Bhutan Municipal Act, 1999

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Bhutan Municipal Act, 1999_English version_





PART I Preliminary


Effective Date



Interpretation – Meaning of Expressions

PART II Constitution and Structure of the Munici pal Corporation

Subpart 1 Creation of the municipal Corporation



Dissolution of a Municipal Corporation

Subpart 2 The Municipal Committee (Throm Gi Tsogpa)
Composition of the Committee

Subpart 3 Elections of the Committee Members (Thueme)

Election of Committee Members

Eligibility Criteria for voters

Election Procedures

Appointment of Committee Members

Eligibility Criteria for Committee Members

Duration of Office

Termination of Office

Obligations of Committee Members

Remuneration of Committee Members

Disclosure of Interest

Extraordinary Vacancies

Subpart 4 Proceedings of the Committee

Minutes of a Meeting

Notice of Meeting



Subpart 5 The Thrompen and Employees of the Municpal Corporation

Duration of Appointment


Termination of Appointment

Employees of the Municipal Corporation
Transfer of Officers of the Royal Government to the

Municipal Corporation
Conditions of Transfer

PART III Functions, Authority and Obligations of the
Municipal Corporation

Subpart 1 Functions of the Municipal Corporation

General Functions

Specific Functions

Subpart 2 Authority of the Municipal Corporati on

General Authority

Specific Authority

Common Seal of the Municipal Corporation

Resolution of Disputes

National Laws and policies

Subpart 3 Obligations of the Municipal Corporation

Community Obligations

Financial Obligations

Obligations to the Royal Government

Linkage with the Competent Authority

Obligations to employees

PART IV Municipal Boundaries

Municipal Boundaries

Procedure for changing the Municipal boundaries

PART V Regulative authority of the Municipal Corporation

Subpart I Authority to adopt Local Rules

Local Rules – General

Policy and Procedure for the Existing Rules

Land Administration Procedures

Compliance with the Urban Development Plan

Subpart 2 Enforcement of Rules
Subpart 3 Compensation for Acquisition of land

PART VI Operations of services by the Municipal Corporation


Contracting of Services

Discontinuation of Services

PART VII Finances of the Municipal Corporation

Subpart 1 Policy

Financial Authority

Grants from the Royal Government

Tax Exemptions

Shares and dividends

Subpart 2 Financial Transaction


Definition of assets and liabilities

Registration of Vehicles

Contracts and arrangement

Provident Fund

Subpart 3 Budget

Subpart 4 Revenues of the Municipal Corporation


Tax Revenue

Non-Tax Revenue


Funds for Capital Projects

Subpart 5 Expenditure of the Municipal Corporation


Authority to Spend

Expenditure for Meeting Emergency Situations


Subpart 6 Miscellaneous

Financial Management Practices

Gratuity Fund

Investment of excess Funds

Annual Report

PART VIII Duties and Functions of the Competent authority

PART IX Amendment and Validity of the Act

Schedule 1 Articles of Incorporation (Charter) of the Thimphu

Municipal Corporation





1. This Act shall be called the Bhutan municipal act, 1999.

Effective Date

2. The Act shall come into force with effect from 28 July 1999, corresponding

to the Bhutanese 15th day of the 6th month of Earth female Hare year.


3. The purpose of this act is to enable the establishment of Municipal

corporations as legal entities with perpetual succession, and to confer on
them such powers as required to forge partnerships between the Municipal
Corporation, the residents, business and industry of the Municipality foe
effective development and governance of the Kingdom’s urban


4. In this act, unless the context otherwise requires:

“Building or structure” means any physical erection on, above or below the
land, including display signs and advertising boards.

“Committee” means a body that may be constituted in accordance with the
provisions laid down in subpart 2, Part II of this Act.

“Competent Authority” means the authority that shall be specifically
designed by the Royal Government for purpose of this Act.

“Development” means any change to the use of land, the construction of
any building or structure, or the alteration to any building or structure.

“Geographical Area” means an area within the Municipality demarcated
either by natural or man-made boundaries, designated for the purpose of

“Government Purpose” means a purpose as may be define rom time to
time, by the Royal Government. Regarding this Act, Government purpose
will include setting up of projects such as, hospitals, industries and any
other similar public utilities.

“Incorporation” means, formal approval to the charter of the Municipal
Corporation by the Royal Government.

“Land Acquisition” means acquisition of any land or property within the
municipal boundaries in accordance with the procedur s established by the
Royal government.

“Land” means the soil including building or other st uctures erected on the
land, and all vegetation, but in accordance with THRIMSHUNG-
CHHENPO does not include any minerals.

