Legislation: The joint sitting of Parliament yesterday passed the Companies Bill 2015 after deliberations on 12 disputed sections.
Over the last 15 years since the enactment of the Companies Act 2000, there has been a tremendous amount of changes in the socio-economic and legislative landscape of the country. And the changes needed to be incorporated into the Act.
Some of the noteworthy new features are minority interest protection, standards of business ethics, separation of ownership and management, dispute resolution mechanism, and corporate social responsibility (CSR).
The house after deliberation on the disputed sections referred back seven of the 12 disputed sections to the joint committee for further review during the lunchtime. The committee then incorporated the changes suggested by the members and re-submitted the bill after the lunch break.
The house then endorsed the bill with 100 percent of the members present voting in favour of it. There were 64 members present during the vote.
Thanking the members, Speaker Jigme Zangpo said the government had held meetings with stakeholders on the bill.
MP Dorji Wangdi told Kuensel that the bill is a progressive law incorporating features and elements of best practices in corporate governance. “It is definitely a good step forward in Bhutanese corporate governance,” he said.
With the bill, a firm will be allowed to be registered as a limited company with just one shareholder.
The National Council had introduced the concept of “one person company” (OPC) under section 4 of the bill. With this addition, the bill will give OPCs all benefits of a private limited company such as credit, market access, legal protection and tax advantage.
Also, the owner of a company will only be responsible for company debts upto the amount that they have invested and no more without risk to personal wealth.
Although the concept is new in the country, it was becoming popular in economies around the world. Until now, at least two shareholders were required to start a company.
The bill also emphasises the need for profit-making companies to keep aside a minimum percent of annual profit for CSR spending. CSR is a social responsibility of businesses to pay back to society for using resources and harming the environment.
The new bill, which seeks to repeal the existing Act, was drafted incorporating necessary changes to establish good corporate governance system in the country.
The Assembly during its last session did not endorse 12 of the 41 recommendations from the Council.
The bill will be submitted to His Majesty The King for assent.