Civil Society Act, 2007

Link to law: http://www.nationalcouncil.bt/assets/uploads/docs/acts/2014/Civil_Society_Act,_2007Eng.pdf

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Civil Society Organizations Act of Bhutan 2007_English version_

THE CIVIL SOCIETY ORGANIZATIONS

ACT OF BHUTAN, 2007

1

THE CIVIL SOCIETY ORGANIZATIONS ACT
OF BHUTAN

Preamble

WHEREAS, it is expedient to provide for the establishment ad registration of
Civil Society Organizations to strengthen civil society by developing human
qualities and rendering humanitarian services;

The National Assembly of Bhutan in its 87th Session held on 5th Day of the 5th
Month of the Female Fire Hog Year of the Bhutanese Calendar, corresponding to
20th June, 2007 hereby consolidate and enact the Civil Society Organizations Act
of Bhutan.

Chapter 1
Preliminary

Short title, commencement and extent
1. This Act shall:

(a) Be called the Civil Society Organizations Act of Bhutan, 2007;
(b) Come into force in the 16th Day of the 6th month of the Female Fire

Hog Year of the Bhutanese Calendar, corresponding to the 31st Day
of July, Month, 2007; and

(c) Extends to the whole of Bhutan.

Repeal
2. This Act hereby repeals Tha 2-1 and 3-3 of the Thrimzhung Chennmo and

provisions of any law, by-law, rules and regulations which are inconsistent
with this Act.

Chapter 2
Civil Society Organizations

3. Civil Society Organizations (“CSO”) shall refer to associations, societies,

foundations, charitable trusts, not-for-profit organizations or other entities
that are not part of Government and do not distribue any income or profits
to their members, founders, donors, directors or trustees. CSOs do not
include trade unions, political parties, cooperatives or religious organizations
which are devoted primarily to religious worship.

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4. For the purpose of this Act, there are two types of CSOs, distinguished by

their differing objectives:
(a) Public benefit organizations (“PBOs”) are CSOs, which are

established in order to benefit a section or the society as a whole.
(b) Mutual benefit organizations (“MBOs”) are CSOs which are

established in order to advance the shared interests of their members
or supporters, such as to advance the shared interests of people
working in a particular profession, the businesses engaged in a
particular industry, youth studying in a university, or people who are
interested in a particular cultural activity, sport r hobby.

Chapter 3
Principle and objectives

Objectives of the Act
5. The objectives of this Act are to:

(a) Facilitate the establishment and growth of PBOs and MBOs in order
to strengthen civil society, promote social welfare, and improve the
conditions and quality of life for the people of Bhutan;

(b) Ensure a system of public accountability by providing a framework
for responsible and effective self-regulation of CSOs;

(c) Protect national and public interest;
(d) Facilitate a constructive partnership between the Government and

CSOs in order to advance the public interest;
(e) Provide opportunities for people to serve public interest;
(f) Benefit the public at large or particular sections f the public;
(g) Demonstrate and continue to increase CSO’s value to the larger

communities of which they form a part;
(h) Promote compliance by CSOs with their legal obligations to exercise

effective control and management over the administrat on of their
activities and funding; and

(i) Promote the delivery of emergency relief services and other types of
public services by PBOs, and promote the effective us of public and
private financial resources by PBOs for such purposes.

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6. PBOs shall serve to supplement or complement the efforts made by the
Government to:
(a) Protect human life and health;
(b) Prevent and alleviate human suffering and poverty;
(c) Disseminate knowledge and advance learning;
(d) Develop the Country economically and culturally;
(e) Assist in protection and promotion of National culture and heritage;
(f) Protect the natural environment; and
(g) Promote social harmony and Gross National Happiness.

