New Voting Rules for Bhutanese Companies: A Step Towards Transparency and Accountability
The Royal Government of Bhutan has introduced a new set of voting rules aimed at ensuring transparency and accountability in the corporate sector. These revised rules, which come into effect immediately, will govern the way shareholders cast their votes to elect directors.
Eligibility for Election
Under the new rules, only candidates who have been nominated by shareholders or the company’s board will be eligible for election. This ensures that only qualified individuals can stand for directorship positions.
Voting Process
Voting will be conducted through a secret ballot, with each shareholder having one vote per share. Shareholders may choose to appoint proxies to cast their votes on their behalf, but only if they have provided written authorization and power of attorney.
Proxy Forms
Proxy forms must be submitted at least 48 hours prior to the general meeting. This allows for sufficient time to verify the authenticity of the proxy forms before the voting process begins.
Integrity of Voting Process
To ensure the integrity of the voting process, the new rules prohibit the submission of incorrect, false or misleading ballot papers. Any such papers will be deemed rejected for voting purposes.
Recasting of Votes in Event of a Tie
In the event of a tie, every shareholder or proxy shareholder is entitled to re-cast their votes for the candidates with the tie. This ensures that all shareholders have an equal say in the election process.
Eligibility Criteria for Directorship
To be eligible for directorship, a person must:
- Be nominated by the board or shareholders through a written nomination signed by at least five shareholders or the government
- Consent in writing and provide proof of their citizenship
Board Composition
The company’s board should have an appropriate level of independence and diversity of thought and background to enable it to make decisions in the best interests of the company. The composition of the board should reflect the scale and complexity of the company’s activities, with a balance of skills, experience and knowledge.
Impact on Corporate Governance
The new voting rules are seen as a major step towards promoting transparency and accountability in Bhutanese companies. They are expected to enhance corporate governance standards and ensure that shareholders have a greater say in the direction of their companies.
Key Highlights
- Voting restricted to nominated candidates only
- Secret ballot system to be used for elections
- One share equals one vote
- Proxy forms must be submitted at least 48 hours prior to general meeting
- Incorrect, false or misleading ballot papers will be rejected
- Recasting of votes in the event of a tie
- Eligibility criteria for directorship set out
- Board composition should reflect scale and complexity of company’s activities
- Balance of skills, experience and knowledge required on board
- Independence and diversity of thought and background important for effective decision-making.