Previous Page
Doing Business in MONGOLIA
Deal Maker of the Year Awards 2012
Doing Business and Investing
My name is Chuluunbaatar Begzsuren, the Founder and Executive Company. We provide quality legal services in the areas of corpo real estate transactions, debt and equity financing, tax issues
I have a Bachelor of Laws in International Economic Law (LLB) from the Jilin University in Peoples Republic of China from 2002 and an LLM in Mineral Law and Policy from the University of Dundee, Scotland, which I obtained last year. I qualified in 2007 as a practising lawyer in Mongolia and am a Member of the International Bar Association.
After obtaining my first degree, I started to work for the Ministry of Finance of Mongolia for about three years as an officer in charge of legal affairs, followed by two years in an in house practice for a private company. In January 2008 I joined Economic and Legal Consultancy LLC, a commercial law firm in Mongolia, who are experienced in commercial and corporate law practice and I worked as Senior Associate and Junior Partner until the establishment of LexLoci in early 2012.
Although LexLoci is a new firm, we are benefiting from my previous experience of over 9 years in practice within both the public and private sectors. During this time I have worked with part-time and outsourced lawyers, as well as consultants and variety of other professionals, all of whom had extensive knowledge in their area of expertise. Some of our latest assignments include equipment sales and services contracts for mining service companies, legal advice to a railroad construction contractor, transfer of mineral licenses and company shares, real estate transactions, as well as labour and local tax related issues for foreign companies conducting business in Mongolia. The firm has the ability to provide its services in Mongolian, English, Chinese and Russian languages.
As the Executive Director of the firm, I am responsible for the day to day business, which includes overseeing and delegating the legal assignments to the associates and part-time external lawyers and consultants, reviewing and drafting legal documents prepared by them, attending meetings and discussions with clients and other stakeholders, reviewing and approving administrative and financial decisions and reports, etc. However, the generation of new clients, client care and some major legal assignments are handled directly by myself as the partner.
and individuals. How can LexLoci assist individuals and firms that invest or start-up in Mongolia?
Q
We start by providing oral and written advice, opinions and enquiries on Mongolian legal issues and continue with drafting, reviewing and/or translating all types of legal documentation, documents with legal effect, legal due diligence and legal opinions with regard to potential transactions between foreign investors and Mongolian individuals and companies. We assist foreign investors in setting up representative or branch offices, subsidiaries or joint venture companies locally and arrange visa and labour permission related issues, providing company secretarial services and helping them to obtain relevant business licenses for certain activities in Mongolia as well.
Furthermore, LexLoci can act as the authorized representative of the client in communicating with the government authorities, business entities, or individuals, as may be required by the investors.
Q
What are the benefits for businesses that want to start-up in Mongolia?
First of all, I would mention that Mongolia is a democratic country where the rule of law prevails. Although it has only been just over twenty years since Mongolia was transformed from a centrally planned economy into a free market regime, we have quickly fostered a solid fundamental level legal environment for businesses here in Mongolia, including the concepts of property ownership, human rights, environmental protection and investment protection. The Foreign Investment Law (1993) provides that foreign investors shall enjoy full legal protection under the Constitution, as well as through Mongolian laws and international treaties, of which Mongolia is a signatory. All of which firmly establish that equitable treatment is paramount and is provided to all Mongolian and foreign investors; allowing them free transfers of funds, freedom from discrimination and no illegal expropriation.
To date Mongolia has concluded Bilateral Investment Protection Agreements with 39 countries including the UK, the USA, Japan and China, which are among the countries
from which the most foreign investments come from. Moreover, Mongolia has negotiated Double Taxation Agreements that protect the investors in terms of reducing their tax liabilities with more than 30 countries. As I write this article there are currently four DTAs under review by Parliament for termination (Netherlands, Luxemburg, UAE and Kuwait) due to concerns over reduced tax revenue from dividend distributions to these jurisdictions.
If an investment is more than USD 20 million, the investor is entitled to conclude a Stability Agreement with the Government of Mongolia in order to stabilise Mongolian taxes for a certain period of time.
There is no strict regulation on controlling foreign exchange for investment remittance; however, all transactions within the territory of Mongolia should be expressed and settled only in our local currency under the Law on Conducting Settlement in National Currency (2009).
With regard to dispute settlement, the investors are free to select international arbitration as the method of resolution for cross border transaction and contractual disputes, as Mongolia is as a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Q
What are the rules governing how companies can start-up in your
jurisdiction?
Under the law, there are two types of company formation in Mongolia; Limited Liability Company and Joint Stock Company. The latter is divided as open and closed JSCs of which stocks are traded in Mongolian Stock Exchange freely and with limitation. The most common practice is forming a limited liability company with 100 percent foreign investment, or a joint venture with Mongolian entities and individuals. There are legal stipulations that the participation of foreign investors must not be less than 25 percent of the company in order to be considered as a legal entity with foreign investment, and the minimum initial investment in the registered capital must be USD 100,000 or above.