Civil Society Organizations Act of Bhutan
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THE CIVIL SOCIETY ORGANIZATIONS ACT
OF BHUTAN

Preamble

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

The National Assembly of Bhutan in its 87 th Session held on
5 th Day of the 5 th Month of the Female Fire Hog Year of the
Bhutanese Calendar, corresponding to 20 th 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 on the 16 th Day of the 6 th Month of
the Female Fire Hog Year of the Bhutanese Calendar,
corresponding to the 31
st Day of July, 2007; and
(c) Extend to the whole of Bhutan.

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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 wh ich 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 distribute any income or
profits to their members, founders, donors, directors or
trustees. CSOs do not include trade unions, political
parties, cooperatives or re ligious organizations which
are devoted primarily to religious worship.
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.

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(b) Mutual Benefit Organizations (“MBOs”) are
CSOs which are establishe d 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 or hobby.

Chapter 3
Principle and Objectives

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

(a) Facilitate the establishmen t 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;

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(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
of 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 ad ministration 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 use of public
and private financial resources by PBOs for such
purposes.

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 a nd advance learning;

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(d) Develop the Country economically and
culturally;
(e) Assist in the 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 th at are directly related
to public elections;
(c) Do anything to destroy the peace, stability and
well-being 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;

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(f) Violate the spiritual heritage of Bhutan as
expressed in Article 3 of the Constitution;
(g) Be involved in conducting activities or managing
institutions whose primary purpose is public
religious worship;
(h) Compel any person to bel ong to another faith by
providing reward or inducement for a person to
belong to another faith; and
(i) Be organized or operated exclusively for
financial gain.

Chapter 4
Authority

Authority
8. An independent “Civil Society Organizations
Authority”, hereinafter referred to as “the Authority”
shall be established under th is 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 re lating 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
Cultural Affairs, appointed by the Home
Minister, who shall be the member secretary of
the Authority.

10. The members of the Authorit y 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
additional sessions may be convened, if deemed
necessary.

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

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Functions of the Authority
15. The Authority shall:

(a) Prescribe the application form and application
procedures for any person 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 facilita te better internal
administration of CSOs;
(f) Monitor the activities of CSOs to ensure their
compliance with this Act and with their own
Articles of Association or Charters, and the
purposes for which they ha ve been established;

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(g) Approve the accreditation of foreign CSOs
within the provisions of the laws of Bhutan and
this Act;
(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 fo r violations of this Act
or any other law of Bhutan or law of any other
country where that CSO may be operating; and
(l) Carry out other related powers and
responsibilities prescribed in this Act.

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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 ar e reasonable grounds for
making the inquiry.

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

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

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(b) Furnish copies of documents in his custody or
under his control which re late 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 establis h an office for carrying out
its functions and responsibilities under this Act.

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 responsib ilities 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.

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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 dependent 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 available 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 CS O’s general purposes,
the total amount of the CSO’s current assets,
liabilities, income and expe nditures, 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
juridical status from the date the Authority issues a
Certificate of Registration under its official seal.

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29. The Certificate of Registra tion issued by the Authority
shall be conclusive evidence that the body or institution
is duly registered in accord ance 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 regist ered 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 co ntributed 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 tim e being registered under
this Act shall be voluntarily removed from the register
if it so requests.

36. It is the duty of each regi stered 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 register.

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.

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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 inves ting its endowed property or
other funds in accordance with regulations promulgated
by the Department of Revenue and Customs.

39. PBOs may be granted exem ptions from payment of
customs duties or other taxes besides income taxe, 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.

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;

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(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 organiza tion 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 fo r 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;

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(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 th e applicable laws and
regulations; and
(f) Exercise all other right s or responsibilities as
authorized by this Act.

44. A PBO shall furnish to the Authority:

(a) Two copies of the Articles of Association and
Memorandum of Association;
(b) Code of ethics for all trustees and employees;
(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;

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(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 association 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 the
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;

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(c) The CSO’s organizational structure,
accountability and reporting responsibilities of its
officials and key pers onnel and its decision-
making system;
(d) Its types of funding sour ces 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 inform ation it chooses or is
requested 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
systems;
(b) Source, use, investment and management of
funds; and
(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 a pply 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.

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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 audited 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 referre d to as the “Board”, in
order to promote accountabili ty, 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 sha ll 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 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.

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55. The members of the Board shall maintain the highest
standard of ethics, integr ity 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
least once every three mont hs, provided that the
secretary serves the notice of meeting at least two
weeks in advance.

Liability
58. A Board member or an offici al of a CSO, who willfully
and knowingly votes for or as sents 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 unde r Section 58 shall be liable
jointly or individually for all damages suffered by the
CSO.

