company and by each shareholder and contained convenants on its and his part to observe all the provisions of the Articles.

vi. From the date of incorporation mentioned in the Certificate of Incorporation, such of the subscribers of the Articles and other persons as may from time to time be shareholders of the company, shall be a body corporate by the name contained in the Articles, capable forthwith of exercising all the functions of an incorporated company and having perpetual succession and a common seal with its name engraved thereon and the company may sue or be sued in its own name.

Effect of Registration

14.

i. Upon registration, a company shall, without prejudice to an power under the law, have powers, inter alia, to do the following acts in its own name:

a. to enter into contracts with any other person in the same manner as an individual;

b. to execute, endorse or deal with deeds, negotiable instrument including any bill of exchange or promissory note;

c. to sue and be sued;

d. to purchase, sell or deal with movable and immovable properties; and

e. to empower any person either generally or in respect of any specified matter as its agent or attorney.

ii. A company shall within six months from the date of its incorporation send to the shareholders a statement showing the progress made in carrying out its objectives and the manner in which the capital issued by the company till the date of the statement has been utilized.

The Companies Act of the Kingdom of Bhutan, 1989

Part – III

Shares, Share Capital And Shareholders

Authorised and Issued Capital

15. i. The capital mentioned in the Articles of Incorporation shall be the authorised capital of the company within which the company shall be entitled to issue shares.

ii. The authorised share capital may be varied with the approval of shareholders and the Department.

Paid up Capital

16. i. Subject to other provisions of this Act. all shares issued by a company shall be paid up within ninety days of allotment or within such extended time as the Board may permit.

ii. If the amount due of shares is not paid up within the time specified in subsection (i) above, the Board may decide to charge interest at a rate not exceeding the maximum Bank Overdraft rate applicable to the company and the share together with the money paid on application shall be liable to forfeiture.

Amount Payable on Application

17. Not less than 25% of the amounts payable on shares shall be paid along with the application.

Issue of Further Shares

18.

i. Subject to section 15, the Board may increase the issued capital of the company by issuing further shares to the shareholders and/or to the public with the approval of the shareholders and the Department.

ii. Shares may be issued at par, at premium, or at discount.

iii. A company may at any time issue to the ordinary shareholders bonus shares pro-rata by capitalisation of its free reserves and undistributed profits or utilisation of shares premium with the approval of the shareholders and the Department.

iv. Any further shares issued by a company shall rank pari passu with the existing shares already issued in all respects. However, the entitlement to dividend on the new shares shall be from such date as the company may decide.

Offer of shares to the Public

19.

i. Offer of shares to the public shall be made by issuing a prospectus containing particulars prescribed under subsection v) below and the prospectus shall incorporate such changes as the Department may require before it is issued to the public.

ii. The prospectus shall be printed, dated and signed by the Chairman and Managing Director and it shall be registered with the Department for a period of not less than seven days before the offer of shares is made and every copy of prospectus shall state that the prospectus has been so registered.

iii. The offer shall be made by publishing the prospectus in a national newspaper.

iv. A copy of the prospectus shall be given alongwith the application form for shares.

v. The prospectus shall, inter alia, contain the following particulars;

a. name of the company;

b. main objects of the company and present business of the company;

c. particulars of authorised, issued and paid up capital and of any borrowings, including by the issue of debentures, with a period to maturity exceeding twelve moths;

d. particulars of shares issued or to be issued for consideration other than cash.

e. names and addresses of the Directors, including the Managing Director, auditors and bankers of the company;

f. shares held by the Directors;

g. purpose of making the offer;

h. amount of premium or discount on shares;

i. underwriting commission payable on the shares under issue which shall not exceed 2% of the amount of capital underwritten and names and addresses of persons to whom such commission is payable.

j. brokerage not exceeding one per cent of the value of shares to be procured by the brokers and names and addresses of such brokers;

k. report of the auditors on the turnover, profits and dividends of the company for the past five financial years or such lesser period for which the company has been in existence, and on the financial stability or solvency having regard to the proposed share issue;

l. interest of the Directors and their family members in any contract or arrangement with the company; and

m. other particulars, if any, prescribed by the Department.

vi. the Chairman and Managing Director signing the prospectus shall be personally responsible for any false statement or misstatement in the prospectus made deliberately or with knowledge thereof and shall be personally liable to pay compensation to any person who suffers any

loss or damage arising from his subscription or purchase of shares offered through the prospectus provided that any such Chairman or Managing Director shall not be liable if he withdraws his consent for issue of prospectus before the date of publication in a national

newspaper and gives a public notice in a national newspaper of that fact.