“Municipal Corporation” means a corporation incorporated under this act to
implement the provisions of the act for the benefit o the residents of a
community classified as a Municipality by the Royal government.

“Municipality” means area over which a Municipal Corp ration has

“Person” means any individual, partnership, company, government agency
or other association of persons, which is recognized as a separate legal

“Regulation” means subordinate by-laws adopted or enacted by the
competent authority in accordance with the provision of an Act.

“Residents” mean Bhutanese citizens residing in the Municipality.

“Royal Government” means the Royal government of Bhutan as a whole
or, depending on the context, a particular ministry, division, or any other
agency of the government.

“Rules” means subordinate by-laws adopted by the Municipal Corporation
in accordance with the provision of this Act.

“Thrompen” means the executive head of the Municipal Corporation.

“Urban Development Plan” means a strategic document outlining the
existing and future development within a Municipality.

“Vesting date” means the date on which property, rights and liabilities of
the Competent authority are transferred to and vested in a Municipal

Interpretation – Meaning of Expressions

5. Importing of masculine gender shall include the feminine gender; in the

singular shall include plural and vice versa.




Purpose of Creation

6. The Royal government shall, under this act, create Municipal

Corporation, in accordance with an urban classificat on as determined from
time to time provided the corporation will be able to effectively and
equitably provide services, and promote the general wel -being of the
residents of the Municipality.


7. In pursuance of Section 6 of this Act, the competent Authority may
recommend to the Cabinet to grant a charter stating the name, purpose,
organization and other particulars of the Corporatin. Granting of the
charter as provided for in Schedule I of the Act shall constitute
incorporation of the Municipality as the body corporate.

Dissolution of the Municipal Corporation

8. The Municipal Corporation may be dissolved by the Royal Government.
Upon such dissolution, a competent Authority shall appointed to directly
manage the affairs of the Municipal corporation.



9. The committee shall be the highest decision making body of the Municipal



10. A committee, constituted under this act, shall have the following functions:

i. to formulate policies and development priorities in respect of the
functions of the Municipal Corporation.

ii. to adopt rules to enable the Municipal Corporation carry out its

iii. to establish procedures and guide lines for the Municipal
Corporation that are consistent with the laws and policies of the
Royal government to operate efficiently and equitably;

iv. to review and approve the annual budget, related proposals of the
Municipal Corporation;

v. any other functions that the Competent Authority or the Royal
government may assign to the committee;

vi. to promote traditional architecture.

Composition of the Committee

11. The committee shall consist of:

i. the chairperson who is appointed by the government;
ii. the Thrompen; and
iii. not more than nine other Committee members who are elected or

appointed in accordance with this Act. This shall be decided in the
Corporation charter.



12. The Municipality may be divided into geographical areas depending on the

size of the Municipality, for election or appointment purposes.

Election of Committee Members

13. Where the Regulations established by the Competent authority allow for all

or some of the Committee Members to be elected, the following shall

i. The Thrompen shall be responsible to conduct the election.

ii. The Thrompen shall set the date of the election not less than six

weeks prior to the date chosen.

iii. The Thrompen shall immediately after the setting of the election

date notify the residents of the Municipality of the forthcoming
election and call for nominations of candidates.

iv. The Thrompen shall advise the residents on the number of Members

to be elected to represent each geographical area.

Eligibility Criteria for voters

14. Person entitled to vote shall be Bhutanese citizen:

a. who are registered in the census records of the Municipal and;
b. who have been residents of the Municipality for not less than 5

consecutive years at the date of the election.

Election Procedures

15. Election shall be held for each geographical area.

16. Election shall be by consensus.

17. In the event that a consensus is not reached a secret ballot is to be held.

a The candidate with the largest number of votes in his favour shall be
the first Committee Member elected; the candidate wi h the second
number of votes in his favour shall be the second Committee
Member elected; and so on until the required number of Committee
Members is elected.

b. In the event two or more candidate receives the same number of

votes, the committee Member shall be determined by drawing of

c. At the conclusion of the voting process, the Thrompen shall declare

the results of the voting and the names of the Committee Members

Appointment of Committee Members

18 Where the regulations to this Act require all or some of the Committee
Members to be appointed, they shall be appointed by the competent

Eligibility Criteria for Committee Members

19 Persons eligible to be elected as Committee Members shall be:

i. Citizens of the Kingdom of Bhutan;
ii. At least 25 years of age;
iii. Persons of sound mind;
iv. Residents of the Municipality for not less than 5 consecutive years;
v. Person with established business house in the Municipality;
vi. Literate and able to articulate adequately the views of the residents

that he represents and the Municipality’s proposal and actions to

vii. Persons who have not been convicted of a criminal offenses;
viii. Person who are willing and able to devote sufficient time to the

office of the Committee;
ix. Persons who have not been bankrupt within the past five years;
x. Person having respect for the nation’s law and the Pelden Dukpa’s

Driglam Choesum.

