Competition law
Mongolian Competition Law is upheld by the Fair Competition and Consumer Protection Authority (AFCCP). The main provisions forbid any organization from carrying out activities that include publicizing false information about its own goods, concealing shortcomings in quality and conducting or promoting activities detrimental to competitors.
Furthermore, in it, there are provisions that specifically handles ‘dominant entities’ activities which are defined as any legal entity or group of entities larger than one third of the market size. The law includes issues such as market fixing, misuse of a dominant position, cartels and abusive policies against its competitors.
Corporate governance
The company law lays out the duties and obligations of a company’s management, which include the Board of Directors and the Executive Team. Corporate governance duties include:
- Acting in the best interests of the company
- Avoiding conflicts of interest
- Maintaining confidentiality
Governing persons may be held personally responsible for the damages caused by failure to meet these requirements.
The company charter identifies the powers of the shareholders and the board where these are not governed by legal requirements.
Shareholders
Naturally, with power to vote on resolution at the shareholders meeting, Shareholders have the highest governing authority of an organization. The shareholder meeting has exclusive authority over matters including:
- Amendments to the company charter
- Company restructuring such as mergers, consolidations, divisions and liquidations
- Equity transactions
- Board of Directors appointments and terminations
- Approval of Directors’ reports with respect to annual performance and financial statements
- Signing a contract with the appointed external auditor
The board of directors and within four months of the end of the financial year shall hold annual shareholder meetings. In the organisation of the conference, company law also provides for the procedure to be followed. A variety of conditions can be called for special shareholders’ meetings and, such as major losses or substantial debt. In order to satisfy a quorum at a shareholders’ meeting more than 50% of qualifying voting shares must be represented. The threshold can however be set higher by the company charter.
Board of Directors
The board of Directors is responsible for managing the company through shareholders’ meetings. Having the Board of Directors is a requirement for Joint Stock companies, but not for limited liability companies. A minimum of 9 members must form the Board of Directors and its one-third has to be independent.
The Board has authority over matters such as:
- Company activities and policies
- Issuance of securities and authorized shares
- Appointment of the external auditor
- Preparation of the annual report and financial statements
- Appointing the executive body to conduct the daily business of the company
The Board of Directors holds meetings on a monthly basis, unless otherwise stated in the company charter and minutes must be kept of all meetings.
Land ownership and use
Only Mongolian citizens have the right to have ownership over land in Mongolia. Land that is not registered under a Mongolian citizen is regarded as property of the Government by default.
In compliance with the Law on Land, Mongolian land can be used for a particular reason, time and conditions by international companies, organisations and nationals. A charge for the use of Mongolian land is payable based on several factors, including the land’s size and location which is determined and approved by the government. For the regulation of subsoil and mining activities, special legislative provisions exist.
Anti-corruption law
The Anti-Corruption Law (Anti-Corription Law) of Mongolia was ratified in 2006. The anti-corruption law established an independent agency for the prevention, detection and investigation of cases of corruption in order to prevent public officials from taking their positions for personal gain. Moreover, corporations, organisations and private citizens have rights report to the independent agency to have them investigate cases of corruption. Following its review, the independent agency shall take appropriate additional action, including initiation of formal investigations and inquiries.
Arbitration
In accordance with the Arbitration Law of Mongolia, civil disputes can be resolved through arbitration if legal persons or legal entities agrees to do so. Arbitrator’s decision generally cannot be subject to judicial review or appeal. Although the legal arbitration framework is in place, it is noted that the system in Mongolia is not widely used.
Mongolia signs and presents, as such, international arbitration ruling, the New York Convention of 10 June 1958. Same is the case with the international recognition and enforcement of arbitration decisions in Mongolia.