Application and Allotment

20.

i. Every person intending to become a shareholder (other than a subscriber to the Articles) shall submit an application in writing in the form prescribed by the company enclosing therewith the amount payable on application within such time as may be specified by the company.

ii. The Board may allot shares to the applicant upon receipt of the application together with the money payable thereupon provided that no allotment may be made to a non-Bhutanese person, including a Foreign Company, without the approval of the Government.

iii. All moneys received in respect of applications shall be kept in a separate bank account till the allotment of shares is made and refund shall be made to the applicants who have not been allotted or have been allotted lesser number of shares than applied for as the case may be.

iv. Shares may be allotted for consideration other than cash only with the approval of the shareholders.

v. Particulars of shares allotted with the names of shareholders shall be filed with the Department within thirty days of allotment.

Nature of Shares and Voting Rights

21. i. Shares in a company shall be movable property and transferable in accordance with the provisions of this Act or rules, if any, made thereunder and the Articles.

ii. Shares shall be distinguished by appropriate numbers serially given and shall be evidenced by one or more Share Certificates.

iii. Each Ordinary Share fully paid up shall entitle the holder to one vote.

iv. Each Ordinary Share shall be of uniform amount.

v. The voting rights pertaining to the holders of Preference Shares shall be specified in the Articles.

Certificate of Shares

22. i. A certificate under the seal of the company specifying any share held by any shareholder shall be prima-facie evidence of the title of the shareholder to such share.

ii. A certificate shall be in the form specified in Schedule – III.

iii. A certificate may be renewed or a duplicate of a certificate may be issued by a company upon the application of a shareholder if such certificate.

a. is proved to have been lost or destroyed; or

b. having been defaced, or mutilated or torn is surrendered to the company on such terms and upon such indemnity or guarantee as the Board may think fit.

Transfer of Shares

23.

i. Shares may be transferred by duly executing an instrument of transfer in the form specified in Schedule – IV in favour of the transferee and having the transfer registered in the books of the company upon production of the instrument of transfer together with the relevant Share Certificate.

ii. All transfers in favour of non-Bhutanese persons including a Foreign Company shall be done only upon obtaining written approval of the Government.

iii. Upon receipt of a duly executed instrument of transfer and the relevant Share Certificate, the company shall, subject to the provisions of subsection (ii), proceed to register the transfer within thirty days from the date of receipt.

iv. Particulars of all transfers approved or refused shall be forthwith recorded in a Register of Transfers in the form prescribed in Schedule – V.

v. A company may in the interest of the company and if permitted by the Articles have the power to refuse transfer of shares for reasons to be recorded in writing.

vi. Where a company refuses to register a transfer or fails to register a transfer within the prescribed time, any aggrieved party may make an application to the Department for suitable directions to the company and the Department shall dispose of the applications after hearing the parties.

Nominee

24. For each share allotted only one nominee may be nominated by the shareholder which fact shall be recorded on the Share Certificate and in the Register of Shareholders.

Transmission of Shares

25. i. In the case of death of a shareholder, the company shall transmit the shares to the name of the nominee.

ii. In the case of lunacy or insolvency of a shareholder the company shall, upon production of an order from the Court, transmit the shares held in the name of the shareholder to the name of the person mentioned in the order who shall be the nominee or if the nominee is a minor the legal guardian of such a nominee.

Register of Shareholders

26. i. a. A company shall maintain a Register of Shareholders in the form specified in Schedule – VI

b. An index shareholders shall also be maintained by the company in alphabetical order.

ii. Particulars of all issues of shares, transfers and transmission shall be entered in the Register of Shareholders and where a shareholder is a non-Bhutanese person the Register of Shareholders shall specify the fact.

iii. The Register of Shareholders may be closed for periods not exceeding in the aggregate thirty days in any year by publishing a notice in a national newspaper not less than seven days before the closure in each case.

Annual List of Shareholders

27. Each year the company shall deliver to the Department a list of shareholders as on the date of the Annual General Meeting held in that year within thirty days from the date of conclusion of the said meeting and the list shall contain the name and address of each shareholder alongwith the number of shares held by him.

The Companies Act of the Kingdom of Bhutan, 1989

Part – IV

Borrowings, Debentures And Charges

28. i. A company registered with the object of carrying on trade, commerce or manufacturing shall have power to borrow moneys for the purpose for which the company is incorporated.

ii. The total borrowings (exclusive of loans taken for working capital requirements of a company) shall not exceed thrice the paid up capital of the company or such other limit fixed by the Government.

iii. All borrowings by a company from outside Bhutan shall require prior approval of the Government.