Duration of Office

20 Except as provided for in Section 30, all Committee M mbers shall be

elected or appointed for a period of three years, and shall be eligible for re-

Declaration of Office

21 A person elected or appointed to be a Committee Members is not entitled to

act as a Committee Member unless he or she has madethe following
declaration: “I,……….declare that I will undertake the duties of the office
of Committee Member in the best interests of the people in the
Municipality of ….. and faithfully and impartially carry out the functions,
powers, authorities and discretion vested in me under this or other Act to
the best of my skill and judgement”.

22 The declaration must be:

i. made before the Chairman; and
ii. recorded in the minutes of the Corporation meeting; a d
iii. dated and signed before the chairman.

Termination of Office

23 Committee Member may have his office as a Member terminated by the

competent authority at the request of the committee on the following
i. The Committee member is absent from meetings of the Corporation

on more than three consecutive occasions without acceptable reason;
ii. The Member engages in behaviour likely to bring the Corporation in

to disrepute;
iii. The Member is incapable of discharging his duties;
iv. The Member contravenes any of the terms of his appointment or the

provision of this Act;
v. The Member submits a resignation letter to the Chairm n.

Obligations of Committee Members

24. The Member shall:

i. act honestly with due skills and care in the interest of the
Corporarion at all times;

ii Not make improper use of their position or the information acquired
in their capacities.

Remuneration of committee Members

25. The Members shall be paid a sitting fee for each meeting attended, as

determined by the Competent Authority but shall not receive any additional
remuneration or salary for carrying out their duties as Members.

Disclosure of interest

26. In a Member has a direct personal interest in a matter to be considered by

the corporation, the member shall disclose the nature of the interest prior to
the meetings of the Committee.

27. A disclosure under Section 26 shall be recorded in the minutes of the

meeting and unless the Corporation determines otherwis , the members
shall not:
i. be present during any deliberation of the Committee in relation to

the matter; or
ii. take part in any decision of the Committee in relation to the matter.

28. Section 26 does not apply to matters relating to the supply of goods or

services by the Member if the same goods or services ar available at the
same terms and conditions to the members of public.

Extraordinary Vacancies

29. If the office of a Member becomes vacant because of the provision of

section 23, or because of the death of a member an xtraordinary vacancy is

30. The Competent authority shall appoint a member to fill the existing


31. A Member so appointed to fill an extraordinary vacancy shall hold office
only until the next election.


32. All meetings of the Committee shall be chaired by the chairperson. In the

absence of the Chairperson, an acting Chairperson shall be appointed by the
Chairperson, and if that is not possible, the committee shall elect an Acting
Chairperson for the meetings.

33. The committee shall hold at least two meetings in three months.

34. The initial meeting of the Committee shall be convened by the Chairperson,

as son as practicable after the election of the members.

35. Subsequent meetings shall be on a schedule agreed by the Committee at its

first meeting subject to the rights of the chairperson to convene
extraordinary meetings if sufficient reasons exist.

36. If deemed beneficial for the development and governance of the

Municipality the Committee may invite any Municipal corporation staff
member or official of the Royal Government to participate in its meetings
in an advisory capacity.

Minutes of a Meeting

37. The following procedures shall apply for each meeting:

i. Minutes of each meeting shall be recorded;
ii. Minutes shall be submitted to the next meetings for confirmation;
iii. If the minutes are confirmed the Chairperson at the meeting shall

sign the minutes and certify that have been confirmed.

Notice of Meeting

38. The Members should be notified one week in advance of the meeting with

an agenda.


39. At least 2/3 of the members shall comprise a quorum.


40. Each Member present at the meeting shall have one vte and decisions shall

be taken on a simple majority of votes. In the event of an equality of votes
the chairperson shall exercise a casting vote.



Duration of appointment.

41. The duration of the appointment of the Thrompen shall be at the discretion

of the Royal government.


42. The Thrompen shall be the executive head of the Municipal Corporation.

The duties of the Thormpen shall include, but not be limited to, the
i. Manage the affairs of the corporation under the direct on of the

ii. Supervise the day-to-day operations and administration of the

Municipal Corporation;
iii. Ensure the proper and adequate implementation of Corporation’s

rules and regulations;
iv. Prepare annual budget, and ensure compliance of the approved

v. Appoint, in accordance with the policies and procedures of the

corporation, staff members for the Municipal corporation, and be
responsible for their dismissal or severance as the cas may be;

vi. Serve as the member-secretary of the Committee;

vii. Interact with the Competent Authority and other organs of the Royal
government on matters concerning the development and overall
governance of the Municipal corporation; and

viii. Perform such other duties as the Royal Governme t may determine
from time to time;

ix. Act on behalf of the Corporation and in its name.

