Bhutan's Gelephu City Announces Policy For Family Offices, Investment Funds

The Gelephu Mindfulness City (GMC) is preparing the ground for large-scale investments by opening its doors to a new kind of business: family offices, investment funds, and the professional fund managers who run them. From October 1, these businesses can be set up in GMC under a new set of rules designed to be simple to follow and quick to implement, a statement from the GMC Authority said.

"Wealth management is a natural extension of what we are building in Gelephu," said Pang Yee Ean, Co-Chief Executive Officer of the GMC Authority.

"The capital this industry brings in is meant to work for Bhutan, funding entrepreneurship, innovation and the infrastructure our people need, while creating high-value careers here at home," he added.

Family offices and funds can invest in almost anything, from stocks and property to digital assets and commodities, and there are no restrictions on the profile of investors who can invest with them. A family office does not need to apply for tax incentives to start functioning in GMC. It simply informs the Gelephu Financial Services Office (GFSO), GMC's financial regulator, what it plans to do, a statement said.

If it holds at least US$10 million in assets and meets a short list of conditions, the tax benefits follow automatically, and there is no licence to apply for either. In most other financial centres, the same process means a formal application and a wait that can stretch to several months, and this is what sets the GMC apart from other financial centres, the statement added.

For Indian investors, it is easier.

"India is one of six jurisdictions the GFSO recognises for fund management. That means an Indian-licensed manager (including those in the GIFT City) - a SEBI-registered AIF manager, a PMS - can manage a GMC-domiciled fund without applying for a separate GMC licence. They file four weeks ahead of activity, and the GFSO has committed to responding within four weeks. For Indian family offices, the entry point is US$10 million in assets under management, tested once at the point of application, with no requirement to deploy capital into local projects," a spokesperson for the GMC Authority said.

"The fund exemption runs for the life of the fund; the family office exemption for up to 15 years. And GMC is a two-hour flight and a land border away, not a twelve-hour one," a spokesperson for the GMC Authority told NDTV.

The GMC Authority has made getting a licence easier too. A fund manager already licensed in a recognised country does not need a separate GMC licence to run funds based in the Gelephu Mindfulness City. It goes through a no-objection process instead, and the Gelephu Financial Services Office (GFSO) responds within four weeks.

The Gelephu Financial Services Office (GFSO) is the independent regulator of all financial services (across traditional finance and blockchain/digital assets) in GMC, and also has the mandate of developing the financial services and blockchain ecosystem in GMC.

Fund Managers who want a full GMC licence can expect a decision within two to three months, which is faster than what it takes in many established centres

"Family offices and fund managers in India test three things before committing to a new jurisdiction: how long approval takes, how clearly the conditions are set out, and whether there is a real regulator behind them," said Siddharth Shah, Senior Partner at Khaitan & Co and a Board Director of the Gelephu Mindfulness City Authority.

When asked if any Indian business houses, family offices and investment funds moved in on this initiative, a spokesperson for the GMC authority said, "The framework opens for applications on 1 October. We are in active conversation with Indian family offices and fund managers, but it would not be right to name anyone before they have decided and before they have cleared us to do so. Firms across financial services and digital assets already hold GMC licences or in-principle approvals, and we expect to be able to say more about the asset and wealth management side in the coming months."

On the question about whether there is a specific amount or a number that the GMC and GFSO are looking at when it comes to Indian family offices and investment funds, the spokesperson said, "We have deliberately not set an AUM or entity-count target. A new jurisdiction is judged on the quality of its first cohort, not its size - the firms that come in the first year set the standard for everyone who follows. Our threshold is the one in the Guidelines: US$10 million to qualify, US$50 million for capital-intensive strategies."

The Gelephu Mindfulness City, Special Administrative Region (SAR), is a visionary initiative creating a world-class economic hub in southern Bhutan, centred on mindfulness, sustainability, and innovation. It is born out of the King's global vision to establish an oasis of mindfulness and prosperity amidst increasing global uncertainties and geostrategic challenges. It seeks to offer the world a different path of development, one where traditional Bhutanese values of spirituality and harmony with nature blend with innovation, technology and economic vibrancy.

The Special Administrative Region (SAR) integrates traditional Bhutanese values with globally recognised legal frameworks, cutting-edge design and technology, while harnessing the Kingdom's abundant renewable energy resources to serve as a global exemplar of holistic development. Through this Royal mandate, GMC is accorded full executive and legislative powers, with an independent judiciary, to govern the SAR separately from the Royal Government of Bhutan.