Debentures

29. i. Subject to section 28, debentures shall be issued only upon approval by the shareholders.

ii. An issue of debenture to the public shall be made by issuing a prospectus similar in form and details to the prospectus specified in section 19.

iii. Debentures issued by a company may be secured by mortgage and/or charge on the assets of the company.

iv. For the purpose of securing debentures and enforcing the security, a company shall execute a trust deed in favour of its bankers or any other person approved by the debenture holders and the Department; a copy of the trust deed shall be filed with the Department within thirty days of execution.

v. Every debenture shall be evidenced by a certificate and shall include particulars, if any, prescribed by the Department.

vi. The provisions relating to transfer and transmission of shares shall apply mutatis-mutandis to debentures.

Charges and Mortgages

30. i. Particulars of all mortgages or charges created by a company or any modification or satisfaction thereof shall be filed with the Department within thirty days thereof or such extended time as the Department may allow.

ii. The filing of mortgages or charges with the Department may be done either by the company or by any interested person and where it is done by a person other than the company, the Department shall give notice of the particulars of the mortgages or charges to the company before

registering the same in its books.

iii. Section 30 shall apply to all types of mortgages and the following charges:

a. a charge on any immovable property of the company;

b. a charge, including pledge or hupothecation, on any movable property of the company;

c. a floating charge on the undertaking or any property of the company including stock-in-trade;

d. a charge on any other property or right of the company.

iv. If the mortgages or charges are not filed with the Department within the time specified above, the person in whose favour they are created shall not have the benefit of security constituted thereby as against any other creditor of the company.

v. The Department shall maintain a Register of Charges and shall issue certificate of charges as per its record.

The Companies Act of the Kingdom of Bhutan, 1989

PART – V

Loans, Investments, Guarantees And Donations Powers to Make Loans

31. i. A company whose main business is banking, insurance or financing or taking and giving loans may use its funds for making loans.

ii. Loans may be made by any other company only to its subsidiary or Holding Company on commercial terms approved by its Board.

iii. Where there is any doubt about the main business of a company the matter shall be decided by the Department upon application by any interested person and the decision of the Department shall be final and binding.

Investments

32. i. A company whose main business in banking, insurance, financing or investment or trading in shares may keep funds invested in shares and debentures of other companies or bodies corporate.

ii. Any other company may invest its funds –

a. in any of the recognised financial institutions in Bhutan;

b. in the shares of another company with the approval of shareholders.

iii. Investments in shares or debentures of a foreign company shall require the prior approval of the government.

iv. All investments made by a company must be held in its own name except where the investment is pledged as a security for any loan taken by the company or for the performance of any obligation undertaken by the company in relation to its business.

Guarantees

33. i. A company may give a guarantee in connection with any loan taken by its subsidiary or any performance of any obligation undertaken by it or its subsidiary, as the case may be.

ii. Save as aforesaid, a company shall not give any guarantee for and on behalf of any person except where it is necessary in the interest of the business of the company.

iii. Guarantees given by financial institutions in the course of their business shall not fall within the purview of section 33.

Donations

34. A company shall have power to make donations of reasonable amounts with the approval of the Board.

The Companies Act of the Kingdom of Bhutan, 1989

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.

The Companies Act of the Kingdom of Bhutan, 1989

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.

The Companies Act of the Kingdom of Bhutan, 1989

PART – VIII

General Meetings

Approval of the Shareholders and General Meetings

66. i. Approval of the share holders under this Act means:

a. resolution passed at a General Meeting of which notice required under section 66 (ii) (a) has been given and the votes cast in favour of the resolution by the shareholders present and entitled to vote exceed the votes cast against the resolution.

b. resolution which is circulated to all shareholders entitled to vote along with reasons for proposing the resolution and agreed to by the shareholders holding a majority of the shares.

ii. a. The Board may convene a General Meeting of shareholders at any time by giving not less than thirty clear days notice in writing to the shareholders unless shorter notice is agreed to, by all the shareholders entitled to vote.

b. Any accidental omission to give the notice shall not invalidate a General Meeting convened.

c. A General Meeting must be held at the registered office of the company or at such place within Bhutan as the Board may decide.

iii. Shareholders holding not less than 20% of the voting shares of a company shall be entitled to call a General Meeting provided that fifteen days notice is given to the company and the Board shall convene the meeting in accordance with subsection 66(ii) (a).

iv. a. A notice convening a General Meeting shall specify the date, time and place of the meeting and contain a statement of business to be transacted thereat along with reasons therefore and the interest, if any, of the Directors in the business.

b. A notice convening a General Meeting shall be advertised in a national newspaper at least once before the date of meeting.