Termination of Appointment

43. The Competent Authority or the Committee may recommend to the

Government, the termination/transfer of the Thrompen from the
Corporation if, any of the circumstances of section 23 apply to him or her.

Employees of the Municipal Corporation

44. A Municipal Corporation may lay down such persons as considered

necessary for the performance of its functions.

45. The Municipal Corporation may lay down rules and guidelines related to

the conditions of employment, privileges, rights and responsibilities of the
employees, training and opportunities for promotion, retirement benefits
and other matters.

Transfer of civil servants by the Royal government to the Municipal

46. The royal government may transfer or depute civil servants to serve in a

Municipal Corporation in accordance with the existing guidelines of the
Royal Government.

Conditions of transfer

47. Unless civil servants who are transferred as employees of the Corporation

are required to remain in the civil Service, they shall have the following
rights and obligations:

i. They shall resign from the civil Service on the day of the transfer;
ii. They shall be paid by the Government their separation gratuity and

other entitlements;

iii. They shall be eligible to receive their Provident fund account
balance provident that they choose to receive the full balance not
later than the date determined by the Chairman for this purpose;

iv. Civil Servants who decide not to receive the Provident fund Balance
by the determined date shall retain their balance i the fund.

v. Employees of the Municipal Corporation including civil servants on
transfer to the corporation shall be entitled to remain or become
members of the RICB Provident fund on the same terms and
conditions as Civil Servants.




General Functions

48. A Municipal Corporation constituted under this shall have the following


i. to provide such civil and other services as are essential for the
general well-being of the residents of a Municipality;

ii. to ensure that the development occur in a planned ad h rmonious

iii. to undertake any activity, consistent with the other relevant laws and
policies of the Royal Government, which may preserve and promote
the environment within the limits of a Municipal Corp ration; and

iv. to perform any other function that the Royal governme t may assign.

Specific Functions

49. The Municipal Corporation carry out the following specific functions in
consultation with the relevant government Authorities:

i. General Public services
• fire prevention and protection;
• local emergency and safety services;
• animal control;
• waste impounding;

• litter control;
• operation of open markets;
• public safety

ii. Social and Other Community Services

• Health awareness campaign;
• Public conveniences;
• Prevention and abatement of nuisance;
• Crematoriums;
• Sanitary inspection;

iii. Planning and Land Use

• Development control;
• Housing and other accommodation;
• Land budgeting.

iv. Property Services

• Drinking water supply, drainage and sewerage;
• Land development schemes;
• Registration/transfer of land ownership;
• Land subdivision and consolidation;
• Cadastral surveys.

v. Recreation and cultural services

Halls and public buildings

Sports, recreation and leisure;

Parks, gardens and services;

Public entertainment;


vi. Roads including-

• Bridges;
• Footpath, landscaping;
• Traffic control and signs;
• Street maintenance and cleaning;
• Lighting and drainage of roads.

vii. Any other functions relating to orderly and sustainable
development of the Municipality including




Encouragement of commerce and industry;

Environment control, protection and conservation;

Weights and measures;

Municipal administration;

River Training;

Urban Census.


General Authority

50. Subject to the laws and policies of the Royal government and the conditions

specified in this Act, the Municipal Corporation may exercise any authority
that it may consider essential for discharging its functions laid down in
Parts III of this Act.

Specific Authority

51. Specifically the Municipal Corporation shall have th authority;

i. to enter into contracts and agreements;
ii. to purchase, lease, or otherwise acquire land and property, and sell,

lease, or otherwise dispose off it in the interest of the residents;
iii. sue in the Bhutanese courts and be sued;
iv. to raise, borrow, spend, and invest moneys for the support of its

v. to establish rules for governing its affairs, including the affairs of the

vi. to define the functions and duties of its employees;
vii. to employee staff to the municipal Corporation, and terminate the

employment in accordance with the Corporation’s procedures; and
viii. to adopt and enforce rules for protecting the healt, safety, and well

being of the residents, and for preserving and promoting the quality
of municipal environment.

52. The specific regulative and contracting powers of the Municipal
Corporation are elaborated in Parts V and VI of this Act.

Common Seal of the municipal corporation

53. The Municipal corporation shall have a common seal, which must:

i. bear the title of the Municipal Corporation and any other words,
letters, or design determined by the committee;

ii. be kept at the Municipal Corporation office;
iii. be used in accordance with the rules of the Corporation;
iv. be used with signature of the appropriate authority.

