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FDIRC Validity Period Extended for Foreign Direct Investment in Bhutan

New Regulations Facilitate Foreign Direct Investment

The Royal Government of Bhutan has introduced new regulations to promote foreign direct investment (FDI) in the country, with a goal of creating a favorable business environment and stimulating economic growth.

FDIRC Validity Period

According to the regulation, the Foreign Direct Investment Registration Certificate (FDIRC) shall be valid for a period of one year from the date of issue. Investors are required to submit documents for project approval within this validity period. If they fail to do so, the Department may renew the FDIRC upon request of the investor on justifiable grounds.

Cease of FDIRC Validity

The regulation outlines circumstances under which the validity of an FDIRC shall cease, including:

  • Surrender
  • Expiration
  • Rejection of the proposed business
  • Issuance of formal project approval
  • Cancellation by the Department

Amendments and Company Incorporation

FDI businesses may apply to the Department for amendment of their FDIRC. The Department shall review the proposed amendment and issue a new FDIRC or reject it. Investors are required to incorporate their proposed business under the Companies Act of Bhutan upon receipt of an FDIRC.

Business Approval and Sector Clearance

The FDI Division shall review and approve FDI priority sector activities upon submission of required sectoral clearances. The Department shall review and decide on Other Activities proposals. A letter of approval shall be issued within three working days from the date of approval, stating the terms and conditions to be complied with.

FDI Business License and Sector Clearance

FDI businesses may obtain a business license from the concerned Regional Trade and Industry Office within three months from the date of issue of approval. They may also obtain sector clearance for FDI business approval depending on the nature and type of activities.

Rejection of Proposed Business

FDI business proposals shall be rejected if they do not meet the approval criteria or conform to these regulations and other laws of the country, or if sectoral clearances are not obtained.

Transfer of Shares

The regulation allows for transfer of shares among investors. The Company shall submit documents to the Department while applying for transfer of shares, including:

  • Consent letter
  • Share transfer agreement
  • Last traded price from the stock exchange
  • Copy of shareholders’ resolution
  • All such documents required for registration of a new foreign investor

Disposal by Winding Up or Liquidation

FDI companies shall wind up as per the Companies Act of Bhutan and Insolvency law. The Company shall apply for winding up or liquidation to the Registrar of Companies upon approval by the Department.

FDI Facilitation Committee

The Royal Government has constituted an FDI Facilitation Committee, chaired by the Minister, to deliberate on matters relating to foreign direct investment policy and regulatory environment, identify measures to enhance service delivery, and foster a “Whole of Government” approach. The Committee shall provide directives and recommendations to facilitate FDI in Bhutan.

These regulations aim to promote foreign direct investment in Bhutan, create jobs, and contribute to the country’s economic growth.