January 20, 2025
INCORPORATION OF A PUBLIC LIMITED COMPANY (“PLC”) IN BHUTAN
INTRODUCTION
Bhutan, known for its moniker “Land of the Thunder Dragon,” has been evolving as an ever-stable and competitive environment after its auspicious strategic location equidistant between India and China and favourable policies towards business growth. Incorporating the PLC opens opportunities to the Bhutanese domestic market subsequently allowing public investment. In Bhutan, a PLC can share its stock with the public; hence, it has become the most powerful and justifiable framework for firms looking for external funding and guaranteeing a significant share for the business.
WHY CHOOSE A BHUTAN PUBLIC LIMITED COMPANY
A Public Limited Company in Bhutan offers the following advantages:
- Ability to Raise Capital: PLCs raise funds by choosing to sell shares to the public.
- Limited Liability: The liability of shareholders is limited, not exceeding the value of their shares.
- Separate Legal Entity: The company operates as a separate legal entity with personal and business assets kept distinct.
- Credibility: A PLC enjoys a higher degree of credibility in the market owing to stringent regulatory requirements and public accountability.
- Access to Bhutan’s Emerging Market: A PLC may take advantage of the growing economy and government incentives for businesses in priority sectors.
PROCESS OF REGISTRATION
Under the Companies Act of Bhutan, 2016, incorporating a Public Limited Company involves the following steps:
- Choose a Unique Name: Choose a name for the PLC in accordance with the naming guidelines of the Registrar of Companies (“ROC”) under the Ministry of Economic Affairs. Send the discretionary name for clearance ensuring its distinction and not like any existing company name.
- Prepare Required Documents:
- Memorandum of Association (“MoA”): Defines the company’s purpose, authorized capital, and activities.
- Articles of Association (‘AoA”): Contains the rules and regulations governing the company.
- Application form for company registration.
- Details of the proposed directors, shareholders, and company secretary.
- Proof of the registered office address in Bhutan.
- Declaration of compliance with the Companies Act of Bhutan.
- Submit Application to the Registrar:
- File the application form, MoA, AoA, and other supporting documents with the ROC.
- Pay the applicable registration fees, which vary depending on the company’s authorized share capital.
- Approval and Issuance of Certificate:
- Upon verification and approval, the ROC issues a Certificate of Incorporation, confirming the establishment of the PLC.
- Tax Registration:
- Register with the Department of Revenue and Customs (“DRC”) to obtain a Taxpayer Number (“TPN”).
- If applicable, register for Bhutan Sales Tax (“BST”).
- License Acquisition:
- Obtain a business license from the Regional Trade and Industry Office (“RTIO”) based on the company’s sector and operations.
BASIC INCORPORATION REQUIREMENTS
To incorporate a Public Limited Company in Bhutan, the following requirements must be met:
- Minimum Number of Shareholders: The company must have at least seven shareholders.
- Directors: The company shall have a minimum of three directors.
- Company Secretary: A company secretary shall be appointed.
- Registered Office: There must be a registered office in Bhutan.
- Memorandum and Articles of Association: Properly drafted and signed MoA and AoA are a must.
- Minimum Paid-up Capital: The company needs to have the minimum paid-up capital as prescribed by the civil code of Bhutan, which depends upon the sector.
ANNUAL FILING AND COMPLIANCE REQUIREMENTS
PLCs in Bhutan are subject to the following annual compliance obligations:
- Annual General Meeting (AGM):
- Conduct an AGM annually, during which shareholders review the company’s performance and approve financial statements.
- Annual Returns:
- File annual returns with the Registrar of Companies, providing updates on shareholders, directors, and other statutory details.
- Audited Financial Statements:
- Submit audited financial statements to the ROC and the DRC.
- Tax Compliance:
- File tax returns and comply with Bhutan’s corporate tax regulations.
CONCLUSION
Incorporation of public limited company in Bhutan would provide an excellent platform for companies to raise equity and operate in an emerging market where the government is also supporting economic development. Establishing a solid foothold in Bhutan is possible by following the registration process and ensuring annual compliance. Seeking professional advice during incorporation is advised so that it can proceed smoothly and statutory obligations complied with.
HOW WE CAN HELP?
- Our team of professionals may guide you through the process of setting up a business in Bhutan. We can also ensure compliance with all requirements, including registration, licensing, tax obligations, employment, and labour laws.
- Our team offers advice to help set up successful businesses in emerging sectors.
- Our team of experts can conduct extensive market research to assist businesses in understanding and comprehending their target audience, industry trends, and potential competitors.
For more information or queries, please email us at
[email protected]
Key Contact
Surendra Singh Chandrawat
Managing Partner
