A certificate of incorporation used to be enough. You bought one, added a registered agent, and the structure worked because nobody downstream asked where the company was. That model is now the thing that stops a deal. The bank, the exchange, the payment provider, the acquirer's diligence team and increasingly the counterparty's own risk committee all ask the same question, and a brass-plate answer fails. The choice in 2026 is not between an expensive structure and a cheap one. It is between a structure that other people will deal with and one they will not.
In short
- Substance is no longer tested only by tax authorities. Banks, exchanges and counterparties test it, before onboarding rather than after.
- A GMC company must have at least one director ordinarily resident in GMC, and members can become personally liable for company debts if that position persists beyond six months.
- A registered office in GMC is mandatory from incorporation, must be filed within a month and must be accessible during stated hours. The earlier waiver ended on 30 April 2026.
- A company secretary must be a natural person resident in GMC, and an auditor appointed within three months, with accounts under international financial reporting standards.
- Registers of registrable controllers, nominee directors and nominee shareholders must be kept, and the Income Tax Act 2025 contains exchange of information machinery including international tax compliance agreements and crypto-asset reporting.
- Treat that as the product you are buying, not the cost of buying something else.
Why the brass plate became a liability
The change happened in three waves and it is now complete.
The first was tax transparency. Automatic exchange of financial account information, country-by-country reporting and beneficial ownership registers removed the assumption that a company's affairs would stay where it was registered.
The second was economic substance legislation. A long list of traditional offshore centres introduced requirements that companies carrying on relevant activities demonstrate adequate people, premises and expenditure locally. That turned the zero-cost holding company into one with an annual compliance file and a filing that can be failed.
The third wave is the one founders feel. Private gatekeepers made substance a condition of access. A bank onboarding a corporate client wants to know who makes decisions and where. An exchange offering institutional accounts wants a named senior individual in a supervised jurisdiction. An acquirer's diligence team reads the board minutes and notices when every one was signed in a different country from the company's address.
So the question "which jurisdiction gives me the least obligation?" produces the wrong answer. The company with the least obligation is the one with the least evidence, and evidence is what you need.
What GMC asks for instead
GMC's requirements are not unusual in kind. They are unusual in how plainly they are stated, which makes them useful to a founder building a defensible file.
A director ordinarily resident in GMC. The Companies Act 2025 requires every company to have at least one director ordinarily resident in GMC, and treats a director as satisfying that test if he or she is resident in GMC or holds a valid work visa or work pass. Where the company has a single member, that sole director may also be the sole member. This has practical consequences for the structure. If the company breaches the requirement, the Registrar may direct the members to appoint a resident director, and members who default commit an offence. If the company carries on business without a resident director for more than six months, a member who knows that becomes liable for the debts contracted in that period. Very few structuring failures convert limited liability into personal liability that directly.
A registered office in GMC, filed and accessible. The Companies Act requires a company to have a registered office within GMC from the date of incorporation, to which all communications and notices may be addressed, with an offence and a default penalty for failure. Notice of its situation and of the days and hours during which it is open to the public must be filed in the prescribed form. The Gelephu Corporate Registration Office has confirmed that all GMC companies must have a physical presence in GMC, that the waiver of this requirement ended on 30 April 2026, that the address must be filed within one month of incorporation, and that the office must be accessible at least five hours on business days.
A company secretary resident in GMC. Every company must have one or more secretaries, each a natural person whose principal or only place of residence is in GMC and who is not debarred from acting. The directors must take reasonable steps to ensure the secretary has the requisite knowledge and experience. The Registrar may waive the residence requirement, and may compel a private company to appoint a qualified secretary where it has failed to keep its registers properly. The role may be filled internally or by a service provider and must not be vacant for more than six months.
An auditor within three months, and international standards. A new GMC entity must appoint an auditor within three months of incorporation, ongoing accounting and audit obligations follow international financial reporting standards, and a company may not appoint its own corporate service provider, or an affiliate of it, as auditor. Exemptions apply for dormant and small companies. The first financial year may run up to eighteen months from incorporation, with longer requiring the Registrar's approval.
Registers that record who is there. The Companies Act requires a register of charges and registers of registrable controllers, nominee directors and nominee shareholders at the registered office, with provision for central registers held by the Registrar. Changes in the particulars of officers and members must be lodged within fourteen days. An annual general meeting must be held within six months of the financial year end and an annual return filed within seven months. Minutes must be recorded within one month and accounting records kept for five years.