Annual General Meeting

67. i. The first Annual General Meeting shall be convened within ninety days of the registration of the company.

ii. In addition to first Annual General Meeting or other General Meetings, the company shall within six months of the close of the financial year or such extended time as the Department may permit hold a General Meeting called Annual General Meeting at which, inter alia, the following business should be transacted –

a. consideration of the annual accounts, Report of the Board of Directors and the auditors thereon;

b. declaration of dividends (other than interim dividends already paid) which shall not exceed the amount or rate recommended by Board;

c. appointment of Directors in place of those retiring upon expiry of their term; and

d. noting the appointment of auditors by board.

iii. The agenda for the Annual General Meeting shall also include any business required to be included therein by shareholders holding not less than 10% of the total votes if a request in writing is made to the company not less than forty five days before the date of the meeting.

iv. In case of Government Companies the Government may, as sole shareholder, enter into alternative arrangements with the Board for the conduct of business that would otherwise be required to be transacted at General or Annual General Meeting provided that the prescribed period of six months or duly extended permitted period relating to matters specified in subsection it) of this section and also the provisions of section 68 relating to minutes of proceedings shall be applicable to Government Companies.

Provisions Relating to General Meetings

68. i. The Chairman of the Board or in his absence any Director, or in the absence of Directors, a shareholder elected by the shareholders present shall take the chair at any Annual or other General Meeting and shall have all the powers necessary for the proper conduct of the meeting.

ii. Where a company or body corporate holds shares in a company, such shareholding company or body corporate may by a resolution of its Board or through its attorney duly authorised, appoint a representative to attend any Annual or other General Meeting of the other company and vote thereat and such representative shall have all the powers of the shareholder.

iii. A shareholder entitled to attend and vote shall be entitled to appoint another person as a proxy to attend and to vote instead of himself ad the authority of proxy shall be deemed to have been cancelled if the shareholder entitled to vote attends in person.

iv. a. Minutes shall be kept of the proceedings of a General Meeting and entered in a separate bound book within thirty days of the meeting and shall not be pasted or otherwise affixed to the minute book.

b. The minutes of each meeting shall contain a fair and correct summary of proceedings thereat and shall set out the resolutions passed with number of votes cast in favour and against the resolutions.

c. The minutes shall be signed within thirty days of the meeting by the Chairman of the meeting or in his absence, any two Directors (including Managing Director) present at the meeting and appointed by the Board for the purpose.

d. Minutes of meetings shall be conclusive evidence of the resolutions passed by the shareholders.

The Companies Act of the Kingdom of Bhutan, 1989

Part-IX

Statutory Returns And Records Annual Returns

69. A company shall within six months from the close of its financial year submit an annual return to the Department giving particulars prescribed in Schedule – VII.

Registers

70. i. In addition to registers prescribed under other sections of this Act, a company shall where applicable maintain the following Registers and enter therein particulars or changes within thirty days of the happening of the event:

a. Register of Mortgage or Charges,

b. Register of Investments not held in the company’s name; and

c. Register of Debenture Holders.

ii. The Registers mentioned in section 70(i) shall be kept at the registered office of the company or such other place as may be permitted by the Department and shall be available for inspection by shareholders free of charge on any working day for at least two hours during business hours.

Copies of Documents and Inspection by Shareholders

71. A shareholders shall be entitled to inspect free of charge during business hours on any working day the following records of the company:

i. Copies of Articles,

ii. Register of Shareholders,

iii. Register of Transfers,

iv. Register of Mortgage and Charges,

v. Register of Debenture Holders,

vi. Instruments creating Mortgage or Charges,

vii. Register of investments not hold in company’s name,

viii. Minute books relating to Annual and other General Meetings.

Inspection and Investigation

72. The Department may on its own or shall, upon the request of shareholders holding not less than 10% of the total voting power, order inspection of the books of accounts or other documents of the company to ensure that they have been maintained in a correct and proper manner as per requirements.

