Tag Archives: New Law

Mongolian Public Officers May Soon be Subject to Dismissal

We have already provided an overview of the new Law on Imposing Liability on Selected and Appointed High Ranking Government Officials, we would like to follow that with a closer look a few specific provisions in the new draft.

The law will set forth the legal basis and official procedures imposing disciplinary actions, political and moral accountability on officials including the President of Mongolia, the Parliament Speaker, the Deputy Speaker of Parliament, members of Parliament, the Prime Minister, Cabinet members, and officials appointed by the Parliament, or appointed by  provincial governors or Chairmen of local representative councils.

Officials in violation of legislation, oath or code of conduct or who fail to perform his/her duties will be subject to disciplinary actions depending on the nature of the violation committed. The said actions will be in form of warning the said official individually or warning among public. Furthermore, other disciplinary actions will be taken pursuant to other applicable legislations.

For the political accountability, officials in violation of the Constitution, legislation and code of conduct, will be dismissed or recalled, or his/her right to hold government high ranking position will be subject to 2 or 4 year restriction.

Furthermore, the law categorized ethics accountability as type of accountabilities in order to develop political culture in Mongolia, and aims to make officials feel greater regret for poor performance or taking advantage of their position and voluntarily assume accountability. However, if an official was subject to ethics accountability, he/she will be exempted from political accountability.

Chapter two of the law clearly states grounds for dismissal of President of Mongolia subject to overwhelming majority voting of members attended in Parliament session.

Chapter three states grounds and procedure for dismissal of the Parliament Speaker and the Deputy Speaker of Parliament and dismissal subject to overwhelming majority voting of members attended in Parliament session. Moreover, Parliament members elected from constituency will be dismissed according to majority voting of total members attended in Parliament session based on request by voters.

Chapter four includes wider grounds for dismissal of Prime Minister, Cabinet members and officials appointed by the Parliament, dismissal subject to discussion and majority voting of members attended in Parliament session and regulates other relevant issues. Furthermore, the chapter states basis for dismissal of aimag or city Governor.

Chapter five states basis for dismissal of chairman of the Citizen’s Representative Khural of aimags or city and issue on dismissal will be decided according to majority voting of total representatives attended in meeting.

Chapter six regulates matters regarding public statement, informing officials about dismissal, conducting investigation, discussing about dismissal, imposing liability on officials, reporting and informing public about compensation of damage incurred to state due to breach of law by officials.

This new law which clearly outlines procedures for dismissal of public officials will be a significant improvement over the current situation in which misdeeds by public officials are not adequately addressed. We expect this new law will go a long way to reduce or eliminate any feeling by public officials that the does not apply to them due to their position of authority.

Draft Law Seeks to Define Liabilities for Mongolian Government Officials

A new draft law has been submitted to the Mongolian parliament. Named the Law on Imposing Liability on Selected and Appointed High Ranking Government Officials, the proposed law seeks to define liability for certain high ranking government officials. The draft will first be reviewed and discussed by Parliament before a vote. We are very excited at the current draft and our Mongolian lawyers consider the proposed law, if adopted, to be hugely important to Mongolian public policy and society. The need for the law stems from a feeling among many in the Mongolian public that politicians in the country often to act “Above the Law.” The effects of this official lawlessness are seen and felt by the public through displays of misbehavior and misconduct. In the past, there has not been adequate legislation to clearly identify inappropriate actions by public officials, and impose liability. The new draft is an important attempt to remedy this through new legislation.

To give readers a better idea of the problems facing Mongolia and the provisions in the law which will address these issues, the following are several weak points, or grey areas which the draft law will address.

The disciplinary sanctions set forth in the current Law on Public Service address only the executive branch government hierarchy, while not mentioning Members of Parliament, or those officers directly appointed by and responsible to the Parliament (the Legislative Branch and auxiliaries). Legal grounds for imposing liability on politicians within (the Legislative Branch and auxiliaries) have been absent or unclear at best. However, even grounds for imposing liabilities to the politicians within the government hierarchy carries uncertainty.

