Rules & Procedures for Election of Directors in Bhutan

Aggregated by the Bhutan Chamber of Commerce and Industry

Rules & procedures for election of Directors in Bhutan

1. Applicable Section

Directors of a public company shall be appointed by the company in general meeting as per section 76, sub section 3. If the article of incorporation does not require the retirement of all directors, 1/3 shall retire on rotation at every general meeting.

2. Eligibility of nomination

Every person shall be eligible for election as a director at the General Meeting subject to fulfilling the following conditions:

2.1. There is a vacancy to be filled

2.2. The person does not break section 79

2.3. The person is nominated by: (a) The board or (b) The shareholder(s) by obtaining a written nomination signed by a minimum of 5 shareholders (c) The Royal Government of Bhutan

2.4. The person consents to the nomination in writing

2.5. The nomination and consent of the person is received by the company not less then 07 days before the General Meeting

2.6. Directors who have been the longest in office shall retire first. For those persons appointed at the same day, retirement on rotation shall be conducted by lot. Lot shall constitute “writing the names of those directors that contend retirement” and placing their names for pick up. The names of the directors shall be picked till the required number are met who shall retire. The remaining shall be appointed as per section 76(3)’

3. Shareholders entitlement to nominate candidates for election

The company shall inform all the shareholders listing the names of the directors retiring on rotation and the vacancy in the board of directors at least 1 month before the conduct of the Annual General Meeting Every shareholder listed on the register of shareholders during the time of filing the nomination shall be entitled to nominate and sign the nomination of a candidate for the post of a director at the General Meeting. Where a joint holder of a share is present, the shareholder whose name comes first on the register of shareholders signs the nomination. The register of shareholders shall be made available for inspection to the shareholders at the Registered Office of the Company or any other place approved by the Registrar of Companies during the ordinary hours of business. Proxy shareholders shall not be eligible to nominate a candidate. The rights of the proxy shareholder shall be limited to voting by poll only. The Proxy shareholders are allowed to attend and vote in the General Meeting, but a proxy so appointed shall not have the right to speak in the meeting, and shall not be entitled to vote except on a poll.

4. Forms of nomination and consents

4.1. Nominations

The nominations shall be filed as prescribed in Form A: Nomination form. The company shall accept only original nominations and faxed nominations if only duly attested by the Registrar of Companies.

4.2. Consents

A candidate so nominated shall be required to send his confirmation as prescribed in form B.

5. Filing Nomination

i. Time period

Nomination shall be filed and should be received by the company at least 07 days before the general meeting.

ii. Place/Address

Nomination forms and consents shall be addressed to:

Name of Company

Address (including fax no. telephone no, email, post box)

Contact Person

Postal delay in receiving the nomination and forms shall not be the responsibility of the company.

6. Acceptance of nomination

The company shall notify the shareholder and the candidate in case of any irregularities and in the absence of such a notification, the same shall be deemed to be in order and hence accepted.

7. Voting System

FOR PUBLIC COMPANIES

7.1. Where the number of candidates is equal or lesser then the number of vacancies. In such a case, every candidate must receive more votes approving their election as a director, which means a simple majority of votes by the shareholders present.

7.2. Where the number of candidates exceeds the number of vacancies. The chairman shall call for a poll and every shareholder may vote in favor of the appointment of as many candidates as they approve of. The candidates with the most votes in descending order will be elected until all vacancies are fulfilled.

FOR GOVERNMENT OWNED COMPANIES

7.3. The Government Owned Companies shall be exempt from voting. Appointment order of the Government shall be read out in the General Meeting and duly endorsed and minutes recorded.

FOR GOVERNMENT CONTROLLED COMPANIES

7.4. Where the Government decides to participate in voting it shall take place as per this Rules and Procedures

7.5. Where the Government decides to appoint its candidates as directors, the number of directors so appointed shall be exempt from voting. Public nominations shall be voted in accordance with this Rule.

7.6. Where the number of directors have been appointed by the Government as per rule 7.5, the number of vacancies for public holding shall be determined as follows:

Example

Number of directors appointed 6

Government’s shareholding 60%

Number of directors for public = [Shareholding of public x number of directors appointed by government] /shareholding of govt.

= [40*6]/60

= 4 directors

Decimals greater than 0.5 shall be taken as 1 and lesser than 0.5 shall be taken as 0.

Voting Rights as per section 26

On a poll – As many votes as the number of shares held
63: “A body corporate if it is a shareholder of a company, may by resolution of its board of directors authorize him to act as its representative in the meeting of the company”
The proxy holders are allowed to attend and vote in the General Meeting, but a proxy so appointed shall not have any right to speak in the meeting, and shall not be entitled to vote except on a poll.

General rules

The voting shall be restricted to the candidates so nominated only.
Voting will be conducted by secret ballot and on poll: One share = One vote
Every shareholder or proxy shareholder shall fill in the “(a) Shareholder/proxy shareholder information form – page 1A and page 1B and (b) Ballot form – page 2 and ensure that the information given are true and correct
Information should be clearly written and the correct details as required by the ballot papers. Incorrect, false and misleading ballot papers shall be deemed rejected for voting
Shareholders or proxy shareholders can take the assistance of the company’s election members for any assistance or clarifications
The votes once cast will not be allowed to be recast or modified otherwise
Every shareholder or proxy shareholder can cast all votes for one candidate or cast votes proportionately or disproportionately for one or several candidates
Every shareholder or proxy shareholder has the right to abstain from voting
Votes shall be cast for all the candidates at the same time
No votes shall be allowed to be cumulative
Votes cast cannot exceed the total number of shares held by the shareholder or the proxy shareholder
No duplication of votes will be allowed
If the number of votes cast exceed the total number of shares held by the shareholders or the proxy shareholder, then the votes cast for one or more candidate shall be reduced proportionately
In the event that the votes cast are less then the actual number of shares held, then the balance votes that was not cast shall not be allowed for voting