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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:

(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 a ny 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 otherw ise exempted by law;
or
(f) Is disqualified under any law.

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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 ensure 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 and human resource
management of local employees as per the standards
and guidelines established by the relevant public
authorities, and it shall refra in from arbitrary or other
unfair business practices fa iling which, the concerned
CSO shall be dealt in accordan ce with this Act and with
other relevant laws of the Country.

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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 an institu tion solicits money or other
property as a contribution to a CSO, the solicitation
shall be accompanied by a statement clearly indicating:

(a) The name of the CSO concerned; and
(b) If there is more than one CSO concerned, the
proportions in which the CSOs will respectively
benefit.

Sources of Funds
65. The source of funds or othe r 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.

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Foreign Sources of Funds
66. Donations, grants, subsidies, financial assistance and
contributions, bequests and other transfers of funds or
other property from foreign sources, whether public or
private, shall be routed thro ugh an authorized Financial
Institution of Bhutan.

Chapter 10
Charitable Collections

Donations
67. Any person is free to offe r 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 sha ll be collected only on the
volition of the donor. No colle ction 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.

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Restriction on Collections
71. A collection in a public place must not be conducted
unless the promoters of the collection hold a public
collections certificate fro m the Authority and the
collection is conducted in ac cordance with this Act.

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 upon
permission from the Authority, where the:

(a) Original purpose, in whole or in part have been
fulfilled or cannot be carried out, or not in
accordance with the directions given and to the
spirit of the gift;
(b) Original purposes provide a use 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 conjunction and to that end
can suitably be made applicable to common
purposes;

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(d) Original purposes were to the specified area but
that area for any reason ceased to be suitable or
practicable in administering the gift; or
(e) Original purposes, in whole or in part, have been
adequately provided for by other means, or are
useless or harmful to the community.

Chapter 11
Merger and Consolid ation of CSOs

Merger of CSOs
74. Two or more registered CS Os with a similar purpose
may merge with another an d 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.

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Decision to Merge and Consolidate CSOs
76. The decision to merge or c onsolidate a CSO, as the case
may be, shall require a vote of two-thirds of the board
of trustees of the CSO.

77. After verification, the Authority may approve the
merger or consolidation of a CSO consistent with the
laws of the Country.

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 un able 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.

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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 recei ved 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 ha ving 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 ther eupon issue a certificate of
dissolution. The dissolution shall come into effect on
the day and the date of the i ssuance 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 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 ne cessary 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 disput e 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 ma tter shall be referred to a
Court.

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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 w hose legal existence is
terminated either by vo luntary or involuntary
dissolution shall nevertheless continue as a legal entity
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.

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91. The CSO dissolved under th e preceding Section shall
not continue for the purpose of carrying out the
purposes, activities or pr ograms for which it was
established.

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.

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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 financia l 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.

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100. The Authority shall prescrib e the circumstances and the
manner in which the public shall exercise the right of
access to and inspect the CSO Register.

Chapter 14
Breach of Trust

Breach of Trust
101. Subject to the provisions of th is Act and to the terms of
a CSO’s Articles of Associa tion or Charter, a Board
member or officer of the CS O, who commits or concurs
in a breach of trust, including any 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.

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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 sh all 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 an y property into which it has
been converted may be follo wed and recovered, unless
it is no longer identifiable.

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107. If a Board member or officer of a CSO commits a
breach of trust at the instigat ion, at the request with the
concurrence of a benefici ary, 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.

Chapter 15
Code of Conduct

108. CSOs shall respect indigeno us knowledge and customs,
individuals’ dignity, identity, culture, faith and values.

109. CSOs are encouraged to prov ide cost effective services,
be innovative and responsive to the needs of the
economically disadvantaged sections of society.

110. Public services and charita ble activities of PBOs shall
be planned, designed, im plemented, monitored and
evaluated in an equitable ma nner with the participation
of the people concerned.

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

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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 in itiated 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 gi ving false statement, if the
person solicits or collects money or other property
representing that the organi zation is a CSO registered
under this Act, although the organization is not so
registered. The penalty for the offence shall be in
accordance with the Pena l Code of Bhutan.

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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 re quired to be provided under
this Act. The penalty for 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
breach of trust, if the Bo ard 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 se ntencing in accordance with
the Penal Code of Bhutan.

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 i nvestment 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 accordan ce with the Penal Code of
Bhutan.

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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 sentencing in
accordance with the Pe nal 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 registered.

123. Any fund 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.

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Chapter 19
Miscellaneous Provisions

Rule making power
124. The Authority shall make rules for effective
administration and effective im plementation of this Act.

Amendment
125. The amendment of this Act sh all 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.