54. All courts and persons shall take legal notice of the imprint of the seal of a

Municipal Corporation on any document and shall presume that the
document was properly sealed and signed until the contrary is provided.

Resolution of Disputes

55. Any disagreements or disputes arising between the Municipal Corporation
and another public body shall be referred to the Competent Authority for
resolution. Only if a party is not satisfied with te settlement the normal
legal course shall be pursued.

National Laws and Policies

56. All laws and regulations of the Royal Government shall apply to all
Municipal Corporation in Bhutan.


Community Obligations

57. The Municipal Corporation shall manage its affairs in an efficient and

equitable manner, benefiting all residents of the Municipality.

Financial Obligations

58. The Municipal Corporation shall manage its finances prudently, and in a
manner, which is consistent with sound financial practices. The Municipal
Corporation shall exercise, in an appropriate manner, th powers that may
be granted to it, by the Royal Government.

Obligations to the Royal government

59. The Municipal Corporation shall support, to the extent practicable and with
its means and capacity, the development and other activities of the Royal
Government as far as they relate to the municipality.

60. The Municipal Corporation shall maintain appropriate relations with
Ministries of the Royal Government and other organiz tions which may be
affected by its affairs.

Linkage with the competent Authority

61. The municipal corporation shall, in respect of matters relating to urban
planning and development policies carry out its activities in a manner,
which is consistent with the overall directions of the competent Authority.

Obligations to Employees

62. A Municipal Corporation shall seeks to enhance the well being of its
employees. It shall provide, to the extent permitted by its means and
capacity, safe working conditions, and opportunities for training and
promotion, and other service benefits.



Municipal Boundaries

63. The boundaries of the Municipality shall be those as defined by the
Competent Authority on the day that its Charter is granted.

Procedure for Changing the Municipal boundaries

64. The competent Authority or municipal Corporation may propose inclusion
of any land which lies outside of, but contiguous to the boundaries of the
Municipality in the boundaries of the Municipal corp ation, if it is in the
best interests of the residents of the Municipality and the contiguous area.
Likewise, it may propose the exclusion of any land which lies within, but
contiguous to, the municipal boundaries of the Municipality from the
Municipality, it is in the best interest of the residents of the Municipality
and the area to be excluded.

65. i. Upon approval by the Government of the inclusion of any land in the
boundaries of the Municipality provisions of this Act and related rules
and regulations shall apply to the area included in the Municipality.

ii. upon exclusion of any land from the boundaries of the Municipality, all

provisions of this Act and related rules and regulations shall cease to
apply to the excluded area.

66. The Royal government shall reserve the right to reject the proposal in

which case the status quo in respect of municipal boundaries will be




Local Rules-General

67. The Municipal Corporation may adopt rules to carry out its functions

Specified in sections 48 and 49. These rules may relate but need not be
restricted to:
i. provision of services such AS water supply, sewerag services, solid

waste management, drains, animal control, plantation, and other
including the disposal of unclaimed bodies;

ii. promotion of planned development, pertaining to land use; building

activity; subdivision, sale, purchase and transfer of land; control of
squatter and illegal settlement; and commercial activities regulating
in particular business timings, location, cleanliness, and waste
disposal, shop signs and billboards, sale of alcohol, street vending,
weekly market and other matters;

iii. protection and improvement of the city’s environment, i particular,

control of noise, reduction of pollution, regulation of parking,
protection of parks and plantations, and other related matters.

Policy and Procedure for Existing Rules

68. Upon the incorporation of the Municipal Corporation, the Royal

government’s existing regulations, rules and codes of practice relating to
building practice, water and sanitation, plumbing and electrification shall

Land Administration Procedures

69. The registration of the ownership of land, subdivision, consolidation,

transfer of land and all matters pertaining to the administration of land shall
be in accordance with procedures adopted by the Municipal Corporation
and any Act or Regulations, which cover urban land dministration.

Compliance with the urban development plan

70. The municipal corporation shall prepare an Urban Development Plan or

amendments to an approved urban development Plan to regulate and
enforce land use and building activity in the municipality and shall submit
such plans to the competent Authority for approval.

71. Upon the approval of the urban development plan or any approved

amendments to the Plan, all development activities within the jurisdiction
of the municipal corporation.


72. The Municipal Corporation shall have the authority to enforce the existing

or new rules. The enforcement methods indicated in the rules may include
but need not be limited to, public education and awareness, fines,
disconnection of utilities, and stop-work orders.

