Benefits of Making Business in Bhutan | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN BHUTAN WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN BHUTAN WWW.MERGERSCORP.COM

4. Country Overview Bhutan, a Buddhist kingdom on the Himalayas’ eastern edge, is known for its monasteries, fortresses (or dzongs) and dramatic landscapes that range from subtropical plains to steep mountains and valleys. In the High Himalayas, peaks such as 7,326m Jomolhari are popular trekking destinations. Paro Taktsang monastery (also known as Tiger’s Nest) clings to cliffs above the forested Paro Valley. A delay in hydropower construction could cloud macroeconomic prospects in the coming years. Bhutan has a stable political and economic environment. It has made a tremendous progress in reducing extreme poverty and promoting gender equality, while attention is needed to address inequality issues.

5. Executive Summary Bhutan is a democratic, constitutional monarchy whose king, Jigme Khesar Namgyel Wangchuck, is the head of state, with executive power vested in the cabinet, headed by Prime Minister Jigme Thinley. The country held its first general election for the National Assembly in 2008, and an EU election-monitoring team declared that it met international standards and was free and fair. Bhutan covers a wide area of 38,364 sq. km. and accounts for a population of 750,000 people. The major language spoken is Dzongkha. The official religion followed in Bhutan is Buddhism while the other religion followed is Hinduism.

6. Introduction – Doing business in Bhutan Bhutan is ranked 89 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Bhutan deteriorated to 89 in 2019 from 81 in 2018. There may be investment opportunities in: • Artificial Marble Tiles. • Granite (Marble) Polishing Batti (Bar) • Granite Marble Cutting and Polishing Unit. • Calcium Carbonate from Marble Chips. • Coal Washing Unit. • Ferro Silicon Manufacturing. • Gypsum plaster boards. • Beneficiation of chromium, nickel and manganese ore.

7. Conducting business in Bhutan The process of Business Approval in Bhutan : • Submit the FDI Registration Application form to the Department of Industry. You will receive a FDI Registration Certificate which is the approval in principle. • Submit two copies of the business plan to the Department. Depending on your business activity, you will be asked to submit the Initial Environmental Examination form (IEE) to the National Environment Commission through the Department of Industry. However, for some activities, the clearance is delegated to relevant sectors. • Incorporate your business with the Registrar of Companies (see documents listed under "Register your Company"). • Open a foreign currency account under the company name. • Obtain an industrial license at the relevant Regional Trade and Industry Office.

8. Taxation in Bhutan Tax rates in Bhutan are: Sales Tax. 5% to 50% depending on the product. Company Tax : Corporate income tax: 30% Withholding Taxes : Dividends: 10%. Interests: 0%. Royalties: 5%. Social Security Contributions Paid By Employers : At least 5% of monthly basic earnings.

9. Trade Bhutan is the 176th largest export economy in the world. In 2017, Bhutan exported $194M and imported $482M, resulting in a negative trade balance of $288M. In 2017 the GDP of Bhutan was $2.53B and its GDP per capita was $9.4k. The top exports of Bhutan are Ferroalloys ($120M), Carbides ($22.7M), Dolomite ($11.4M), Gypsum ($5.11M) and Raw Plastic Sheeting ($4.42M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($117M), Cars ($22.1M), Large Construction Vehicles ($14.8M), Iron Reductions ($13.1M) and Forging Machines ($12.4M).

10. Banking in Bhutan Bhutan National Bank started on July 25th 1980 as Unit Trust of Bhutan (UTB) with an initial funding of Nu. 2.5 million by Royal Insurance Corporation of Bhutan. The trust functioned as a subsidiary of RICB with the purpose set to inculcate saving habits among the general public and to channel resources into productive sectors. In many instances, Bhutan National Bank Limited has been a pioneer in introducing new services to improve on the processes and customer satisfaction.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com