While each of the Law on Public Service, the Law on Anti-Corruption, and the Law on Regulation of Public and Private Interests and Prevention of Conflict of Interest in Public Service outline legal grounds to impose liability on officials, these each function as separate stand alone laws without a unified or common approach.  For example, liability under the Law on Public Service only targets administrative, executive, and public service professionals, and specified public officials. Political officers are not included.

Because of these limitations there is no clear body of law to assist in establishing or imposing liability on high ranking “selected” and “appointed” (as opposed to Elected) government officials. Currently, wrongdoing by such officials may only be determined on a case by case basis through a decision of a court, which does not allow for regular and effective enforcement.

In practice there is no regulation providing for the recall of elected officials such as Members of Parliament. The President, the Parliament Speaker, and Members of Parliament may be dismissed or recalled, only where the Constitutional Court of Mongolian issues a ruling that that they have violated the Constitution of Mongolia and must be removed. This is exceptionally difficult as there is no clear standard for establishing such violations in the legal system.

Under current legislation, political liability and means to impose it has not been addressed. Such liability will increase overall levels of responsibility for public officials who may be forced to resign, face recall, or be restricted from nominations for future public office in the event clear guidelines of liability are established. By establishing real legal consequences, the draft law is expected to help promote a culture of greater responsibility for public officials, bringing greater prestige and international respect to Mongolia’s political institutions and public officers.

Political liability is intended to increase the level of responsibility for individual officers by setting clear provisions and requires for resignations, dismissals, recalls and restrictions on rights to be nominated as candidate for specific period for the elected and appointed high ranking officials. In this way the new draft law seeks to establish a culture of self-responsibility and accountability for politicians as an integral part of public service regulation in the well-developed democracy in other countries. To this end the draft law will help to established procedures and a foundation for imposing liability on politicians within (the Legislative Branch and auxiliaries).

By doing so it is hoped that government influence and interference in public society and operations of private companies will be greatly reduced or eliminated.  Come back for our next post which will have an overview of some important provisions in the new draft law.

New Draft Mongolia Law on Investigation of Regulatory Infringment

One of the new drafts scheduled to be considered by Parliament during its next session later this year is a new Law on Investigating Infringement.

Currently in Mongolia, regulatory infringements are addressed by a range of different laws, each addressing specific subject matter. These laws range from the Customs law, Taxation laws, Competition law, Mineral law, Law on State inspection and supervision. In the current state of things, there are several overlapping areas of regulation, sometimes resulting on conflicting provisions. There are also gaps where specific sectors are without relevant regulations. The different laws also treat procedures and process of investigations of infringements differently, which as resulted in concerns about whether constitutional rights are appropriately upheld in each case. The new draft law to be discussed will be designed to cure such faults by protecting individual rights which establishing a uniform standard of official process and powers when resolving suspected regulatory infringements.

The draft to be proposed differentiates regulatory infringement from criminal offences and will adopt a systematic approach to unifying over 230 laws which pertain to various types of regulatory infringement.

Currently the various laws grant 26 different classes of official, ranging from police officer, to tax inspectors, state inspectors, prosecutors and others) ability to investigate suspected infringement and impose penalties. This new law will consolidate those procedures seek to apply uniform procedures.

Under the draft to be proposed all procedures for resolving infringements should take up to 30 days. Up to two extensions of 15 days each will be available if authorized by higher office where additional investigative measures are required.

Individuals or organizations which are the subject of a decision following the investigation of an infringement will be obligated to comply with the terms of the decision within 14 days. In the event there is no compliance, the official Court enforcement agency will have responsibility to enforce the decision.

Individuals or organizations challenging the results of an investigator may appeal the final decision to the prosecutor’s office, and will also have the opportunity to appeal the decision of the prosecutor to a court.

Update on Online Security and Collateral Registration

As we have mentioned in the past, the Mongolian Law on Pledge of Movable and Intangible Property came into force on March 1, 2017. In order to fully implement this new law,  an official Procedure for Online Registry of Pledges of Movable and Intangible Properties was adopted by Minister of Justice and Internal Affairs on March 3, 2017 and a centralized online registry system, www.mpr.gov.mn, has been established to facilitate for the registration of pledges on movable and intangible properties.