The Companies Act of the Kingdom of Bhutan, 1989

Part – X

Amalgamation

73. i. Where two or more companies propose to amalgamate, they shall present a scheme of amalgamation to the Department for approval.

ii. Before considering the scheme, the Department shall direct a meeting of the shareholders of the companies concerned to be held for approving the scheme.

iii. Where shareholders holding 50% of the votes in each company approve the scheme, the Department shall proceed to consider the scheme including the objections, if any, from any person interested and pass such orders as it thinks fit, including orders relating to the following matters:

a the vesting of assets and liabilities of the company which is being amalgamated namely the transferor company in the transferee company without any further act or deed;

b. issue of shares by the transferee company to the shareholders of transferor company; and

c. dissolution of transferor company without winding up.

iv. The Royal Government may, in the public interest, order amalgamation of two or more Government or Joint Sector companies on such terms and conditions as it thinks fit

The Companies Act of the Kingdom of Bhutan, 1989

Part – XI

Winding Up

Voluntary Winding Up

74. i. A company may be wound up voluntarily by the shareholders at a General Meeting.

ii. The shareholders shall appoint a liquidator to wind up the affairs of the Company.

Compulsory Winding Up

75. i. The Department may on its own or at the request of the Administrative Ministry compulsorily wind up a company where, upon investigation of the company, the Department is of the opinion that:

a. the affairs of the company are being conducted in a manner prejudicial to the interests of the company its shareholders ad the country;

b. the company has no reasonable avenue available to enable the company to meet its debts;

c. the company has, without justifiable reasons, failed to commence business after its organisation or incorporation, or suspends its business for a period exceeding one year.

ii. The department shall appoint a liquidator to wind up the affairs of the company.

Duties of Liquidator

76. i. A liquidator appointed by the shareholders or by the Department shall take charge of all the assets and books of accounts and records of the company and prepare a statement of affairs of the company as on the date of winding up, including the following particulars:

a. the assets of the company stating separately the cash balance on hand and in the bank, if any, and the negotiable securities, if any, held by the company;

b. its debts and liabilities;

c. the names and addresses of its creditors stating separately the amount of secured and unsecured debts, and in the case of secured debts, particulars of securities given by the company their value and the dates on which they were given;

d. the debts due to the company with the names and addresses of the persons and entities from whom they are due and the amount expected to be collected or realized on account thereof and the officer/employee who approved the account.

e. any other information that may be required by law. Statements under subsection i. (a) – (e) shall be verified by the Managing Director and certified as correct by the auditor(s) as may be specified by the liquidator.

ii. A liquidator shall have all the powers to carry out his responsibilities under this Act.

iii. The Board, the Managing Director and all the officers and employees of the company shall render assistance to a liquidator in the exercise of his powers and duties.

77. i. For purpose of settling the claims against the company; the Government shall be paid the statutory dues in full in preference to other claims.

ii. After settling the claims against the company any balance shall be distributed pro-rata among the shareholders as per the Articles.

78. After settling all the claims and distributing the surplus the liquidator shall submit a report to the Department. Thereupon, the dissolution of the company shall be noted in the records of the Department.

Winding Up By the Court

79. Notwithstanding anything contained in this Act, the Court on receiving a petition may order that a company be wound up if it is of the opinion that it is just and equitable.

The Companies Act of the Kingdom of Bhutan, 1989

Part – XII

Penalties and Prosecutions

Penalties By Way of Imprisonment or Fine

80. i. The following acts or omission shall be offences :

a. failure to include in the prospectus particulars prescribed under section 19;

b. use of moneys received on application for any purpose not specified in section 20;

c. registration of transfers in favour of non-Bhutanese persons in contravention of section 23;

d. grant of loan in contravention of section 31;

e. making of investments in contravention of section 32;

f. giving of guarantees in contravention of section 33;

g. failure to keep books of accounts as required by section 35;

h. failure to prepare annual accounts and the Board’s Report as required by section 38 and 39;

i. failure to hold Annual General Meetings as required by section 67;

j. breach of an order under section 85;

k. actions taken by Directors or officers of a company beyond the scope of the objects given in the Articles of Incorporation;

l. unauthorised or improper use of a company’s seal by a Director or officer of the company or by any other person;

m. failure to file Annual Returns or to maintain registers as prescribed in the Act.

ii. Any person committing an offence shall be liable to a fine upto Nu. 10,000 or imprisonment upto three months or both.

iii. Nothing contained in section (ii) shall render any person liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of an offence.