Exchange of information written into the tax statute. The Income Tax Act 2025 contains a dedicated part on exchange of information under double taxation and information exchange arrangements, giving the Comptroller powers to obtain information on request and from other authorities. A further part implements international agreements to improve tax compliance, allowing the designated officer to declare an agreement to be an international tax compliance agreement: arrangements with the United States under its Foreign Account Tax Compliance Act, competent authority agreements based on the common reporting standard, country-by-country reporting based on the OECD Action 13 report, and the crypto-asset reporting framework. The Act also contains anti-avoidance and transfer pricing provisions, with documentation requirements and a surcharge.
Read that list as a whole and the design intent is obvious. GMC is not offering opacity. It offers a low-rate, common-law, dollar-denominated jurisdiction that a counterparty's compliance department can sign off.
The cost of substance is the point
Founders instinctively price these obligations as friction. The questions are better reframed.
A resident director is a person who can be interviewed by a bank, sign a local board minute and answer a regulator's question in the regulator's own time zone. A registered office with published opening hours is an address at which service is effective and the registers can be inspected, which is the difference between a company that can prove its ownership chain and one that merely asserts it. An auditor appointed within three months means the first set of accounts exists before anyone needs it. A register of nominee directors and nominee shareholders means that when an acquirer asks who ultimately controls the company, the answer is a document rather than a conversation.
Every one of those is an asset in diligence. The offshore alternative saves the fee and then spends far more, later, proving a negative.
There is also a tax reason to take substance seriously in GMC. The attractive parts of the Income Tax Act 2025 are approval-based. Exemption as an approved founders company, and the concessionary rate of not less than 5% for an approved strategic and development company, are granted rather than claimed, and neither can be approved after 31 December 2030. A company applying for either is asking GMC to accept that it is doing real business there, and a brass-plate file is a weak application. The default remains 15% on every dollar of chargeable income.
How to choose between the two
The comparison comes down to four questions about your own business.
- Who needs to accept this company? If the answer includes a regulated bank, a licensed exchange, an institutional investor or an eventual acquirer, build for their diligence standard from the start.
- Where do decisions get made? If the real management is already in one place, put the company there. Structures fail when the paper location and the decision location diverge.
- What do you need to survive? A holding company with no operations and no banking need can live almost anywhere. An operating business with payroll, customer funds and a licence cannot.
- What is the exit? Diligence on a sale is when every historic shortcut surfaces. The cheapest time to have a clean file is the beginning.
If the answers point to GMC, you do not necessarily have to start again. The Companies Act 2025 contains a transfer of registration regime allowing a foreign corporate entity to be registered as a GMC company limited by shares, preserving the entity, its contracts and its history, and the Income Tax Act contains modifications and a tax credit mechanism for approved redomiciled companies. Whether the company can leave its present home is a question for counsel there.
Frequently asked questions
Does GMC have economic substance legislation?
GMC does not use that label, but the Companies Act 2025 and registry practice impose the equivalent obligations: a resident director, a registered office in GMC that is filed and accessible, a resident company secretary, an auditor within three months, audited accounts under international standards and registers of controllers and nominees.
Can a corporate service provider supply my resident director and registered office?
Registered office services are provided by empanelled corporate service providers, and a company secretary may come from a provider. A director is different: the role carries statutory duties and personal exposure, and should be filled by someone able to discharge it.
Will GMC exchange information with my home tax authority?
The Income Tax Act 2025 contains exchange of information machinery and a framework for international tax compliance agreements covering FATCA-style agreements, the common reporting standard, country-by-country reporting and the crypto-asset reporting framework. Coverage of a particular country follows the agreements the designated officer declares under the Act.
Can I redomicile my existing offshore company into GMC?
The Companies Act 2025 provides a transfer of registration route for foreign corporate entities, and the Income Tax Act contains provisions for redomiciled companies including a tax credit mechanism where approved. Your current jurisdiction must permit the departure.
The bottom line
The brass plate has stopped working, and no amount of structuring ingenuity brings it back. What replaces it is a company whose location can be verified: a director who lives there, an office that opens, accounts that are audited, and registers that record who is behind the shares. GMC asks for all of that in plain statutory language. Treat those obligations as the product. These are the points a bank, an exchange or a buyer examines.
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.
Sources
- Acts: Companies Act 2025 (Law No. 1 of 2025), ss. 142, 143, 145(1), 145(1A), 145(7)-(10), 145A, 171, 386AKA, Part 10A ss. 355-364A; Income Tax Act 2025 (Law No. 6 of 2025), ss. 13Y, 33, 33A, 34D, 34E, 34F, 34G, 34H, 43(1)(a), 43D, 62, 67, Part 20A ss. 105A-105HA, Part 20B ss. 105I-105Q; Application of Laws Act 2024 (Law No. 1 of 2024), ss. 3, 4, Schedule A; Employment of Foreign Workforce Act 2025 (Law No. 4 of 2025), ss. 5, 7
- GCRO FAQ for GMCA Entities, version 0.2, 3 June 2026
