Summary
- A GMC company needs at least one member (Companies Act 2025, s. 20A) and at least one director who is "ordinarily resident in GMC" (s. 145(1)). The sole director may also be the sole member.
- "Ordinarily resident" is defined generously: a director qualifies if he or she is resident in GMC or holds a valid work visa or work pass (s. 145(1A)).
- Shares have no par value (s. 62A) and the Act contains no statutory minimum paid-up capital; a US$1 minimum applies in practice, higher for regulated or incentive cases.
- The transitional waiver of the resident director and registered office requirements ended on 30 April 2026; the Registrar may now revoke registration where they are unmet.
- A registered office in GMC is mandatory from incorporation (s. 142), and every company must have a secretary who is a natural person residing in GMC unless the Registrar waives that requirement (s. 171(1), (1AAA)).
- The demanding substance tests sit elsewhere: tax residence turns on where "control and management" is exercised (Income Tax Act 2025, s. 2), incentive approvals under ss. 13Y and 43D are discretionary and close on 31 December 2030, and GFSO requires a Licensed Firm's head office to be in GMC (GEN 4.5.1).
What "substance" means, and why clients get it wrong
Founders arrive with two opposite assumptions: that GMC demands large paid-up capital and several local directors, or that a GMC company is a paper vehicle with no local requirements. Both readings are wrong. The Companies Act 2025 sets a low bar for incorporating and maintaining a company. The higher bar appears when the company wants something from GMC: a tax incentive, tax residence, or a Financial Services Permission from the Gelephu Financial Services Office (GFSO). This article separates the two layers of the requirement.
Throughout, "$" means United States dollars, which is what every dollar reference in GMC legislation means (Companies Act 2025, s. 4A).
Layer one: what the Companies Act 2025 requires
One member
Section 17(1) allows "any person", alone or with others, to form a company. Section 20A states the floor: "A company must have at least one member." No residence, nationality or natural-person condition attaches to the member. A foreign parent can be the sole shareholder of a GMC subsidiary.
One director, ordinarily resident in GMC
Section 145(1) is the single most important substance provision in the Act. Every company must have at least one director who is ordinarily resident in GMC, and "where the company only has one member, that sole director may also be the sole member of the company". A one-person company is therefore expressly contemplated.
Section 145(1A) defines the test: a director is ordinarily resident in GMC "if he is a resident in the GMC or has a valid work visa or work pass". There is no day-count test in the Act. A foreign national holding a valid GMC work pass qualifies. Under the Employment of Foreign Workforce Act 2025 a foreigner may not be employed in GMC without a work pass (s. 5), and self-employed foreigners must apply for one (s. 10), so a founder working from Gelephu will need one in any event (see our guide to GMC work passes).
The director must be a natural person aged at least 18 with full legal capacity (s. 145(2)). Corporate directors are not permitted.
The transitional waiver of this requirement ended on 30 April 2026. The resident director may be any employee with a valid GMCA employment pass, or a Bhutanese citizen; where a company cannot comply, "the Registrar reserves the power to revoke" its registration.
The resident director cannot simply walk away
The requirement is continuous, not a formation formality. Section 145(5) provides that a director "must not resign or vacate his or her office unless there is remaining in the company at least one director who is ordinarily resident in GMC", and a resignation in breach is invalid. If a company falls out of compliance, the Registrar may direct the members to appoint a qualifying director (s. 145(7)); failure to comply is an offence carrying a fine of up to $2,000 and up to $1,000 for each day the default continues after conviction (s. 145(8)).
The sharpest consequence is s. 145(10). If a company carries on business for more than six months without a resident director, any member who knows of that state of affairs is personally liable for all company debts contracted during the period after those six months. Limited liability is, in effect, suspended for that member.
Nominee directors are regulated
Section 145A(1) prohibits acting as a nominee director "by way of business" unless the person is a registered corporate service provider for that service, or the arrangement is made through one; breach carries a fine of up to $10,000 plus a daily fine (s. 145A(3)). A nominee remains a full director with the duties described in our guide to directors' duties in GMC.
No par value, no statutory minimum capital
Section 62A(1) states: "Shares of a company have no par or nominal value." There is no concept of authorised capital to fix at incorporation, and the Act contains no minimum paid-up capital for an ordinary company. Section 68 goes further: a company "may issue shares for which no consideration is payable to the issuing company". The return of allotments for a private company records the amount paid and unpaid on each share (s. 63(1)(b)–(c)), but the Act does not dictate what those amounts must be.