73. The municipal Corporation shall have under this Act, the authority to

remove, after the issuance of appropriate notices as established under the
relevant rules, any construction or activity that is not approved or

74. the Municipal Corporation shall have the authority to protect its own
property such as the water supply sources, and may take such actions it
consider necessary for this purpose. Where such properties are shared with
other bodies, such actions shall be taken jointly.

75. Any none-compliance to the enforcement of rules may be brought before
the Dzongkhag Thrimkhang under which jurisdiction the Municipality is


76. A Municipal Corporation may acquire, in accordance with the procedures
laid down by the Royal Government, any land or prope ty within its
jurisdiction for the planned development of the Municipality.
Compensation for such acquisition shall be payable as per the rates
determined by the Royal government from time to time.




77. The Municipal Corporation shall operate and maintain those services it is

required to provide under this Act.

Contracting of Services

78. The municipal Corporation may contract the operation and maintenance of

any or all the services to private parties, if it is in the best interests of the
Municipal Corporation and its residents. Such contract and the conditions
of the contract shall be approved by the Competent Authority.

79. Upon the contracting of a service or services, the Municipal Corporation

shall ensure that the services are provided as per the provisions of the
contract and are in the best interest of the residents. In the event of any
breach of the contract by the contractor the Corporati n shall have the right
to terminate the contract with a penalty or compensation as specified under
the terms of the contract.

Discontinuation of Services

80. The Municipal Corporation, after seeking approval of, or being directed by
the Royal government, may discontinue providing some or all of the




Financial Authority

81. The Municipal Corporation shall have the authority to the extent stated in

this Act, to raise, spend, borrow and invest moneys and otherwise manage
its finances prudently, and in a manner, which is consistent with sound
financial practices.

Grants from the Royal Government

82. Grants from the Royal Government may be given to the Municipal

Corporation when:
i. the Municipal Corporation is required to undertake special

responsibilities or provide additional services on behalf of the Royal

ii. the Municipal Corporation is disadvantageously located or has an
inadequate financial resource base; and

iii. the Municipal Corporation faces emergency situations.

83. Grants from the Royal Government may also be given to the Municipal

Corporation for undertaking capital-intensive works.

Tax Exemptions

84. The Municipal Corporation shall be exempted from payment of taxes on its

revenue incomes.

Shares and dividends

85. The municipal corporation shall not issue any shares o pay dividends.



86. Upon the granting of a charter to the Municipal corporation, the Ministry of
finance shall transfer all of the assets and liabilities that are associated with
the municipal Corporation on the vesting date. The Ministry of finance
shall certify in writing the assets and liabilities that have been transferred.

Definition of Assets and liabilities

87. For the purpose of Section 86, the assets and liabilities to be transferred to a
Municipal Corporation may include, but not be limited to the following:

i immovable property: office building(s), vacant government lands,
staff quarters, garage(s), water treatment and distribution system,
landfill(s), sewerage and drainage system, cremation grounds,
nurseries and all other property and infrastructure hat is expected to
be managed by the Municipal corporation;

ii movable property: vehicles that are attached to the functions that a

Municipal corporation is expected to perform;

iii equipment, tools, materials, and supplies as related to the services

and infrastructure, expected to be managed by the Municipal
Corporation; and

iv all debts and financial obligations, financial assets and work under

progress associated with I, ii and iii on the vesting date except for
debts related to capital works.

Registration of Vehicles

88. All vehicles that are transferred to or purchased by the Municipal
Corporation shall be registered and insured by the Municipal Corporation
according to the Road Safety and transport Act of Bhutan.

Contracts and Arrangements

89. Except as otherwise stated in this Act, or directed by the Royal
Government, all contracts and arrangements between the Royal government
and private parties in respect of the affairs of the Municipal corporation
agreed upon prior to the coming into effect of this Act shall continue to be

Provident fund

90. The Municipal Corporation shall assume all obligations, financial and

others, in respect of Provident Fund that may exist on he vesting date for
employees who may be transferred to the Municipal Corporation and for
other employees not coming from the government.


91. The Thrompen shall, at least two months prior to the beginning of a fiscal

year, prepare a draft budget for its regular operations of the corporation and
submit the same to the Committee for approval.

92. The Thrompen shall, in addition, following the same procedure, prepare a

draft budget for capital expenditure and submit the same to the Committee
for approval.



93. The revenues of the municipal corporation may consist of such taxes, fees,

charges, fines and penalties as assigned to it by the Royal government.

Tax Revenue

94. The Municipal Corporation may levy and collect the following taxes in a

manner, and at such rates, as may be determined by the Royal Government:

i. land tax,
ii. urban house tax,
iii. under development land tax,
iv. property transfer tax,
v. entertainment tax.

