Legal and Regulatory

Strategic Foreign Investment Law Approved

By Elena Fehrbach

May 7 – One of the most important laws in Mongolia, a Strategic Foreign Investment Law (SFIL) has been approved by the Government. The amendment is effective from 19 April 2013.

Article 4.7 was amended and now stipulates that the Parliament will be an approval authority for transactions where non- Mongolian State- owned enterprises initiate acquisition of more than 49% of the issued shares of a Mongolian entity. The current amendment no longer includes deals initiated by private investors that since now do not require Parliamentary approval and 100 billion MNT (equivalent to approximately 70 million USD) threshold in its entity. Continue reading →

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The Law on Small and Medium Enterprises is Expected to be Amended

By Elena Fehrbach

Apr. 25 – The main reason for amendment of the current Law on Small and Medium Enterprises is a lack of legal support for herders in Mongolia. The aim of the amended Law is to recognize the herders as small and medium enterprises allowing and supporting the animal husbandry business to become economically viable for herders. A draft of the new Law has recently been submitted to Z. Enkhbold, the Speaker of the Parliament. Continue reading →

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New Securities Law Allowing Dual Listings to be Passed in Mongolia

By Elena Fehrbach

Apr. 10 – The new draft of the Securities Law has just been introduced for the discussion at the spring session of the Parliament which started on April 5. The suggested draft has been in the process of revision for more than 1 year and is expected to become a game- change regulation allowing dual listing. Continue reading →

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Draft Minerals Law to be Approved after Presidential Elections

Apr. 1 – Mr. Elbegdorj Tsakhia, the President of Mongolia, has announced that the draft Minerals Law will not be reviewed during the spring session of the Parliament. It has been decided to move the review of the draft Mineral Law to the second half of the year. According to the announcement by the President’s office, the proposed draft Minerals Law will not be used as a political platform for the re-election campaign of Mr. Elbegdorj Tsakhia. The President also acknowledged that the proposed draft Law does not account of any stakeholder interests and pursuant to this, it has been decided to strengthen the Committee with representatives from the industry. Presumably, representatives should include law firms, companies operating in the mining and financial sectors. Continue reading →

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Mandatory Deposit Insurance Scheme Adopted in Mongolia

By Elena Fehrbach

Mar. 24 – The Parliament of Mongolia has adopted the Law on Insurance of Bank Deposits (the Law) on 13 January 2013. The aim of the Law is to establish a mandatory scheme for protection of bank deposits. This Law is replacing the Law of Mongolia on Issuing a Guarantee for Savings held at Banks as of November 25, 2008.

The new Law compared to the previous regulation is more commercial and advanced in terms of context and compliance to the best global banking practices. According to the new Law, Mongolian banks that are licensed to do transactions connected with deposits and other general payments are required to join the proposed insurance scheme after the payment of applicable premiums. 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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New Mineral Law proposed by the Mongolian Government

By Elena Fehrbach

Mar. 1 – Legal reform is continuing in Mongolia. Release of the new Strategic Foreign Investment Law draft in May 2012 is followed by release of the new Minerals Law draft. Minerals Law is truly considered to be one of the most important legal documents in Mongolia where 90% of all exports is occupied by different mineral commodities.

The current Minerals Law was adopted in 2006. The next step was taken on 17 June 2010 when the Government has issued the moratorium on issuance of the new exploration licenses. The moratorium was supposed to be in place until 31 December 2012, the date when the new Mineral Law was assumed to be adopted. Recently conducted plenary session has extended the moratorium term until the new Minerals Law is adopted. The current status of new exploration licenses issuing keeps local and foreign miners concerned about the opportunity to extend the portfolio of licenses by issuing and/or tender process, as the date of adoption of the new Minerals Law is not defined yet. Continue reading →

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