7. No CSO shall:

(a) Do anything to impair the sovereignty, security, unity and territorial
integrity of Bhutan;

(b) Engage in any activities that are directly related to public elections;
(c) Do anything to destroy the peace, stability and well-b ing of the

nation;
(d) Be involved in any incitement to an offence on the grounds of race,

sex, language, religion or region;
(e) Be involved in political activity;
(f) Violate the spiritual heritage of Bhutan as expressed in Article 3 of the

Constitution;
(g) Be involved in conducting activities or managing inst tutions whose

primary purpose is public religious worship;
(h) Compel any person to belong to another faith, by providing reward or

inducement for a person to belong to another faith; nd
(i) Be organized or operated exclusively for financial g in.

Chapter 4
Authority

Authority
8. An independent “Civil Society Organizations Authority”, hereinafter

referred to as “the Authority” shall be established under this Act and it shall
be the regulatory authority under this Act.

9. The Authority shall consist of:

(a) A senior official from the Ministry of Finance appointed by the
Finance Minister;

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(b) An eminent lawyer with knowledge and experience of laws relating to
CSOs, who is recommended by the Attorney General;

(c) Two eminent members representing the CSOs; and
(d) A senior official from the Ministry of Home and Cult ral Affairs,

appointed by the Home Minister, who shall be the memb r secretary
of the Authority.

10. The members of the Authority shall elect a Chairperson from among

themselves.

11. The quorum for any meeting of the Authority shall be two-thirds of the total

number of members of the Authority.

12. The Authority shall meet at least twice a year and d itional sessions may be

convened, if deemed necessary.

13. All decisions by the Authority shall be determined by a simple majority of

the members present and voting.

14. The term of office of the members of Authority shall be three years and no

person shall hold office for more than two terms.

Functions of the Authority
15. The Authority shall:

(a) Prescribe the application form and application procedures for any
persons wishing to register a CSO under this Act;

(b) Review and approve all applications for registration of CSOs which
satisfy the requirements of this Act, within six months after such
applications are submitted;

(c) Provide written reasons for rejecting any application under this Act;
(d) Advise the Government about the general activities and roles of

CSOs;
(e) Encourage and facilitate better internal administration of CSOs;
(f) Monitor the activities of CSOs to ensure their compliance with this

Act and with their own Articles of Associations or Charters, and the
purposes for which they have been established;

(g) Approve the accreditation of foreign CSOs within the provisions of
the laws of Bhutan and this Act;

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(h) Institute inquiries either generally or for particular purposes, if the
activities of the CSOs are not in compliance with this Act or any other
relevant laws of the Country;

(i) Examine the books, records and activities of CSOs when required;
(j) Keep a public register of CSOs as described in section 27 of this Act;
(k) Add or remove any body or institution from the list of registered

CSOs for violations of this Act or of any other law of Bhutan or law
of any other country where that CSO may be operating; a d

(l) Carry out other related powers and responsibilities prescribed in this
Act.

Endowment Fund Limit
16. The Authority shall prescribe endowment fund limit for the MBO from time

to time.

Supervision
17. The Authority may on its own motion or upon the application of another

person inquire into a CSOs’:
(a) Administration or management;
(b) Value, condition, management or application of their property or

income; or
(c) Entitlements and privileges, including exemptions from taxes and

customs duties.

18. Where an application is made under section 17, the applicant shall furnish

such information in connection with the application as to enable the
Authority to determine whether there are reasonable grounds for making the
inquiry.

19. For the purpose of any inquiry, the Authority may require any person to:

(a) Furnish accounts and statements in writing with respect to any matter
in question at the inquiry;

(b) Furnish copies of documents in his custody or under his control which
relate to any matter in question at the inquiry; or

(c) Attend at a specified time and place and give evidence or produce any
such documents.

Office
20. The Authority shall establish an office for carrying out its functions and

responsibilities under this Act.

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21. The Authority shall be supported by administrative machinery staffed by
civil servants as per the Civil Service Rules and Regulations. The Authority
may incur expenditures that are required for carrying out its functions and
responsibilities under this Act.

