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Wednesday, July 6, 2011

Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates

Opening a Business in Mongolia Part III: Representative Offices

By Elena Fehrbach

Oct. 30 – The main regulatory vehicle for establishing representative offices (ROs) in Mongolia is the Foreign Investment Law. According to this law, a foreign company may open an RO in Mongolia, but this structure will not have separate legal entity status. An RO represents the overseas headquarters of the company in terms of facilitating the business activity and protecting the head company’s interests in Mongolia, but ROs cannot conduct any particular profit-generating commercial activities within country.

The parent company is legally responsible for the representative office’s liabilities to all third parties in Mongolia, as representative office does not have an establishment capital.

The registration procedures for ROs are similar to the requirements applied to the registration of Mongolian legal entities, but may vary in terms of submission of documents to one or two different agencies depending on the type of business activity. Apart from general registration, ROs are required to be registered at the Foreign Investment and Foreign Trade Agency. The main documents required for registration are as follows:

  1. Application and request letter
  2. Minutes of the meeting confirming foundation of the new firm
  3. Document confirming the registration address
  4. Receipts for the paid registration fee
  5. Documents confirming the identity of company founders

As mentioned above, ROs have a definite limitation in conducting commercial activities of any kind and a foreign company should consider beforehand what legal status is most suitable for its office in Mongolia.

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