Category Archives: Uncategorized

How to De-Register a Company in Mongolia?



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Get ready for an exciting journey through the process of company liquidation in Mongolia! Whether it’s initiated by a decision of the shareholders or an order of the court, the process is filled with twists and turns.

If the shareholders decide to liquidate the company, the Board of Directors (or the executive body in its absence) will prepare a draft Shareholders Resolution of Liquidation. This resolution must include the appointment of a liquidation commission, authorization of its powers, a timeline for liquidation, and a procedure for distributing the company’s remaining property among shareholders after creditors’ claims are satisfied. The resolution must be approved by an overwhelming majority of shareholder votes.

Once the resolution is approved, the company must notify the relevant state registration authority in writing within three working days and attach the original decision on liquidation. The executive authority of the company will then be terminated, and the liquidation commission will take over.

The liquidation commission is responsible for publicizing the pending liquidation of the company via the media. If the company has any licenses, the commission will request that they are canceled and returned to the relevant authority. The commission must also complete several actions during the liquidation process, including officially handing in the State Registration Certificate of the company, closing the company’s bank accounts, handing over the company’s official seal to the police, and obtaining a form from the Customs Office to confirm no related taxation issues remain on behalf of the company.

The Tax authority will then examine and investigate the company’s tax records, and an auditor will be required to handle the closing financial statements. An accountant will issue the closing balance of the company. Once the Liquidation commission has submitted the required documents to the State Registration Office (SRO), the SRO will remove the legal entity from the state register. The registration body will announce publicly the deletion of the company from the State Register. It will likely take 6 months to 1 year to complete the company liquidation process.

Value-Added Tax in Mongolia



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Our Mongolian lawyers have recently been assisting a company to register as a withholding Value-Added Tax payer in Mongolia. This post contains the questions that have arisen during that process, along with my answer.

A VAT withholding taxpayer may be an individual, legal entity or representative of foreign legal entity whose sale amount of goods, work or services in Mongolia has reached 50 million MNT or more. They obliged to withhold value added tax and pay to the government under the Mongolian VAT law. Whereas, the VAT payer is the last user, ultimately accountable for the VAT cost. If an individual or entity determined as a withholding tax payer, registration must be submitted to the relevant tax office within 10 working days of exceeding the amount of sale, and the tax authority will issue a VAT certificate to the individual or entity confirming its registration within 3 working days.

VAT is imposed at the rate of 10% on the supply of taxable goods and services within the territory of Mongolia as well as on imports into Mongolia. Followings will be subject to Zero rated VAT:

  • exports of all types of goods, work, and services,
  • international transport service,
  • service related to international air travel,
  • service provided to foreign citizens not residing in Mongolia
  • exported final mining products  

The imposition timing period shall be the day when the seller receives payment for selling goods, work or services, the day when the invoice is issued by the seller or the day when the goods, work, services are purchased by the buyer. The invoice amount issued by withholding tax payer is the taxable amount of VAT for goods, work and services.

Since the VAT law revised in 2016, an integrated electronic database system has been used to share VAT data centrally. All withholding tax payers who are registered in the system will be assigned with user account that is used to upload the information.

Law on Protection of Human Rights on Social Media



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On January 18, 2023, the draft of Law on Human rights protections on social networks was submitted by the Ministry of Digital Development and Communications, and the bill was adopted by the Mongolia parliament on January 20, 2023 providing no time for public to get acquainted with the bill.

The purpose of the law is to protect human rights and legitimate interests in the digital environment, to restrict inappropriate, insulting and discriminatory content, to protect from any kind of violence against children such as immorality, physical, mental and moral development and to prevent the use of drugs and psychotropic substances.

However, some human right organizations raised concerned that the law may not adequately protect rights to freedom of expression, speech and publication as protected under the Constitution of Mongolia. Moreover, they argue that the parliament’s adoption of the law overlooked standard procedures calling for public engagement and discussions.

Currently, the law has been passed by parliament, but has been vetoed by the President within the framework of his constitutional rights.

Obtaining Investment Visas in Mongolia



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Recently, one of our clients had been seeking our advice on how to obtain private purpose permanent residency in Mongolia. Our Mongolian lawyers and visa specialists are able to assist in obtaining permanent residency permits and visas for Mongolia.

The residence permit for personal purposes shall be granted for up to 5 years. This type of residence permit may be issued for family reasons, employment, investment, study and academic research, or immigration.