Chapter 5
Registration and Establishment

Registration
22. Except otherwise exempted by this Act, all CSOs shall register with the

Authority under this Act.

Notification and Application
23. CSOs that have already been established or created shall submit to the

Authority within three months of the commencement of this Act, a duly
completed application for registration except as otherwise exempt under this
Act.

24. The Authority shall issue a Certificate of Registration upon determining that

the application meets the requirements prescribed under this Act.

Requirements for the establishment of CSOs
25. A Bhutanese citizen may establish a CSO by submitting the required

documents and information declaring:
(a) That he is a Bhutanese citizen as evidenced by a Citizenship Card;
(b) The income and assets of himself, his spouse, and depen ent children;
(c) His bio-data and educational qualifications; and
(d) His records of criminal convictions, if any.

Registration Fee
26. The Authority shall prescribe fee for registration of any CSO.

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Register
27. The office established under the Authority shall maintain:

(a) A register recording all CSOs, which shall be made vailable for
viewing by any member of the public during regular business hours at
the Authority’s office or on the internet, listing all CSOs that are or
were operating or authorized to operate in Bhutan, and stating each
CSO’s name, address and telephone number, the names of the
members of its governing board and its chief executive officer, the
CSO’s general purposes, the total amount of the CSO’s current assets,
liabilities, income and expenditures, and the date of its dissolution or
of its loss, termination or cancellation of registration; and

(b) An annual record of the total amount of contributions received and
made to each CSO.

Effects of Registration
28. The CSOs established under this Act shall acquire jridical status from the

date the Authority issues a Certificate of Registration under its official seal.

29. The Certificate of Registration issued by the Authority shall be conclusive

evidence that the body or institution is duly registered in accordance with
this Act unless, it is proved that the registration thereof has been cancelled.

30. In case of an appeal to the Court with regard to registration, the Authority

shall issue the Certificate based on the decision of the Court.

31. A CSO, which has been registered shall discharge its functions and

responsibilities in accordance with this Act.

Cancellation of Registration due to cessation of activities
32. If a CSO has ceased for a period of at least two years to carry out the

purposes and activities set forth in its Article of Association, its registration
shall be cancelled.

Contributions and property not used for intended purposes
33. If money or other property contributed to or owned by a CSO is used for

other purposes and activities not set-forth in the Article of Association at the
time of registration, such money or other property shall cease to be the
property of the CSO, and its registration may be cancelled.

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Removal from the register
34. If the removal of an organization is due to any change in its purpose, the

removal shall take effect from the date of that change.

35. A CSO, which is for the time being registered under this Act shall be

voluntarily removed from the register if it so requsts.

36. It is the duty of each registered CSO to report to the Authority:

(a) If the organization ceases to exist; and
(b) Supply the Authority with particulars of any significant change in its

purpose or in the information entered in the registr.

37. Prior to the cancellation of a CSO’s registration, its board of trustees shall be

given at least three months advance written notice of the intention to cancel
the registration, within which period the organization or institution shall be
given the opportunity either to resume carrying out the purposes and
activities set forth, or else present good reasons why the registration should
not be cancelled.

Exemption from Taxes
38. A registered CSO shall be exempt from the payment of income tax on

income or other gains which it has earned as a result of investing its
endowed property or other funds in accordance with regulations
promulgated by the Department of Revenue and Customs.

39. PBOs may be granted exemptions from payment of customs duties or other

taxes besides income taxes, on a case by case basis in accordance with
regulations and procedures issued jointly by the Authority and the
Department of Revenue and Customs.

40. MBOs shall not be entitled to receive any of the exemptions granted to

PBOs under the preceding sections of this Act, except on a case by case
basis in accordance with regulations and procedures issued jointly by the
Authority and the Department of Revenue and Customs.

