Summary
- GFSO publishes a seven-step licensing process on gmc.bt/GFSO: initial meeting, business model presentation, formal application and non-refundable fee, review and interviews, In-Principle Approval (IPA) with pre-conditions, satisfaction of those conditions, and issue of the Financial Services Licence.
- The statutory framework is Part 4 of the Financial Services Act 2025: applications (s. 27), threshold conditions (s. 28), grant with conditions (s. 30), application content (s. 40) and written notice of the decision (s. 41).
- GEN 5.2.7 sets the four things every applicant must demonstrate: adequate and appropriate resources, fitness and propriety, capability of being effectively supervised, and adequate compliance arrangements.
- Only a Body Corporate or a Partnership may apply (s. 27(1); GEN 5.2.2). Insurers and investment trust trustees must be Bodies Corporate.
- IPA "does not permit you to conduct your business in GMC yet". Only the licence lifts the General Prohibition in s. 16.
- Fees, capital figures and processing times are set by GFSO and PRU and are not published in the Act or GEN.
What the process is
Any person who intends to carry on a Regulated Activity "in or from GMC" must apply to GFSO, the Gelephu Financial Services Office, for a Financial Services Licence (GEN 5.2.1). The Regulated Activities are listed in Schedule 1 of the Financial Services Act 2025 (see our complete guide to GFSO licensing). Carrying on such an activity by way of business in GMC without a licence contravenes the General Prohibition in s. 16.
This article maps each stage of GFSO's process to the Act and the GEN Rulebook (Version 1.0, 7 May 2026). The Act says "Financial Services Licence" (s. 258); GEN also says "Financial Services Permission" for the same authorisation.
Who may apply
Section 27(1) allows an application by "a Body Corporate; or a Partnership". GEN 5.2.2 adds that the applicant must not be a Recognised Body and restricts legal form for certain activities:
| Regulated Activity applied for | Permitted legal form (GEN 5.2.2) |
|---|---|
| Effecting Contracts of Insurance; Carrying Out Contracts of Insurance as Principal | Body Corporate only |
| Accepting Deposits | Body Corporate or Partnership |
| Acting as the Trustee of an Investment Trust | Body Corporate only |
| All other activities | Body Corporate or Partnership |
GFSO may, by written notice, "indicate the legal form that the applicant may adopt" and treat an application by one legal form as made by a new one (GEN 5.2.13). A firm that already holds a licence applies to vary it under s. 32 rather than for a second licence (s. 27(2)).
Two further gating rules apply. A person licensed by the Royal Monetary Authority of Bhutan to trade on a Royal Securities Exchange of Bhutan needs the RMA's prior approval (GEN 5.2.5). And a GMC-incorporated applicant must satisfy GFSO that its head office and registered office will be in GMC (GEN 4.5.1); failure on this point alone means it "will not be considered fit and proper" (GEN 4.5, Guidance 2).
The seven steps published by GFSO
- Contact GFSO to arrange an initial meeting. The published contact is gfso@gmc.bt.
- Present the business model. If GFSO considers it suitable, it may invite a formal application. GFSO's assessment turns on "the rationale for, and basis of, the applicant's business plan" (GEN 5.2.8(1)(d)), so arrive able to explain, in Schedule 1 terms, which activities you will carry on, for whom, and from where.
- Submit the application form(s). GFSO issues an invoice for a non-refundable application fee.
- GFSO review. GFSO reviews the application and conducts the meetings and interviews it requires.
- In-Principle Approval. GFSO issues an IPA setting out pre-conditions. IPA "does not permit you to conduct your business in GMC yet".
- Fulfil the IPA conditions. GFSO lists company incorporation, opening a bank account, injecting regulatory capital, securing office space and putting key personnel in place.
- Financial Services Licence issued. Only then may the firm commence business.
The Act does not use the phrase "In-Principle Approval". Its statutory footing is s. 30(3A), under which GFSO may grant a licence "subject to such conditions, restrictions or limitations as the Regulator considers appropriate", and s. 41(2), which requires the written notice of grant to "state the date from which the Financial Services Licence ... has effect".
Step 3: the formal application
Section 40(1) sets the minimum content. The application must "contain a statement of the Regulated Activity or Regulated Activities which the Applicant proposes to carry on" and "give the address of a place in GMC for service" of notices. It must be made in accordance with GFSO's Rules, in the manner GFSO directs, and with "such other information as the Regulator may reasonably require" (s. 40(4)). GEN 5.2.6 requires GFSO's prescribed form; its Guidance states that the applicant must pay the application fee and include information about its Controllers "completed by the relevant Controllers themselves". The fee amount is not stated in the Act or GEN.
Applications for Approved Person status travel with the licence application: s. 44(2) allows them to be made by "a person who has applied for a Financial Services Licence" (see our guide to Approved Persons and Controlled Functions).