There are several sub-classes of investment related visas.

  • B1 Investor of foreign-invested enterprises;
  • B1-1 Family member of an investor of foreign-invested enterprises;
  • B2 Foreign national appointed as an investor’s representative or executive management of a foreign-invested enterprises;
  • B3 Foreign national working as an executive or a representative of a foreign legal entity.

Visa grant processing time is 5 working days for standard and may be expedited to 3 working days.

A Visitor must apply for residency permit at the Immigration agency for Mongolia within 21 days after entry.

Judicial Recusal



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Articles 91-93 of the Civil Procedure Law of Mongolia regulate grounds for recusal of a judge, submission of a request for recusal, resolution thereof, and consequences of recusal by a judge. In this blog, we will mention some practical difficulties and issued encountered in judicial recusal.

Firstly, in general a judge is obligated to reach a decision in a matter before it.

When the parties to the case make a motion for recusal of the judge, they usually base the request on issues or concerns which raise doubt as to whether the case can be resolved fairly. In this ground, one of the participants in the case must have provided information with certain facts about the judge being influenced by the other party.

However, according to the court practice, the requests made on this basis are related to the violation of the rights of the participants in the case, the restriction of their rights, and the violation of the case procedure.

In the course of the proceedings, the judge himself/herself manages the proceedings, granting or refusing to grant requests made by the parties to the case on the basis of the law.

There are also cases where withdrawing from a judge on the grounds that refusing to accept the request is considered to be interfering to the process of case review by judge.

On the other hand, in the course of the proceedings, there are cases where the judge gives too much priority to one of the parties involved in the case and makes a decision that is beneficial to that party.

It is very difficult to prove the above-mentioned grounds for recusal of a judge, and in practice, in most cases, even if a request for recusal of a judge is made, the request will be always denied or not accepted. 

Another reason for refusing a judge is that lawyers use the tactics of delaying the court hearing and delaying the court processing.

Delays in proceedings and delays in court hearings depend on many factors, but one of them is the delay related to the process of resolving a request to recuse a judge, a panel of judges, or all judges of a given court. 445 cases or 7.8% of cases were delayed due to requests for recusal by judges in civil courts of first instance.

Renewal of a Mining License



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In the past weeks the firm’s Mongolian lawyers have been approached with an inquiry regarding how the recently revised Law on Permits may affect renewal of Mining Licenses.

Mining license are typically granted for a term of thirty (30) years, and are available for renewal in the two years before expiration.

The holder of a Mining License is required to submit an application for renewal of the license not less than two years prior to the expiration of the Mining License.  The applicant is required to submit the original Mining License along with a copy of the license as part of the application. The applicant is also required to submit documentation demonstrating regarding implementation of the mandatory Environmental Protection Plan for mining operations for the project.

Upon the receipt of an application for renewal of the Mining License along with supporting documents mentioned above, the relevant government agency shall reach a decision within 15 days. Where the administering agency finds no violations or other issues which result in ineligibility, the Mining License should be extended for a new term of 20 years.

The Supreme Court Made the Right Decision



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In our previous post, we looked at the recent decision of the Mongolian Supreme Court finding a car accident resulting primarily in property damage will not be considered a criminal matter. Today, we will look a little deeper at the legal basis for the decision.

In the recent case, the Prosecutor charged the defendant under Article 27.10, Section 2, Clause 2.4 of the Criminal Code. However, the law at issue provides that, “Where a driver of a motor vehicle causes serious damage to human health due to a violation of the law on traffic safety”, it will be considered a crime (emphasis added).

Under the legal standard set by the law, a car accident resulting in “minor” injury or even significant property damage, would not meet the requirements to be treated criminally.

Therefore, the case in question should not be treated as a crime, but should property be dealt with a violation of traffic safety pursuant to the Law on Violations. Additionally, those suffering property damage may rely on civil law solutions in accordance with the Civil Code for appropriate compensation in accordance with the law.

When is a Car Accident Criminal?



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On July 6, 2022, the Supreme Court reached a decision in the trial of an alleged criminal case. The Court considered the situation in which a motor vehicle driver caused a road traffic accident and crashed into 12 other cars, resulting in a total of over 100 million MNT monetary damages and causing minor injuries to the health of 2 people. The court ruled this situation will not be considered a criminal case.