Capital is therefore a commercial and regulatory question, not a company-law one. The minimum paid-up capital is US$1, higher for specific industries (such as regulated financial services) or for tax-incentive eligibility. Subscription monies go into the company's bank account as soon as practicable after incorporation; for later allotments or capital increases, before the GCRO submission. Branches need no paid-up capital.
Registered office and secretary
Every company must, from the date of incorporation, have a registered office within GMC "to which all communications and notices may be addressed" (s. 142(1)); default is an offence with a fine of up to $5,000 (s. 142(2)). Notice of the office's address and opening hours must be lodged with the constitution, unless the office is open for at least five hours during ordinary business hours on each business day, in which case no hours notice is needed (s. 143(1)).
GCRO adds that every company must have a physical presence in GMC, file its address through its GCRO account within one month of incorporation, and keep the office accessible at least five hours on business days. The waiver ended on 30 April 2026; CSPs may now provide a registered office.
Every company must also have at least one secretary who is a natural person whose "principal or only place of residence" is in GMC (s. 171(1)); the Registrar may waive the residence requirement (s. 171(1AAA)), and the office may not be left vacant for more than six months (s. 171(4A)). The secretary may be internal or supplied by a CSP. Residential addresses of directors, secretaries and individual members of private companies are excluded from public inspection (s. 12E(1)).
The minimum officers are one director, one shareholder, one secretary and one auditor, plus a data protection officer (DPO) under the applied Personal Data Protection Act, whose contact details must be public.
The ongoing compliance calendar
A GMC company incorporated on or after 16 June 2025 must keep a register of its registrable controllers from the date of incorporation (s. 386AF(1A)). It must keep accounting records that "sufficiently explain the transactions and financial position of the company" and retain them for at least five years (s. 199(1)–(2)). A private company may dispense with annual general meetings by unanimous resolution (s. 175A(1)(a), (2)). An annual return must be lodged within seven months after the end of the financial year for an unlisted company (s. 197(1)(b)).
On audit, the Act as published contains one exemption on its face: a dormant company (s. 205B(1)). The provision numbered s. 205C is marked "[Not in use]", so a trading GMC company should budget for an audit unless regulations provide otherwise. The auditor must be appointed within three months of incorporation, IFRS financial statements, and that the auditor is not the company's CSP or an affiliate of it.
Layer two: where substance bites
Tax residence: control and management
The Income Tax Act 2025 charges tax on income "accruing in or derived from GMC or received in GMC from outside GMC" (s. 10(1)), and companies pay 15% on every dollar of chargeable income (s. 43(1)(a)). Whether a company is resident in GMC is a separate question, and it is answered by a substance test. Section 2 defines "resident in GMC", in relation to a company, as one "the control and management of whose business is exercised in GMC".
A registered office and a resident director on paper do not satisfy that test. It looks to where the board decides strategy and policy; a company whose real decisions are taken abroad is exposed to the argument that it is not GMC-resident. Residence matters for treaty access (see our guide to double taxation relief) and for incentives conditional on it, such as the tax credit for approved redomiciled companies, available only for a basis period throughout which the company "is resident in GMC" (s. 34H(4)(a)).
Incentive approvals are discretionary and conditional
The two headline corporate incentives are both discretionary approvals by the designated officer, not entitlements.
Under s. 13Y, income of an approved founders company from a qualifying business in a "founders industry" is exempt. A founders industry is one "not being carried on in GMC on a scale adequate to the economic needs of GMC" with favourable prospects (s. 13Y(2)). Approval is granted where the officer "is satisfied that it is expedient in the public interest" and may be "subject to such conditions as the designated officer thinks fit" (s. 13Y(4)). The total exemption period cannot exceed 15 years (s. 13Y(8)). Approval can be revoked for breach of any condition (s. 13Y(12)).
Under s. 43D, a strategic and development company may be taxed at a concessionary rate "of not less than 5%" (s. 43D(1)), again subject to conditions (s. 43D(3)) and a maximum total relief period of 20 years (s. 43D(7)).
Both regimes close to new approvals after 31 December 2030 (ss. 13Y(5), 43D(4)). The Act does not prescribe headcount, spending or office conditions; those are left to regulations and each letter of approval. Here "substance" is a negotiated commitment, and an applicant should expect to demonstrate real activity in GMC.
GFSO: head office, mandatory officers and capital
For any business that needs a Financial Services Permission, the substance requirements are explicit. GEN 4.5.1(1) requires that where a Licensed Firm is a body corporate incorporated in GMC, "its head office and registered office must be in GMC". An applicant must satisfy the regulator that it will meet this requirement when the licence is granted (GEN 4.5.1(3)). The guidance explains that the regulator judges head office location "having regard to the location of its Directors, Partners and Senior Management and to the main location of its day-to-day operational, control, management and administrative arrangements", and that an applicant which does not satisfy the regulator on this point "will, on this point alone, not be considered fit and proper".