Non – Tax revenue

95. The Municipal Corporation may impose the following fees, charges, fines

and penalties in a manner, and at rates approved by the Committee:
i. land development and subdivision fee
ii. land demarcation fee
iii. building plan processing fee
iv. land registration fee
v. site plan fee
vi. vehicle parking fee
vii. market vendor fee
viii. advertisement fees
ix. water and sewerage charges (including pipe realignment and

connection fees)
x. other service charges
xi. fines and penalties
xii. environment surcharge


96. A Municipal corporation may, with the prior approval of the royal

government, borrow funds to finance capital works.

97. Borrowed funds shall be spent only for the purpose for which they were


Funds for Capital projects

98. The municipal corporation may fund capital works and projects through

grants or loans from the Royal Government, the international and bilateral
donor agencies, and other sources approved by the Royal government. In
case of emergency, the Royal Government may make special provision foe
capital works to be undertaken by a Municipal Corporati n.

99. Where projects of the municipal Corporation are financed by a loan, the

municipal Corporation may levy a special tax or a special service charge on
the residents of the Municipality for purpose of repaying the loan funds.

100. Funds received for capital works and projects shall be spent only for the

purpose for which they were received.



101. The Municipal Corporation may spend funds only on carrying out the

functions specified in this Act, and in a manner, which is consistent with
sound financial management practices.

Authority to Spend

102. The Authority of the Municipal Corporation to spend shall extend to the


i. the total operating funds that a Municipal corporati n may raise in
any fiscal year, by the levying of taxes provided for in Section 94 of
this Act, and imposition of fees, charges, fines, and penalties as
provided for in Section 95 of this Act, and any grant on revenue
account that it may receive from the royal Governmet, and for
which budget proposals have been approved by the Committee;

ii. any unspent amount from the previous fiscal year(s);

iii. the capital budget of the Municipal Corporation for which
appropriations have been approved by the Royal Governm nt;

iv. the funds that it may receive for capital works and projects from the

international donor agencies and countries;

v. the funds that it may receive for emergency relief works (Section


Expenditure for Meeting Emergency Situations

103. The Municipal Corporation when facing extraordinary and emergency

situations, shall seek, through the Competent Authority assistance from the
royal Government. Such funds shall be spent only in accordance with the
conditions specified with the granting of such funds.


104. The Royal government shall in accordance with its procedures, audit the

accounts of the Municipal corporation once a year. The Municipal
Corporation shall provide the auditors with full access to all accounts and


Financial Management Practices

105. The Municipal Corporation shall manage its finances r lating to the

operating budget in accordance with financial management practices, as
laid down in the Financial Manual of the corporation.

106. The Municipal Corporation shall manage it finances r lating to funds

received from the Royal Government, and the internatio l, bilateral and
other sources in accordance with the procedures laid down by the Ministry
of Finance.

Gratuity Fund

107. The Municipal Corporation must, in addition to the fund, establish a

gratuity fund for its employees, or to contribute, with the approval of the
Competent Authority, to a similar fund established by other agencies.

Investment of Excess Funds

108. The Municipal corporation may, with the approval of the Competent

Authority invest any excess or inactive funds in a recognized Bhutanese
financial institution.

Annual Report

109. Not later than four months after the closing of each financial year the

Municipal Corporation shall submit to the Competent Au hority an annual
report of its operations including:

i. the annual financial statements;
ii. a statement of corporate objectives and policies;
iii. an assessment of the extent to which corporate objectives and

policies have been achieved during the year;
iv. an evaluation of the achievement of performance against standards

during the year;
v. an inventory of assets.



110. The Competent Authority may draft and recommend for adoption by the

Cabinet, regulations and amendments to regulations in accordance with this
i. Those matters set out in Sections 11, 12 & 13 pertaining to the

number and election of Committee Members.
ii. Determining the conditions under which the Thrompen shall be

employed and the circumstances whereby he/she may be dismissed.
iii. Planning matters referred to in Sections 70 & 71.

111. The competent Authority shall recommend to the governm nt the
incorporation of a Municipal Corporation.

112. The Competent authority shall guide and assist the T rompen in carrying

out those functions referred to in Sections 13, 14, 15, 16 and 17 when an
election for Committee Members is held for the first time for a Municipal

113. If required by the regulations for a Municipal Corpation, the Competent

Authority shall appoint Committee Members to the Municipal Corporation.

114. In accordance with the provisions of Section 64:

i. Where the Competent Authority after consultations with the
Municipal Corporations consider the boundary of a Municipal
should be altered, it shall make recommendations to the government.

ii. When a Municipal seeks to alter its boundary, it shall submit its
request to the Competent Authority, which in turn shall forward it to
the Cabinet with its recommendations relating to the proposal.