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Objections to Registration
41. The Authority may refuse to register any organization as a CSO where, in its

opinion:
(a) The name of the CSO is similar to the name of another institution,

other organization or entity as to be likely to mislead the public as to
its true identity;

(b) The name of the CSO is offensive to good morals or national symbols;
(c) The application for registration does not comply with the

requirements of this Act or any regulations made there under; or
(d) The objectives of the proposed CSO are in contravention of the

provisions of the laws of the Country.

42. Any person, who is or may be adversely affected by the registration of an

organization as a CSO may on the ground that the organization does not
qualify as a CSO:
(a) Object to it being entered by the Authority in the register; or
(b) Apply to the Authority for it to be removed from the register.

Responsibilities of CSOs
43. A CSO may:

(a) Adopt or amend Articles of Association which must be submitted to
the Authority for approval;

(b) Sue and be sued in its name;
(c) Engage in any lawful undertaking, own property or enter into

contracts, including employment contracts, for the social, economic,
environmental or cultural advancement of the public;

(d) Expand or diversify its current plans and programs by either
establishing subsidiaries, affiliating with other PBOs or opening
branches;

(e) Accept and receive grants, donations or financial assistance from
domestic and external sources upon compliance with all applicable
laws and regulations; and

(f) Exercise all other rights or responsibilities as authorized by this Act.

44. A PBO shall furnish to the Authority:

(a) Two copies of the Article of Association and Memorandum of
Association;

(b) Code of ethics for all trustees and employees;

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(c) A detailed three year programme of activities with annual work plans
and measurable performance indicators, demonstrating the PBO’s
conformity with the mission and goals stated in its Articles of
Association;

(d) A written commitment by all Board members and senior staff of the
PBO to operate within the law in pursuit of the PBO’s stated mission,
goals and business operations; and

(e) A declaration that the memorandum and articles of requirements of
the Act and the rules made there under have been duly complied with,
in respect of registration or matters incidental or supplementary
thereto.

Chapter 6
Articles of Association and Rules and Regulations

Articles of Association
45. Any CSO applying for registration shall file with te Authority its Articles

of Association signed by all the members of its Board.

46. The Articles of Association shall provide:

(a) The name of the CSO;
(b) The CSO’s purpose, objectives and scope of activity;
(c) The CSO’s organizational structure, accountability and reporting

responsibilities of its officials and key personnel and its decision-
making system;

(d) Its types of funding sources and how it proposes to manage its assets;
(e) Its intended geographical area of operation and the postal address of

its principal office;
(f) The names, nationality, and occupation of its incorporators; and
(g) Any other relevant information it chooses or is requ sted to provide

that is not inconsistent with this Act.

Rules and Regulations
47. A CSO to be registered under this Act shall adopt rules and regulations in

accordance with this Act to govern its day-to-day affairs by providing
procedures and systems for:
(a) Management, inventory of property and reporting system ;
(b) Source, use, investment and management of funds; an
(c) The conduct and operations of the Board.

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Chapter 7

Accreditation of a Foreign CSO

Government Agency Partnership
48. A Foreign CSO shall request a government agency in a relevant sector to act

as a technical collaborator to implement the CSO’s goals and activities in
Bhutan.

Accreditation of a Foreign CSO
49. A CSO registered as a non-governmental organization in a foreign country

that is operating or intending to operate in Bhutan shall apply for
accreditation with the Authority. The requirements for accreditation are:
(a) A certified copy of its certificate of registration;
(b) A copy of its Article of Association and a Memorandum of

Association;
(c) A statement of its aims and objectives;
(d) A Government Agency partner; and
(e) Detailed three year plan of activities and quantitative contribution to

Bhutan.

50. After verification, the Authority may issue a certificate of accreditation to

the CSO to operate in Bhutan. Thereafter, the accredited CSO shall submit
to the Authority its annual report, including audite financial statements for
its operation in Bhutan. A certificate of accreditation shall be reviewed and
updated every three years as per the outcome.

Chapter 8
Management of CSOs

Board of Trustees or Directors
51. Each CSO shall be governed by a board of trustees or directors, hereinafter

referred to as the “Board”, in order to promote accountability, transparency
and more effective management of CSOs.

