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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


Foreign Trade

Majority Stake in Sainshand Industrial Park to be Foreign

By Elena Fehrbach

Apr. 8 – The Government of Mongolia has approved the investment structure for proposed Sainshand Industrial Complex, where 66 percent of investment is expected to be foreign. The preliminary feasibility study conducted by Bechtel Group Inc., a civil engineering company from the USA, shows that more than 10 billion USA investment may be required in total to fund the project, out of which 4 billion USD required to build the power distribution system and waste storage facility. The Development Bank of Mongolia is currently deciding on lending of approximately 10 million USD needed to cover the technical studies preparation. Continue reading

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Strategic Foreign Investment Law Will Regulate State-Owned Enterprises

By Elena Fehrbach

Mar. 19 – A very important update on the Strategic Foreign Investment Law has been announced today in Ulaanbaatar, SFIL will only regulate investments by the foreign state-owned enterprises and will no longer affect investments initiated by private companies. Mr. Altankhuyag, the Prime Minister of Mongolia has announced that the Government of Mongolian has already prepared the amendment that will come into force in the nearest future. According to the new amendment to the SFIL, foreign state owned entity would need to have parliamentary approval, in case the entity initiates investment deal on acquiring more than 49 percent of an entity operating in one of Mongolia’s strategic sectors. Continue reading

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Implementation of the Strategic Foreign Investment Law

By Elena Fehrbach

Mar. 14 – Regulation that has just been approved is an integral part of the Strategic Foreign Investment Law (SFIL) dated May 17, 2012. The document primarily provides the general procedure on how to apply for the State approval of investment deal and how the documents are further processed by Authorities. Apart from general procedures, it is important to pay attention to the following articles in the document:

4.2 – The member of the Cabinet in charge of the foreign investment, together with member of the Cabinet in charge of relevant sector shall approve and observe the business activities to fall under the strategic sector provided for in section 5.1 of Article 5 of SFIL.

This statement means that the Cabinet is still reviewing the actual types of business activities that can fall under SFIL approval. For example, if we look at the mining sector, it is possible that mining contractors, drilling companies or equipment suppliers may need the approval in case of a deal. The clarifying document on the actual sub- sectors is still to be issued. Continue reading

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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. Continue reading

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Opening a Business in Mongolia Part II: Joint Stock Companies

By Elena Fehrbach

Oct. 26 – According to Mongolian legislation, the following types of legal entities can be incorporated in Mongolia:

  • Limited Liability Company (LLC)
  • Joint Stock Company (JSC)
  • Representative Office (RO)

JSCs may be created in the form of an “Open” JSC or a “Closed” JSC. An Open JSC is a legal entity where shareholders’ invested capital is divided into shares and registered at the Mongolian Stock Exchange. Shares are traded by the public without regard to preemptive rights of shareholders. Continue reading

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Opening a Business in Mongolia Part I: Limited Liability Companies

By Elena Fehrbach

Sept. 24 – Mongolia has a substantial legal framework regulating local and foreign activities established in the country. The most important regulating vehicles are the Company Law, the Civil Code and the Law on Strategic Foreign Investment. Continue reading

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Eight New Gates Open for Coal Transportation Between Mongolia and China

Jun. 11 – The recent opening of eight new border gates between Mongolia and China exclusively for coal transportation will significantly increase coal export capacity between the two nations, SouthGobi Resources Ltd. said in a statement.

Coal was previously transported out of Mongolia at Shivee Khuren-Ceke through a single gate approximately eight meters wide, which would allow empty trucks into Mongolia in the mornings and loaded trucks into China in the afternoons, the company said in a Hong Kong stock exchange filing. Continue reading

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Altain Khuder Miner to be Listed in Hong Kong in 4Q 2012

May 24 – Macquarie and Bank of America-Merrill Lynch have been appointed joint global coordinators and bookrunners for the proposed listing of Mongolian iron ore miner Altain Khuder, a person familiar with the matter told Deal Journal Australia.

Altain Khuder is one of Mongolia’s largest iron-ore miners, which owns the Tayan Nuur iron ore mine in the southwest of the country. The company is planning to raise about US$300 million through a Hong Kong initial public offering (IPO). Continue reading

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Dezan Shira & Associates provide a range of services for companies looking to undertake foreign direct investment into Asia, These include corporate establishment, accounting, tax, payroll, audit and due diligence. To learn more about the firm, please contact one of our specialists at mongolia@dezshira.com, download our corporate brochure or visit at us www.dezshira.com


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