GEN 5.5.1 requires a Licensed Firm to appoint, and keep at all times, Approved Persons as Senior Executive Officer, Compliance Officer and Money Laundering Reporting Officer, plus a Finance Officer for banks and insurers. The guidance states that the regulator would generally expect the Compliance Officer and Senior Executive Officer roles to be separated. Capital is governed by the Prudential Rulebook (PRU); the annual auditor's report must confirm that Capital Resources exceed the Capital Requirement (GEN 6.6.4(6)). The official GFSO application process makes incorporation, a bank account, capital, an office and staff preconditions that must be satisfied after In-Principle Approval and before the licence issues.
The Companies Act lets you incorporate with one person and one dollar; GFSO does not let you run a licensed business that way.
Practical checklist / Next steps
- Identify the resident director. If a founder is relocating, sequence the work pass so that s. 145(1A) is satisfied at incorporation.
- If a nominee director is needed as a bridge, engage a registered corporate service provider (s. 145A).
- Set share capital on commercial and regulatory grounds; there is no par value and no statutory minimum (ss. 62A, 68).
- Secure a registered office in GMC before incorporation (ss. 142–143) and appoint a resident secretary or seek a waiver (s. 171).
- Open the register of registrable controllers at the start (s. 386AF(1A)) and keep records that meet s. 199.
- If tax residence or an incentive matters, hold real board meetings in GMC and minute them.
- If a GFSO licence is planned, budget for a GMC head office, the mandatory Approved Persons and PRU capital from the outset.
Frequently asked questions
Can a foreigner be the sole director and sole shareholder of a GMC company?
Yes. Section 145(1) expressly allows the sole director to be the sole member, and s. 145(1A) treats a director holding a valid work visa or work pass as ordinarily resident in GMC. The director must be a natural person aged 18 or over (s. 145(2)).
Is there a minimum share capital for a GMC company?
The Companies Act 2025 sets none. Shares have no par value (s. 62A) and may even be issued for no consideration (s. 68). The minimum is US$1, paid in as soon as practicable after incorporation. Regulated firms must meet the capital requirements in the Prudential Rulebook, and GFSO treats capital as a precondition to licensing.
What happens if our only resident director leaves?
The resignation is invalid unless another resident director remains (s. 145(5)). If the company trades for more than six months without one, any member who knows of it becomes personally liable for debts contracted after that period (s. 145(10)).
Does a registered office in GMC make my company tax resident?
No. Tax residence depends on where "control and management" of the business is exercised (Income Tax Act 2025, s. 2). Board decisions taken in GMC are what count.
Do I need an audit?
On the face of the Act, only dormant companies are exempt (s. 205B); the small-company exemption slot (s. 205C) is marked "not in use". Plan for an audit unless regulations provide otherwise.
Key takeaways
- The statutory minimum for a GMC company is one member, one resident director, a registered office and a resident secretary. Capital is unregulated at the company-law level; the practical minimum is US$1. The transitional waivers ended on 30 April 2026.
- "Ordinarily resident" includes a foreign national with a valid work visa or work pass, which makes founder-led structures workable.
- The resident director requirement is continuous, and six months of non-compliance exposes knowing members to personal liability.
- Real substance is tested by the Income Tax Act's control-and-management residence rule, by the conditions in ss. 13Y and 43D approvals (which close after 31 December 2030), and by GEN 4.5 and 5.5 for regulated firms.
- Basnet Law can advise on structuring the director, office and governance arrangements so that the company meets the layer that matters for its business.
This article is general information about the law of the Gelephu Mindfulness City Special Administrative Region as at the date above. It is not legal advice and does not create a lawyer–client relationship.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
References
- Companies Act 2025, ss. 4A, 12E, 17, 20A, 62A, 63, 68, 142, 143, 145, 145A, 171, 175A, 197, 199, 205B, 205C, 386AF
- Income Tax Act 2025, ss. 2 ("resident in GMC"), 10(1), 13Y, 34H(4), 43(1)(a), 43D
- Employment of Foreign Workforce Act 2025, ss. 5, 10
- GEN Rulebook 2026, rules 4.5.1, 5.5.1, 6.6.4
- GCRO FAQ for GMCA Entities (3 June 2026, v0.2), Gelephu Corporate Registration Office