52. The members of the Board of a CSO shall elect from among themselves a

chairperson, a secretary and a treasurer.

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53. The Board of a CSO shall be responsible for:
(a) The management, investment and use of any movable or immovable

property donated or transferred to the CSO;
(b) Ensuring that all such property and the income therefrom shall only be

used for the purposes authorized by the CSO’s Articles of Association
or Charter; and

(c) Any agreement between the CSO and a donor which may further
restrict the use of a particular donation.

Appointment
54. The Board of a CSO shall:

(a) Select and appoint an Executive Director and any other needed
personnel in accordance with fair and objective hiring practices; and

(b) Approve of the Executive Director’s duties and responsibilities and
fix his remuneration by a resolution of a majority of the Board
members present at a meeting of the Board.

55. The members of the Board shall maintain the highest standard of ethics,

integrity and professionalism in discharging their duties as Board members.

56. All the members of the Board of a CSO shall individually and collectively

ensure and maintain the integrity of a CSO.

Meetings and Quorum
57. The meetings of the Board of a CSO shall be held at east once every three

months, provided that the secretary serves the notice f meeting at least two
weeks in advance.

Liability
58. A Board member or an official of a CSO, who willfuly and knowingly votes

for or assents to patently unlawful acts of the CSO shall be guilty of gross
negligence or bad faith in directing the affairs of the CSO.

59. A person found guilty of the offence of gross negligence or bad faith under

section 58 shall be liable jointly or individually for all damages suffered by
the CSO.

Persons Disqualified from being Board Members
60. Subject to the provisions of this Act, a person shall be disqualified from

being a member of the Board of a CSO if he:

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(a) Has been terminated from Public Service;
(b) Has been removed from any office on the ground of any misconduct

or mismanagement in the administration of any CSO or other
corporate bodies;

(c) Has been convicted for any criminal offence and sentenced to
imprisonment;

(d) Has been found to be in arrears of taxes or other dues to the
Government for a substantial period and in a substantial amount;

(e) Currently holds any senior office or position in a Government-
controlled company or organization, unless otherwise exempted by
law; or

(f) Is disqualified under any law.

61. CSOs operating in Bhutan shall seek the approval of the Authority before

employing any person, who is not a citizen of Bhutan, whether as paid
employees or as volunteers. However, they shall ensur that such
employment is in compliance with all related laws and regulations of the
country including labour and immigration laws. CSOs shall bear all
responsibility for the actions of such employees and volunteers in their
organization.

62. A CSO shall observe all the norms and criteria for operations in Bhutan with

regard to the fair and objective hiring, employment a d human resource
management of local employees as per the standards n guidelines
established by the relevant public authorities, and it shall refrain from
arbitrary or other unfair business practices failing which, the concerned CSO
shall be dealt in accordance with this Act and with ot er relevant laws of the
Country.

Chapter 9
Fund Raising

Prohibition
63. No person or institution shall raise fund or solicit money or other property

for a CSO, unless he does so in accordance with this Act.

64. Where a person or a institution solicits money or other property as a

contribution to a CSO, the solicitation shall be accompanied by a statement
clearly indicating:

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(a) The name of the CSO concerned; and
(b) If there is more than one CSO concerned, the proporti ns in which the

CSOs will respectively benefit.

Sources of Funds
65. The source of funds or other property of a CSO may be from any or all of

the following:
(a) Contribution from members;
(b) Donations, grants, subsidies, financial assistance, bequests and other

transfers of funds or other property, whether public or private; and
(c) Dividends or income from investments or from the sale and lease of

property.

Foreign Sources of funds
66. Donations, grants, subsidies, financial assistance d contributions, bequests

and other transfers of funds or other property from f reign sources, whether
public or private, shall be routed through an authorized Financial Institution
of Bhutan.