115. The Competent Authority shall consider all rules passed by the

Municipality. If it deems the rules to be ill founde or against the interest of
the Municipality, it shall revoke the rule.

116. The Competent Authority shall examine every Urban Development Plan, or

modification to such plan submitted to it in accordance with Section 70. In
its examination, the Competent Authority may seek guidance from any
authority or person it considers appropriate.

117. The competent Authority shall for any plan submitted in accordance with

Section 116;
i. approve the plan, or
ii. direct that certain changes be made to the plan before it is approved,

iii. refuse approval of the plan.

118. The Competent Authority any carry out a planning Audit in any

Municipality at any time to determine whether or not any violation to the
Urban Development plan has happened.

119. Upon creation of a Municipal corporation, the Royal Government shall
determine the assets and liabilities referred to Section 87 to be transferred
to the Municipality.

120. In accordance with Section 82 & 83, the competent Authority shall

recommend to the Royal Government any grants that should be given to the
Municipal Corporation for inclusion in the National Budget.

121. Upon receipt of Annual Reports submitted by the Municipal Corporation in

accordance with Section 109, the competent Authority shall submit a
compiled municipal Corporations report to the Royal Government.

122. Prior to a Municipality levying and collecting any of the taxes set out in

Section 94, the Competent should seek the Royal government’s approval on
the rates of the taxes to be imposed and the manner i which they may be

123. Before a Municipal Corporation obtains a loan to carry out capital works, it

must, as required by Section 96, obtain approval from the Competent

124. In respect of Section 98, the Competent Authority shall recommendations

for grants or loans on behalf of the Municipal Corporation to the Royal

125. the Competent Authority shall assist any Municipal Corporation facing
extraordinary or emergency situations under section 82 in obtaining
assistance from the Royal Government.



126. This Act or any part or sub-part or section of the Act, may, as and when

considered necessary, be amended by the National Assembly. Such an
amendment shall not affect the parts, subparts or sections that are not

127. In the event of any part, sub-part or section being rendered invalid, the
reminder of Act and its application shall remain unaffected.

N.B. If under any provision of this Act, there arises any differences in the

interpretation of different terminology, the interp retation as expressed
and understood in the Dzongkha text shall prevail.

Schedule 1.



The name of the Corporation is the Thimphu Municipal Corporation.


The registered agent and the office of the Corporation is:


Thimphu Municipal Corporation

PO Box 215



The Committee is responsible for representing the Municipal residents and
the Royal Government in the governance and development of the
municipality and for enforcing regulations, resolutions and decisions. The
regulations shall be consistent with the Bhutan Municipal Act, 1999 and
with all other laws and policies of the Royal Government.


Thimphu Municipal Corporation is organized as a non-profit, municipal
governance Corporation. The principal functions andresponsibilities of the
Corporation are to:
i. provide such civic services as are essential for the general well-being

of the residents of Thimphu Municipality;
ii. ensure that development and other activities within t e boundaries of

Thimphu Municipal Corporation occur in a planned an harmonious

iii. support the Royal Government in the general maintenance of the

iv. carry on any activity consistent with the laws and policies of the
Kingdom which may preserve and promote the environment within
the limits of the Municipal corporation; and

v. perform any other functions that the Royal governmet may assign
from time to time.


The capital assets of the Thimphu Municipal Corporati n consists of:

i. Immovable: Office buildings, garage, water treatment and
distribution system, landfill sites for solid waste disposal, staff
quarters, nurseries, sewerage system, drainage systm, parks and
play grounds and all other properties and municipal nfrastructure
including vacant and unregistered government land attached to or
managed by the Corporation;

ii. Moveable: All vehicles that are attached to the Corporation;
iii. All equipment, tools, materials, and supplies in the possession of the

Corporation; and
iv. All debts and financial obligations, and financial assets except for

debts related to capital works.

The Corporation shall have the authority to raise, spend and invest money and to
otherwise manage its financial affairs to the extent stated in the Bhutan Municipal
Act, 1999.

The Corporation shall not issue shares, shall not pay dividends, shall be exempted
from commercial taxes and shall be exempted from the other corporate
commercial requirements stated in the Companies Act of the kingdom of Bhutan,

Disposal of any properties including land shall be strictly in line with the land and
other related policies of the Royal Government.


The Corporation may be dissolved by the Royal Governm nt.


It is hereby declared to form the Thimphu Municipal Corporation with these
Articles and with the provisions of the Bhutan Municipal Act, 1999, and all other
requirements of the Royal Government of Bhutan, with effect from--------------


Competent Authority
Royal Government of Bhutan.