By Elena Fehrbach
Nov. 20 – According to the Law on Partnerships of Mongolia, there are two types of partnerships that can be established:
- Unlimited Partnerships
- Limited Partnerships
The principal difference between the two types is the level of liability the partners have within the partnership.
Unlimited partnerships provide equal levels of liabilities to all partners, which means partners are jointly and severally liable for all the obligations of the partnership without limit to the capital contributed by them.
Limited partnerships have at least one partner with unlimited access to the liabilities of the partnership. Other partners’ liabilities are limited by the amount of capital contributed by them to the partnership.
Both types of partnership may conduct profit- generating activities within Mongolia and internationally.
Mongolian legislation does not have a provision for registration of a joint venture as a separate legal entity. In case two legal entities have decided to establish a joint venture, the procedure is to establish a limited liability company (LLC), where each of the joint venture companies has a share in establishment capital and assets.
The LLC is the most common type of legal entity in Mongolia among 100 percent Mongolian and foreign- invested companies. Registration procedures and submission documents required to establish an LLC are the same regardless of the number of shareholders in a future LLC.