Chapter 10
Charitable collections

Donations
67. Any person is free to offer any movable or immovable property according to

his will to any institutions, private or Government provided it is in
accordance with this Act.

68. Any charity or donations made to any institution, regardless of the quantity
or value shall be recorded.

69. Any charity or donations shall be collected only on the volition of the donor.
No collection shall be made under deceit or coercion.

70. No person shall collect or ask for any contribution or charity to aid or help
any activity, which is in contravention with the laws of the Country.

Restrictions on collections
71. A collection in a public place must not be conducted, unless the promoters

of the collection hold a public collections certificate from the Authority and
the collection is conducted in accordance with this Act.

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72. A door to door collection shall not be conducted, unless the promoters of the
collection hold a public collections certificate from the Authority.

Change of purpose
73. A purpose of the CSO may be altered or changed uponpermission from the

Authority, where the:
(a) Original purpose, in whole or in part have been fulfilled or cannot be

carried out, or not according to the directions given and to the spirit of
the gift;

(b) Original purposes provide a used for part only of the property
available by the virtue of the gift;

(c) Property by virtue of the gift and other property applicable for similar
purposes can be more effectively used in conjunctio and to that end
can suitably be made applicable to common purposes;

(d) Original purposes were to the specified area but tha area for any
reason ceased to be suitable or practicable in administering the gift; or

(e) Original purposes, in whole or in part, have being adequately provided
for by other means, or is useless or harmful to the community.

Chapter 11
Merger and Consolidation of CSOs

Merger of CSOs
74. Two or more registered CSOs with a similar purpose may merge with

another and the merged entity shall continue the purposes of the merged
CSOs.

Consolidation of CSOs
75. Two or more registered CSOs engaged in similar endeavour may consolidate

into a new single registered CSO.

Decision to Merge and Consolidate CSOs
76. The decision to merge or consolidate a CSO, as the cas may be, shall

require a vote of two-thirds of the board of trustee of the CSO.

77. After verification, the Authority may approve the merger or consolidation of

a CSO consistent with the laws of the Country.

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78. A local CSO may not merge or consolidate with a foreign CSO, whether or
not the foreign CSO is accredited in Bhutan.

Chapter 12
Insolvency, Dissolution and Liquidation of CSOs

Insolvency
79. In the event that a CSO is unable to fulfill its financial obligations to

creditors due to insolvency, such CSO may apply for such remedies as it
deems fit under the provisions of the laws of Bhutan.

80. A CSO may only be declared insolvent upon the decision of a Court.

Dissolution
81. A CSO established under this Act may be dissolved either voluntarily or

involuntarily in accordance with this Act.

82. A CSO shall be dissolved:

(a) If the objectives or activities of the CSOs are in contravention of the
provisions of the laws of the Country;

(b) If it has knowingly received illegal money or assistance from foreign
sources;

(c) If it has acted against the security, unity and territorial integrity of
Bhutan; or

(d) Has otherwise violated this Act.

Voluntary Dissolution
83. In case where dissolution of a CSO does not prejudice the rights of any

creditor having a claim against such organization, the dissolution may be
effected by a vote of two-thirds of the members of the Authority.

84. A copy of the resolution authorizing the dissolution shall be signed by the

chairperson of the Board of the CSO.

85. A copy of the resolution shall be submitted to the Authority, which shall

thereupon issue a certificate of dissolution. The dissolution shall come into
effect on the day and the date of the issuance of the certificate of dissolution.

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Involuntary Dissolution
86. A CSO may be dissolved by the order of the Court after completion of the

judicial process on the grounds of:
(a) Having obtained its registration by fraud;
(b) Operating for an illegal purpose;
(c) Willful violation or failure to meet the requirements, despite notice

issued by the Authority;
(d) Insolvency; or
(e) Violation of this Act or any other laws of the Country.

Disposal and Settlement of Property
87. In case of dissolution, all necessary steps shall be taken for the proper

disposal and settlement of the property of a CSO, its claims and liabilities
according to the applicable Articles of Association or other rules of the CSO.

