In Mongolia company liquidation proceedings may be started by either a decision of the shareholders, or order of a court.
If the company is liquidated by decision of the shareholder’s, the Board of Directors (or in its absence, the executive body), will submit a draft Shareholders Resolution of Liquidation of the company. The shareholders resolution must include appointment of a liquidation commission and authorization of its commission, a liquidation timeline and if necessary, a procedure for the distribution of the company’s remaining property among shareholders after creditors` claims are satisfied. The shareholder resolution must be approved by an overwhelming majority of votes of shareholders.
The company/legal entity is obliged to notify the relevant state registration authority in writing within 3 working days and attach the original decision on liquidation.
Upon appointment of the liquidation commission, the company’s executive authority will be terminated and such authority is transferred to the liquidation commission. From then on, the liquidation commission has final authority over the company.
The liquidation commission is required to publicize 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 following actions must also be completed over the course of the liquidation. The State Registration Certificate of the company must be officially handed in. The company’s bank accounts closed, the company’s official seal must be handed over to the police. Finally a form must be obtained from the Customs Office to confirm no related taxation issues remain on behalf of the company.
The Tax authority will examine and investigate the company’s tax records, and an auditor will be required to handle the closing financial statements. Then an accountant will issue the closing balance of the company.
Once the Liquidation commission has submitted the required documents such as the Shareholders Resolution, completion report of the liquidation, report or reference by the tax inspector and reference by court decision enforcement agency on debt obligations 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.