A continuing duty starts on submission: an applicant that "becomes aware of a material change in circumstances that is reasonably likely to be relevant" while the application is under consideration "must inform the Regulator in writing of the change without delay" (GEN 5.2.1).
Step 4: review, enquiries and interviews
At any time before determination GFSO "may require the Applicant to provide it with such further information as it reasonably considers necessary" (s. 40(5)) and may require it in a particular form or verified in a particular way (s. 40(7)). GEN 5.2.12 adds that GFSO may make "any enquiries which it considers appropriate, including enquiries independent of the applicant" and may ask how the applicant intends to comply with a particular Rule.
Interviews of proposed senior individuals fit within this. GFSO must be satisfied that each proposed Approved Person is "a fit and proper person to perform the Controlled Function" (s. 45(1)), assessed on integrity, competence and capability, financial soundness and the proposed role (GEN 5.6.4).
The threshold conditions
Section 28(1) obliges GFSO, in giving a licence, to "ensure that the person concerned will satisfy, and continue to satisfy" the Threshold Conditions specified in Rules made under s. 7(2). GEN Chapter 5 is titled "License and Threshold Conditions", and GEN 5.2.7 is the operative rule: "the applicant must demonstrate to the satisfaction of the Regulator that it: (1) has adequate and appropriate resources, including financial resources; (2) is fit and proper; (3) is capable of being effectively supervised; and (4) has adequate compliance arrangements".
Adequate and appropriate resources (GEN 5.2.8)
For financial resources, GFSO considers how the applicant will comply with PRU, COBS and PIN; provision for liabilities; risk management within the applicant and its Group; the business plan; liquidity; the nature and scale of the business; risks to continuity of services; and whether the applicant can meet its debts as they fall due (GEN 5.2.8(1)). For non-financial resources, it considers the skills and experience of management, the ability to value assets and liabilities, the effectiveness of business management, and whether resources suffice to comply with requirements GFSO is likely to impose (GEN 5.2.8(2)).
Capital figures come from PRU, not GEN. A Credit Rating Agency is not subject to PRU, and a Fund Manager of a Venture Capital Fund only to PRU 6.12 (professional indemnity insurance), but both must maintain adequate financial resources under GEN 2.2.4 and 5.2.8 (Guidance).
Fitness and propriety (GEN 5.2.9)
GFSO considers the fitness and propriety of the Governing Body; the applicant's connections and Group membership; the suitability of its Controllers; the nature, scale and complexity of the activities; the soundness of the business model; the skills and probity of management; and "any matter which may harm or may have harmed the integrity or the reputation of the Regulator or GMC", including any Financial Crime connection. GFSO weighs the "cumulative effect" of factors that individually might be insufficient (GEN 5.2.9(2)).
Close Links are part of this test. Where an applicant has Close Links with another person, GFSO "must be satisfied that those Close Links are not likely to prevent the effective supervision" of the firm, and will consider foreign laws applying to the linked person (GEN 4.6.1). Failure on Close Links alone is fatal to fitness and propriety (GEN 4.6, Guidance 2).
Effective supervision (GEN 5.2.10)
GFSO considers the complexity of the activities and products, how the business is organised, whether Group membership is likely to prevent effective supervision, and whether the applicant is subject to consolidated supervision. For a Non-GMC Firm, s. 29 allows GFSO to weigh its home regulator's opinion according to "the nature and scope of the supervision exercised" there.
Compliance arrangements (GEN 5.2.11)
GFSO looks for "clear and comprehensive policies and procedures relating to compliance with all applicable legal requirements including the Rules" and "adequate means to implement" and monitor them. The expected systems and controls are detailed in GEN Chapter 3 (see our guide to the Principles and systems and controls).
Retail clients (GEN 5.2.3)
An applicant that will act "with or for a Retail Client" must additionally have adequate systems and controls for retail business and for the COBS requirements relevant to Retail Clients, and adequate complaints handling procedures. Client classification itself is governed by COBS.
Steps 5 and 6: In-Principle Approval and its conditions
The IPA conditions are the point at which paper commitments become substance:
| IPA condition (gmc.bt/GFSO) | Legal reference |
|---|---|
| Company incorporation | Companies Act 2025, ss. 17–19; at least one director ordinarily resident in GMC (s. 145(1)); registration through the Gelephu Corporate Registration Office. |
| Bank account | Needed to hold regulatory capital; relevant to "the liquidity of the applicant's financial resources" (GEN 5.2.8(1)(f)). |
| Regulatory capital | Amount set under PRU or PIN for the relevant activities (GEN 5.2.8(1)(a)). |
| Office space | Head office and registered office in GMC for a GMC-incorporated firm (GEN 4.5.1(1)); GFSO judges head office by the location of directors, senior management and day-to-day control (GEN 4.5, Guidance 1). |
| Key personnel | Approved Persons for the mandatory Controlled Functions in GEN 5.5.1: Senior Executive Officer, Compliance Officer, Money Laundering Reporting Officer and, for banks and insurers, Finance Officer. The SEO, Compliance Officer and MLRO must be resident in GMC/Bhutan (GEN 5.5.2). |
Licensing only once these are in place reflects GEN 5.1.1(3): once licensed, the firm must "satisfy the requirements of the provisions in this Chapter on an on-going basis".