88. In the event of any dispute arising among the board of the CSO, the

settlement of its affairs shall be referred to the Authority in the first instance.
If they cannot be settled by the Authority, the matter shall be referred to a
Court.

Profit upon Dissolution
89. If upon the dissolution of any CSO registered under this Act, after the

satisfaction of all its debts and liabilities, any property whatsoever is left, the
same shall not be paid to or distributed among the Board members or
employees of the said CSO but it shall be utilized for project with similar
activities in consultation with the Authority.

Liquidation
90. A CSO whose Article of Association or Charter expires by their own terms

or whose legal existence is terminated either by voluntary or involuntary
dissolution shall nevertheless continue as a legal ntity for one year after its
dissolution has been approved solely in order to:
(a) Prosecute or defend any suit by or against it;
(b) Settle and close its affairs;
(c) Dispose of and convey its property; or
(d) Distribute its assets.

91. The CSO dissolved under the preceding section shall not continue for the

purpose of carrying out the purposes, activities or pr grams for which it was
established.

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Chapter 13
Accounts, Reports and Returns

Accounting and Reporting System
92. PBOs under this Act shall establish an accounting system in accordance with

the Financial Rules and Regulations of the Royal Government of Bhutan.

93. The PBOs shall make full disclosure of financial information, including

sources of funding, application of funds and audited accounts.

94. The Annual Financial reports shall be submitted to the Authority.

Annual Accounts
95. The accounting records shall contain:

(a) The total sums of money received and the total expenditures made;
and

(b) A record of the PBO’s assets and liabilities.

Annual Audit
96. The Royal Audit Authority shall conduct an annual audit of the PBOs.

Annual Reports
97. The members of the Board of a PBO shall prepare in respect of each

financial year, an annual report enclosing:
(a) A prescribed report by the trustees on the activities of the PBOs

during that year; and
(b) Such other information relating to the PBOs or to its trustees or

officers as may be prescribed by rules and regulations made under this
Act.

98. The annual report required to be prepared under section 97, in respect of any

financial year of a PBOs shall be put in the public domain in either
electronic or paper form.

Access to Documents
99. Members of the public shall have the right of access to and inspect the

public register of CSOs that is maintained by the Authority.

100. The Authority shall prescribe the circumstances and the manner in which the

public shall exercise the right of access to and inspect the CSO Register.

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Chapter 14
Breach of Trust

Breach of Trust
101. Subject to the provisions of this Act and to the terms of a CSO’s Articles of

Association or Charter, a Board member or officer of the CSO, who
commits or concurs in a breach of trust, including a y undisclosed conflict
of interest is liable for any:
(a) Loss or depreciation in value of the CSO’s property resulting from the

breach; and
(b) Profit, income or donations which would have accrued to the trust had

there been no breach.

102. A Board member or officer of a CSO may not set off a profit accruing from

a breach of trust against a loss or depreciation in value resulting in another.

103. A Board member or officer of a CSO is not liable for a breach of trust

committed by another person prior to his appointment or for a breach of trust
committed by a co-Board member or officer of a CSO, unless he:
(a) Becomes aware of the breach; and
(b) Actively conceals the breach, or fails within a reasonable time to take

proper steps to protect or restore the CSO property or prevent the
breach.

104. If the Board members or officers of a CSO are liable for a breach of trust,

they are liable both jointly and severally.

105. A Board member or officer of a CSO, who becomes aware of a breach of

trust shall take all reasonable steps to have the breach remedied.

106. The property of a CSO which has been charged or dealt in the breach of

trust, or any property into which it has been converted may be followed and
recovered, unless it is no longer identifiable.

107. If a Board member or officer of a CSO commits a breach of trust at the

instigation, at the request with the concurrence of a beneficiary, the Court
may impound all or part of the beneficiary’s interest by way of indemnity to
the Board member or officer of a CSO or any person claiming through him.

