40 companies in the country are at risk of being removed from the register of incorporated companies. Meaning, the companies will no longer be legally allowed to operate and will be forced to close down. These companies, according to the Corporate Regulatory Authority, CRA have failed to submit their financial statements and annual reports for the last two years.
The companies at risk include construction firms, real estate agencies, breweries, media houses, textile producers, and manufacturing businesses.
According to the Companies Act of Bhutan 2016, every company must file financial statements, directors’ report and annual returns with the Registrar of Companies.
The Corporate Regulatory Authority issued a public notification warning companies to submit their reports and statements by the 13th of this month.
“All companies registered under the Companies Act have to follow auditing standards, accounting standards, prepare the books of accounts and also get them audited. They can finalise those financial statements towards the end of the year in a shareholders’ meeting,” said Karma Yeshi, the Registrar of Companies, Corporate Regulatory Authority, MoICE.
If companies fail to comply, the authority will not only strike them off the register but also suspend their business licences.
Karma Yeshi said, “Earlier we used to stick to basically updating through the documents and striking off the company and making them pay the penalty. But now we also suspend their licence, which means they cannot renew their licence and operate the business.”
Once struck off, companies have five years to re-register. However, they must pay penalties and submit all the missing documents.
He added that non-compliance disrupts the integrity of the corporate system and poses a risk to transparency and accountability.
While the action ensures legal order, the Authority acknowledge the impact on employment.
“When we see a number of companies dying, it also means a number of jobs are being lost. From the way private companies report to us, each company usually has at least 10 to 20 people employed. In some cases, it can go up to 50. So, when a company dies, there is an employment loss of 10 to 20 people, or even more,” added Karma Yeshi.
Some business owners listed in the notice claimed that they were unaware of the CRA’s action. One said internal issues prevented them from maintaining proper financial records.
Last year alone, 97 companies were asked to close down.
Kinley Bidha
Edited by Sangay Chezom