All types of movable assets, present or future can be registered in this electronic database as collateral. This includes accounts receivable, construction equipment, agricultural equipment, crops, consumer goods, documents, industrial equipment, intellectual property, office items, inventory, vehicles, domestic animals, wood, furniture, household item, investment security, mineral resources and others.

The registered collateral information in the database will be available to the public and searchable online by the following key terms at www.mpr.gov.mn :

  • an initial registration number of notice of pledge;
  • creditor’s name and registration number;
  • debtor’s name and registration number; and
  • serial number for vehicles.

Furthermore, this collateral registry system is accessible online for verification, amendment, extension and cancellation of the details of the registered collateral. This centralized modern collateral registry is a big positive step to protect the non-possessory security rights of creditors against third parties by ensuring transparency.

Mongolia’s New Arbitration Law Offers More Effective Enforcement

The Previous Mongolia Arbitration Law consisted of 43 clauses while the newly revised Arbitration law consists of 52 clauses. The new Mongolia Arbitration Law is drafted to be mostly based on the previous Arbitration Law with a few key changes.

Under the new Mongolia Arbitration Law the following “Temporary Actions” may be taken to secure the implementation of an Arbitration decision:

  • Force the continuance or restoration of the status quo until dispute is resolved;
  • Parties may be compelled to not take actions which may affect arbitration proceedings and may take preventive actions to prevent further damages;
  • Take actions to protect property aa may be necessary for ensuring the enforcement of of a final arbitration award;
  • Take action to preserve evidence which is significant for the resolution of the dispute or otherwise related to the dispute.

The following conditions must be met in order to take such protective measures

  1. The request for the temporary action should be clear and enforceable;
  2. if no actions are taken, it will be impossible to compensate, in full, the damage enforceable under the principle award;
  3. The amount of the potential damage should be greater than amount of potential damage which may incur as a results of the temporary actions if taken;
  4. there is a reasonable possibility that the dispute may be resolved positively for the Party requesting the temporary action.

If the arbitration panel considers that informing one party of the request for Temporary Action submitted by the other party, the panel may do so. The party so notified will have the opportunity to provide arguments relating to the request for Temporary Action.

The arbitration panel may request the Party requested the temporary actions, to provide appropriate financial guarantee in relation to the said actions.

This is a positive change to the Arbitration Law which will give Arbitration more “teeth” and better ways to be effective at both resolving disputes and securing an appropriate compensation for a grieved party seeking redress.  Our experienced Mongolia lawyers are excited at the new options provided by this change the Arbitration Law and we are looking forward to see these Temporary Actions take effect in our own cases.

Proposed New Mongolia Laws Promise Reform in 4 Key Areas

Parliament has just issued a list of draft laws to be considered during the fall session in 2017. This list includes drafts in relation to State Budget 2017 and number of completely new proposed laws. There are also several proposed amendments to existing laws that look to be very interesting going forward.

The following are the newly initiated draft laws:

  • Amendments to Constitutional law
  • Law on National System of Payment
  • Law on Development of the Ger District
  • Law on Investigating and Resolving Infringements
  • Casino law
  • Law on Mongolian Foreign Relations
  • Law on Safety of Information
  • Law on Encouraging Development of Youth
  • Law on Food Supplements for Infants and Toddlers
  • Law on Health of Livestock and Animals
  • Law on Resource of Livestock Genetics
  • Law on Enriched Food
  • Law on Responsibility of Elected or Appointed State High Officials
  • Law on Protecting Critic’s Rights

The Mongolian Lawyers at LehmanLaw Mongolia are particularly interested in the proposed Law on National System of Payment.  There is huge potential for reform and modernization in this area and we are excited and looking forward to significant changes under a new law.

We expect the proposed Law on Investigating and Resolving Infringements to be very interesting to foreign businesses seeking greater protection for Intellectual Property rights in Mongolia, including Copyright, Trademarks and Patents. We hope the new law will provide a clear system for enforcement of protected intellectual property rights in Mongolia.