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Chapter 15
Code of Conduct

108. CSOs, shall respect indigenous knowledge and customs, individuals’

dignity, identity, culture, faith and values.

109. CSOs are encouraged to provide cost effective services, be innovative and

responsive to the needs of the economically disadvantaged sections of
society.

110. Public services and charitable activities of PBOs shall be planned, designed,

implemented, monitored and evaluated in an equitable manner with the
participation of the people concerned.

111. PBOs shall exercise and promote fairness, impartiality nd equity in all their

activities and dealings.

112. PBOs shall be transparent and accountable to their community partners, the

public, their donors and other interested parties.

113. CSOs shall not be biased or discriminatory in their policies and procedures.

Chapter 16
Removal

114. A member of the Board or an employee of a CSO may be removed, if he:

(a) Becomes incapable by reason of mental disorder, illness or injury of
managing and administering his own affairs;

(b) Acts in contravention of the provisions of the laws of the Country;
(c) Has knowingly received illegal money or assistance from foreign

sources;
(d) Has acted against the security, unity and territorial integrity of

Bhutan; or
(e) Has otherwise violated this Act.

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Chapter 17
Legal Proceedings

Legal Proceedings
115. A legal proceeding may be initiated in the name of a CSO by its Board or by

its legal representatives but not by any other person.

Enforcement of Judgment
116. If a judgment is to be enforced against the person or officer named on behalf

of a CSO, such judgment shall not be executed against the property,
movable or immovable, or against the body of such person or officer, unless
such a person or officer is personally found guilty of committing an illegal
act or breach of trust.

Chapter 18
Offences and Penalty

False statements
117. A person shall be guilty of giving false statement, if he person solicits or

collects money or other property representing that t e organization is a CSO
registered under this Act, although the organization is not so registered. The
penalty of the offence shall be in accordance with the Penal Code of Bhutan.

False or misleading information
118. A person shall be guilty of providing false or misleading information, if the

person knowingly or recklessly provides false or misleading information
regarding the information required to be provided under this Act. The
penalty of the offence shall be in accordance with the Penal Code of Bhutan.

Breach of Trust
119. A member of the Board of a CSO shall be guilty of a breach of trust, if the

Board member, being entrusted with any movable or immovable property of
the CSO or any property which a person intends to donate, bequeath or
otherwise transfer to a CSO does any act contrary to the term of his trust and
dishonestly misappropriate or converts the property to his own use. The
penalty for this offence shall be determined according to value-based
sentencing in accordance with the Penal Code of Bhutan.

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Misuse of investment
120. A person, who is an investment manager or custodian selected by the Board

under this Act shall be guilty of the misuse of investment, if the person who
is responsible to manage the investment on behalf of the CSO, misuses or
does not use the investment as provided in the investment guidelines. The
penalty for this offence shall be determined according to value-based
sentencing in accordance with the Penal Code of Bhutan.

Unlawful collection
121. A person or organization shall be guilty of unlawful collection, if the person

or organization collects any donation or charity without conforming to the
provisions of this Act. The penalty for this offence shall be determined
according to value-based in accordance with the Penal Code of Bhutan.

Illegal fund raising
122. A person or institution shall be guilty of illegal fund raising, if the person or

organization raises funds or solicits money or other property as a charity not
in accordance with this Act. The offence shall be petty misdemeanour. If the
wrongdoer is an institution, such institution shall be fined or have its
registration suspended or cancelled, if it is regist red.

123. Any funds that are raised in an unauthorized manner shall be returned to the

donors, or if the donors cannot be identified or contacted, shall become the
property of the Government.

Chapter 19
Miscellaneous Provisions

Rule making power
124. The Authority shall make rules for effective administration and effective

implementation of this Act.

Amendment
125. The amendment of this Act shall be effected only by Parliament.

Authoritative text
126. The Dzongkha text shall be the authoritative text, if there exist any

difference in meaning between the Dzongkha and the English text.