The prosecutor filed an indictment against the driver defendant alleging the crime of “Infliction of very serious damage to human health by the driver of motor vehicle through violating traffic safety legislation and administrative norms”, in Article 27.10, Clause 2.4 of the Special Section of the Criminal Law. In other words, the prosecutor considered citizen G’s act to be a crime against traffic safety and submitted the indictment to the first instance court.
The court initially dismissed the case on the grounds of that “no crime” had been committed and acquitted the defendant.
However, the appellate court condemned the lower court’s decision and considered that the case should be reconsidered by the first instance court.

The driver defendant’s lawyer appealed to the Supreme Court which upon review of the case, concluded that the decision of the first instance court was legal and correct., because the damage in this case was primarily only property damage to other motor vehicles.

Constitutional Change Improves Environmental Impact Transparency



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The Parliament of Mongolia amended the Constitution of Mongolia on November 14, 2019, according to the second part of Article 6.2 of the Constitution of Mongolia “… By using subsoil resources within the right of citizens to live in a healthy and safe environment have the right to know about the impact on the environment”.

In order to exercise this constitutional right, the Law on Environmental Protection and the Law on Environmental Impact Assessment provide for measures to be taken by citizens to monitor the status of subsoil use, environmental impact, rehabilitation and monitoring by the authorities. The legal regulation of the right to know and the legal regulation of the exercise of constitutional rights are in the process of being approved.

This is very important regulation. There are frequent tripartite disputes between citizens and company using subsoils or project implementer and local authorities such as Governor and Citizens’ Representative Meeting.

Citizens complain that companies using subsoil in local area and project implementers are destroying the environment and failing to rehabilitate it, and demand that action be taken to stop the activity.

The reason for this is that citizens are not given the right to know and the information they want has not been provided. In other words, failure to provide information or access to information on the current status of subsoil use, its impact on the environment, and the process and results of rehabilitation, the lack of access to information has led to a number of negative consequences, such as misinformation and misunderstandings.

On the other hand, due to the failure of the local government to provide the above information to the citizens, the citizens have lost trust in the local governors and the Citizens ‘Representatives’ Meeting and therefore there have been many cases that citizens criticized local government that not protecting their rights and interests instead protecting and serving the interests of the company using subsoil and project implementers.

As a company using subsoil and project implementer, they have spent a certain amount of money and have conducted certain activities, such as employing local people, providing financial support for local development, and conducting regular rehabilitation work. Lack of information or access to information has led to many misunderstandings and conflict among citizens due to a lack of information about their work and investments.

Therefore, it is important to ensure that citizens have access to information and right to know, and that local governments and project implementers are required to report their work and the results of their activities in connection with proving information to citizens.

According to the two laws mentioned above, on the one hand, the law allows a citizen may request information from the aimag, capital city, soum and district governors, project implementer on the condition of natural resource use within the territory, its impact on the environment, rehabilitation process and control measures taken by the state authorities and project implementers.

On the other hand, aimag, capital city, soum and district Citizens ‘Representatives’ Khurals and Governors shall openly inform citizens about the conditions of land use, environmental impact, rehabilitation and control measures within the territory, and provide relevant information upon request, and therefore obliged to report it to the Citizens’ Representatives Meeting.

As a project implementer, they are obliged to provide or provide information on the status of subsoil use, environmental impact, rehabilitation process and results related to its activities at the request of the citizen.

Basics of Land Pledges



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Any individual or legal entity may pledge as collateral land they own or possess. If the land was transferred to an individual or a legal entity based on a valid legal agreement, the person receiving such rights has the ability to legally pledge those rights so long as the legal claim to the land rights remains valid. Registration of a pledge of land will require presentation of documentation including the cadastral, and a copy of the land ownership, possession, or utilization certificate along with the pledge agreement.

A bank or a person authorized to conduct credit activities may also receive a pledge to land based on rights granted by a loan agreement. Such rights may be registered by the bank or creditor as pledgee as with any pledge.

Land may be pledged separately from the buildings that are constructed on it, or even which are in the process of being constructed. A pledge agreement must stipulate the land and buildings may not be pledged separately, if this is the intention.

In case of disagreement between a pledgee collecting on pledged rights to land, and an owner of buildings on the land, parties should seek to reach a mutual agreement between themselves, or in extreme cases seek resolution at court.