Offences By Companies

81. Where an offence is committed by a company, the Board and the management shall be jointly responsible and liable to punishment.

he Companies Act of the Kingdom of Bhutan, 1989

Part – XIII

Miscellaneous

Power of the Department Concerning Approvals Etc.

82. i. The Department while –

a. according any approval, sanction, permission, confirmation or recognition; or

b. giving any direction or issuing any order, or

c. granting any exemption or extending time under this Act in relation to any matter;

may impose such conditions, limitations or restrictions as it thinks fit.

Powers to Condone Delay

83. Where a company fails to file particulars prescribed under this Act with the Department or make an application to the Department within the time stipulated, the Department may, upon request in writing, condone the delay on such terms and conditions as it thinks fit.

Protection of Action Taken in Good Faith

84. No suit, prosecution or other legal proceedings shall lie against a company or its officers and employees in respect of anything which is done in good faith or intended to be so done under this Act.

Power to Call for Information and Explanation

85. i. The Department may at any time call from a company and its officers such information and explanations as it thinks fit in connection with the business and conduct of affairs of the company, including suspected restrictive trade practices and, if such conduct is considered to be contrary to the national interest, the Department may, by an order in writing, direct the company to desist from that conduct or any other having similar effect.

ii. Any confidential document and information obtained by the Department shall not be disclosed to any unauthorised person.

Power to Make Rules and Regulations

86. The Ministry, with the concurrence of other concerned Ministries may make rules and regulations for carrying out the provisions of the Act.

Power to Alter Schedules

87. i. The Government may by notification in a national newspaper alter any of the Schedules of this Act.

ii. Any alteration notified under subsection (i) shall have effect as if enacted in this Act and shall come into force on the date of the notification, unless the notification otherwise directs.

Research and Development

88. A company shall undertake to carry out research and developments work commensurate with the efficient achievement of its objects.

Human Resource Development

89. A company shall allocate funds to train and develop human resources commensurate with the efficient achievement of its objects.

Management Participation Abroad

90. Management participation in a foreign company in another country or promotion of a foreign company abroad by any company will require the written permission of the Royal Government of Bhutan before such management participation or promotion are carried out.

Provisions of the Act and Amendment Thereof

100. His Majesty the King shall be the final authority and may, at his discretion review, amend or revoke any of the provisions of this Act.

29 October, 1989

Issued by

The Ministry of Trade & Industry

The Companies Act of the Kingdom of Bhutan, 1989

Schedule – I

Articles Of Incorporation

[See Section- 4]

I. Name Clause:

The name of the Company is “……………………..”

II. Registered Office Clause :

The Registered Office of the Company will be situated in …………………….

III. Object Clause :

a. The main objects to be pursued by the Company on its incorporation are

i

ii

iii

b. The objects incidental or ancillary to the attainment of the above main objects are:

i.

ii.

iii.

and the doing of all such other things as are conducive to the attainment of the foregoing main objects.

IV. Limited Liability Clause :

The liability of the members is limited.

V. Capital Clause:

The Authorised Equity share capital of the company is……….. Ngultrum divided into………..shares of………..Ngultrums each.

The Authorised Preference capital of the company is ……….Ngultrums divided into……….shares of………… Ngultrums each.

VI. Regulations Clause

Voting Rights

1. i. An ordinary shareholder shall have as many votes as the number of shares held by him.

ii. A preference shareholder shall have a right to vote only on resolutions placed before the company which directly affect the rights attached to his preference shares.

Issue of Share Certificate

2. i. Every person whose name is entered in the register of shareholders as holder of shares shall be entitled to have relevant Share Certificates issued or endorsed in his favour.

ii. Every shareholder shall be entitled to have Share Certificates free of charge.

iii. The company may at the request of the shareholder, subdivide the Share Certificates in which case the company shall be entitled to charge fee for each new certificate issued.

iv. a. Where a certificate is issued in place of one lost or renewed, it should state on the face of it that the certificate is being issued in place of the Share Certificate lost or surrendered and the

number of the original Share Certificate shall be indicated on the new certificate.

b. The company may charge a fee for each new Share Certificate issued in replacement of the original Share Certificate.

V. All Share Certificate shall be issued under the seal of the company and be authenticated by person(s) so authorised by the Board.

Nominee

3. For each share only one nominee shall be nominated by the shareholder which shall be recorded on the Share Certificate and in the Register of Shareholders.

Transfer of Shares

4. i. The transferor shall be deemed to be the holder of shares transferred till the name of the transferee is entered in the register of shareholders.

ii. The Board may decline to register a transfer of shares in favour of a person where the Board is of the opinion that it would be detrimental to the interest of the company.