Step 7: the licence and its terms
When GFSO grants the application it "must give the Applicant written notice" stating the effective date (s. 41). The licence must specify the permitted Regulated Activities (s. 30(3)); GFSO may narrow or widen the description, add stipulations, or license an activity not applied for (s. 30(4)), attach conditions (s. 30(3A)) and impose requirements under s. 35.
Two post-licence points matter at the planning stage. GFSO may vary, suspend or cancel a licence if the firm "has failed, during a period of at least 12 months, to carry on a Regulated Activity to which the Financial Services Licence relates" (s. 33(1)(c)), so a licence should not be left dormant. And a firm that later wants to add activities applies under s. 32 and GEN 8.3, which re-applies the GEN 5.2 tests (GEN 8.3.2); a firm wishing to exit requests withdrawal under GEN 8.4.1.
Practical checklist: preparing for the GFSO process
- Write a Schedule 1 activity map: each product, its investment or asset class, the paragraph number, and the client type.
- Decide legal form against s. 27(1) and GEN 5.2.2; plan the GMC incorporation, resident director and registered office early.
- Draft a business plan addressing each item in GEN 5.2.8(1) and (2), with a twelve-month forecast (GEN 3.3.16).
- Identify the Governing Body, Controllers and the individuals for the mandatory Controlled Functions; check residency under GEN 5.5.2.
- Prepare compliance, AML, risk, outsourcing, business continuity and complaints policies to the standard in GEN Chapter 3 and, if retail, GEN 5.2.3.
- Map Close Links and Group relationships, including foreign regulation of linked entities (GEN 4.6.1(2)(c)).
- Obtain the current application fee and PRU or PIN capital figures from GFSO or your adviser, and assign responsibility for notifying GFSO of any material change during review (GEN 5.2.1).
Frequently asked questions
How long does a GFSO licence take?
Neither the Act nor GEN states a processing time. GFSO can request further information at any time before determination (s. 40(5)), so the timeline depends on the completeness of the application and how quickly the IPA conditions are met.
Can I start trading once I have In-Principle Approval?
No. GFSO states that IPA "does not permit you to conduct your business in GMC yet". The General Prohibition in s. 16 applies until the licence takes effect on the date stated in the s. 41 notice.
Do I need to incorporate before applying?
GFSO's process places incorporation among the IPA conditions, after review. The applicant must be a Body Corporate or Partnership (s. 27(1)), and GEN 5.2.13 allows GFSO to indicate a legal form and treat the application as made by the new entity.
What are the threshold conditions?
Section 28 refers to Rules made under s. 7(2). GEN Chapter 5 sets them out: adequate and appropriate resources, fitness and propriety, capability of effective supervision and adequate compliance arrangements (GEN 5.2.7), with criteria in GEN 5.2.8–5.2.11. They apply on an on-going basis after licensing (GEN 5.1.1(3)).
Key takeaways
- GFSO's seven-step process runs from an initial meeting to a licence, with In-Principle Approval as the pivot.
- The legal tests are in GEN 5.2.7–5.2.11: resources, fitness and propriety, effective supervision and compliance arrangements, applied continuously.
- Applications must state the Regulated Activities and a GMC address for service (s. 40(1)); the licence specifies the permitted activities (s. 30(3)).
- IPA conditions — incorporation, bank account, capital, office, personnel — are the practical expression of the threshold conditions; a licence can be cancelled for 12 months' non-use (s. 33(1)(c)).
This article is general information about the law of the Gelephu Mindfulness City Special Administrative Region as at the date above. It is not legal advice and does not create a lawyer–client relationship.
You may contact Basnet Law at basnet@basnetgmc.com or office@basnetgmc.com for any legal queries related to GMC.
References
- Financial Services Act 2025 (Law No. 5 of 2025), ss. 7(2), 16, 27, 28, 29, 30, 32, 33(1)(c), 35, 40, 41, 44(2), 45(1), 258; Schedule 1
- Companies Act 2025 (Law No. 1 of 2025), ss. 17–19, 145(1)
- GEN Rulebook 2026 (Version 1.0), Rules 2.2.4, 3.3.16, 4.5.1, 4.6.1, 5.1.1, 5.2.1–5.2.14, 5.5.1, 5.5.2, 5.6.4, 8.3, 8.4