Transmission of Shares

5. i. Upon death of a shareholder the nominee shall succeed to all the rights and his name shall be registered as a shareholder by the Company.

ii. The Board may require evidence as to title from any person who applies to the company for being entered as share holder in respect of shares upon death, lunacy or insolvency of a shareholder.

Dividend and Reserve

6. i. The Board may pay to its members one interim dividend in respect of a year as appears to it to be justified by the profits of the company.

ii. The company in a General Meeting may declare final dividend in respect of a year, but no dividend shall exceed the amount recommended by the Board.

iii. The Board may carry forward any profits which it may think prudent not to distribute as dividend.

Forfeiture of Shares

7. i. Where a shareholder fails to pay the amount due on the shares held by him, the Board may issue a notice to the shareholder at any time after the last date specified for payment informing him that unless the amount is paid by the date indicated in the notice, the shares will be forfeited without any further intimation.

ii. The notice mentioned in sub-regulation (1) shall be sent by registered post.

iii. If the amount due still remains unpaid, the Board may by passing a resolution forfeit the shares and thereupon the shareholder shall loose all his rights in the shares forfeited and the Share Certificates issued relating to the said shares shall cease to be valid and the Board shall have the right to re-issue those shares at its discretion. General Meetings.

8 i. All general meetings other than annual general meetings shall be called extraordinary general meetings.

ii. The Chairman of the Board failing whom any other director, failing whom any shareholder willing and present, shall preside as chairman at every general meeting of the company.

iii. The chairman may, with the approval of shareholders, adjourn a General Meeting from time to time and from place to place.

iv. No business may be transacted at the adjourned meeting when reconvened other than the business proposed at the original meeting.

9. i. A shareholder entitled to attend and vote shall be entitled to appoint a proxy to attend and vote instead of himself and the proxy need not be a member.

ii. An instrument of proxy shall be deemed to have been revoked when the shareholder attends in person and casts his vote.

Board Meeting

10. i. A director may and the the Managing Director shall on the requisition of a director summon a meeting of the Board.

ii. Questions arising at any meeting of the Board shall be decided by a majority of votes and such decision shall be final and binding.

iii. In case of an equality of votes, the chairman of the Board shall have a second or casting vote.

11. i. The Directors shall be reimbursed all the actual out of pocket expenses incurred in attending the meetings of the Board.

ii. The Board may delegate its powers to committees consisting of two or more directors on such terms and conditions as it thinks fit.

Trust in Shares not Recognised

12. Save as required by law, a company shall not recognise any trust or equitable or contingent interest in any shares.

Commission and Brokerage

13. i. Commission payable on account of under writing may be satisfied by payment of cash or allotment of shares.

ii. The company may pay on any issue of shares such brokerage as is lawful.

Seal

14. i. The Board shall provide for safe custody of the seal.

ii. The seal shall not be used except with the express written authority of the Board who shall record this fact and the reasons therefore in the Directors’ minutes.

iii. The seal shall be used to authenticate, inter alia, the following:

a. issued Share Certificates and transfer documents;

b. written guarantees entered into by the company;

c. loan documents and trust deeds;

d. debentures, mortgages and charges;

e. contracts and agreements entered into by the company.

iv. The authorised use of the seal shall be witnessed by two signatures authorised by the Board.

v. Unauthorised or improper use of the seal by a Director or officer of the company or any other person shall be punishable in accordance with section 80 of the Companies Act of the Kingdom of Bhutan 1989.

DECLARATION

We, the several persons whose names and addresses are subscribed, are desirous of being formed into a Company in pursuance of these Articles of Incorporation, and we respectively agree to take the number of shares in the capital of the Company set opposite our respective names.

Name Address Designation Occupation No. of shares

taken by each

subscriber :

AB son of Merchant

CD wife of Housewife

EF daughter of Student

GH son of Executive

IJ son of Govt. Servant

KL son of Landlord

MN son of Agriculture

Total shares taken

Year Month Dated

Witness to the above signature

Signature

Name of Witness

Address of Witness

Occupation of Witness

Judicial

Stamp

The Companies Act of the Kingdom of Bhutan, 1989

Schedule – II

CERTIFICATE OF INCORPORATION

No………………………….. Dated…………………..

I Hereby certify that…………………………………………. [Name of Company]

is this day incorporated under the Companies Act of the Kingdom of

Bhutan 1989.

Given under my hand at Thimphu this………year………….month and ………………..day.

Department’s Seal

[Signature, Designation of the official signing and name of the Department]

The Companies Act of the Kingdom of Bhutan, 1989

Schedule – III

CERTIFICATE OF INCORPORATION

No………………………….. Dated…………………..

I Hereby certify that…………………………………………. [Name of Company]

is this day incorporated under the Companies Act of the Kingdom of

Bhutan 1989.

Given under my hand at Thimphu this………year………….month and ………………..day.

Department’s Seal

[Signature, Designation of the official signing and name of the Department]

The Companies Act of the Kingdom of Bhutan, 1989

SCHEDULE – IV

FORM OF TRANSFER

FOR THE CONSIDERATION STATED BELOW the “Transferor” named do hereby transfer to the “Transferee” named, his executors, administrators and assigns the shares specified below subject to the conditions on which the said shares are now held by the Transferor and the Transferee do

hereby agree to accept and hold the said shares subject to the conditions aforesaid:

Full name of Company

Number of No. in Figures Number in Words

shares Distinctive Ordinary

Numbers Preference Shares

TRANSFER FROM

TRANSFEROR

Name in full

Preferably type

written or in

block letters

CONSIDERATION

(in words) Ngultrums

TRANSFER TO

TRANSFEREE

Name in full

Preferably type

written or in

block letters

Occupation

Father’s/

Hunsband’s

name

Address of the

Transferee

PARTICULARS OF

NOMINEE

NOMINEE

Name of the Nominee

Address of the Nominee

Occupation of the Nominee

PARTICULARS OF TRANSFER

DATE OF TRANSFER NO. REGISTERED IN FAVOUR TRANSFER

TRANSFER FOLIO NO OF VERIFIED

BY

The Companies Act of the Kingdom of Bhutan, 1989

Schedule – V

SCHEDULE V

FORM OF REGISTER ON TRANSFERS

(See Section 23 [IV])

SL. Received Share No. of From To

Transfer Initial Shares

No. from Certificate No. Deed No

&

Distinctive

Nos.

The Companies Act of the Kingdom of Bhutan, 1989

Schedule – VI

SCHEDULE- VI

FORM OF REGISTER OF SHARE HOLDERS

[See Section 26]

Name :

Father’s

Husband’s Name : Folio No………………….

Address : Date on which entered as a shareholder Date on which ceased to be a shareholder

Occupation :

– Instruction if any

NO MINEE : Nom. Amount Date TOTAL

Val. &account when Date of C.B. Amount Nom.Val.

Name : of (Allot. due payment POL. paid of shares

Address : shares etc)

Occupation : acquired

8 9 10 11 12 13 21

Dividends of :

SHARES AQUIRED SHARES TRANSFERRED

———————————————————————-

Folio Date of No. of Dist No. No. & Trans- No. Date No.of

No. allot- shares of shares Date ferors Tran- entry shares

of ment alloted Inclu of Folio sfer of Trans-

allot- or entry or tran- From To Certi- Trans- ferred

ment or of tran- sfered

tranfer sfer

———————————————————————-

1 2 3 4 5 6 7 14 15 16

———————————————————————-

———————————————————————-

Dist. Number of No. & Date Transferees Balance of Remarks

Shares Inclu. Of issu of Folio Shares held Initial

——————  the Certificate

From To

———————————————————————-

17 18 19 20 22 24

——————————————————————

The Companies Act of the Kingdom of Bhutan, 1989

Schedule – VII

SCHEDULE – VII

FORM OF ANNUAL RETURN

[See Section 69]

Annual Return of………………………………as at the close of Financial year ended on ………………..day………………….19

1. Name of the Company.

2. Registration Number.

3. Address of the Registered Office

4. Address of all Branches

5. Names, Address, description and occupation of Directors including the Managing Director and their share holders.

6. Particulars of Share Capital

7. Particulars of indebtedness indicating separately debentures,secured loans and unsecured loans.

8. Particulars of mortgages or charges created.

9. List of selling and buying agents of the Company Giving salient terms of appointment.

10. Particulars of Contracts with the Directors or their relatives.

11. Particulars of investments made by the Company indicating separately investments not held in Company’s name.

12. List of general powers of Attorneys executed.

13. Number of employees.

14. Business of the Company and where the business financial year quantity wise.

15. Particulars of any suits, proceeding pending against the Company.

16. Any other information that the company may think appropriate.

NOTE : Unless otherwise specified, the particulars specified above shall be as at the close of the financial year.

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