Two proposed laws appear to target Mongolia’s growing agricultural sector.  Mongolia is ripe for increased foreign investment in the agricultural sector and an improved legal framework in this area will be sure to increase interest. We will monitor related developments

It also looks like there will be a proposed law regarding establishing norms of official behavior, which appears to be an effort to increase anti-corruption measures among government officials; a very positive development which we will explore more fully as details are available.

Mongolia Enacts New Law on Hygiene Affecting Employers

The Parliament of Mongolia nullified the Law on Sanitation adopted on May 07, 1998 and passed the Law on Hygiene on Feb 04, 2016. The laws warrant the Constitutional right of a citizen to live in healthy and safe environment.

According to the new law, organizations and employers shall have the following duties:

  • to demand employees and customers to comply with hygiene legislations;
  • to impose a penalty on employee who is in breach of hygiene legislations;
  • to comply with the order issued by a competent official or an authority with respect to standards and legislation on hygiene and to take all necessary actions to eliminate the offences and to respond;
  • to comply with the norms and requirements of labor safety and hygiene during all stages of activities;
  • to keep the public road and square free of garbage, puddle, snow or ice, to broaden green area and to keep stairs, walls and fences intact;
  • to prevent infectious and non-infectious diseases, occupational disease, industrial accident and injuries;
  • to include the employees to medical exam and screening;
  • to employ a personnel who is in charge of labor safety and hygiene in accordance with rules adapted by State Central administrative authority in charge of Health and Labor related matters if the organization and legal entity in production and service business employs 50 people or more. If the organization in manufacturing and service business employs 50 people or less, it may employ the personnel on the basis of  a contract;
  • to approve annual expenses to spend on hygiene safety;

Also the organization and the employer is required to cooperate with the relevant professional NGOs in organizing hygiene trainings and shall support by providing accommodation and other expenses related to the training.

According to the law, following activities shall be prohibited:

  • to take any actions and activities that has adverse impacts to human health and environment;
  • to sell open food and operate production and service on public streets, squares, points or places where such activities were prohibited by the competent authorities;

If the organizations or persons do not comply with the law authorities shall impose the following administrative sanctions i.e. fine if the violation does not constitute a criminal offence.

Keep up to Date on The Mongolia VAT

As we posted previously, the newly adopted Mongolia Value-Added Tax  (VAT) law has come into effect since January 1, 2016.

According to the VAT law, “Any citizen and legal person, who is engaged in the import and export of goods as well as the sale and manufacturing of any goods, performance of work and rendering of services in the territory of Mongolia, shall be value-added taxpayers.” VAT shall be applicable for the following goods, works and services where operational income value reaches 50 or more million tugrugs:

  • all types of goods, works and services sold within the territory of Mongolia;
  • all types of goods, works and services imported from abroad to Mongolia; and
  • all types of goods, works and services exported from Mongolia;

Furthermore, the VAT shall apply to the representative office of a foreign legal entity whose revenue of sold goods, performed works and rendered services in the territory of Mongolia, has reached 50 million tugrugs or more.

In almost all cases, the value-added tax shall be imposed at the rate of 10 percent of the taxable amount of imported, manufactured or sold goods, performed works and rendered services.  However, some certain types of goods, work and services can be subject to zero (“0”) percent VAT. The payment of VAT must be within the first ten days of the following month.

The newly adopted law also creates an incentive system with the possibility of recovering up to 20 percent of paid taxes if certain conditions are met. Initial such tax returns are expected to refund in the first quarter of this year.

A conference with our Mongolian Tax Law specialists can help you determine whether your company may be able to take advantage of the 0% VAT, or the VAT recovery.

Mongolia Set to Allow Trading of Real Estate Interests Via Stock Exchange

Mongolian Parliament approved the Law on Allocation of Land to Mongolian Citizens for Ownership (LALMCO) in 2002 under the authority of Article 6.3 of the Constitution, “the state may give for private ownership plots of land, except pastures and areas under public and special use, only to the citizens of Mongolia”.

Implementation of LALMCO began May 1, 2003, granting every Mongolian Citizen a right to own a plot of land. This was the first time in the history that Mongolian citizens were entitled by law to own land. However, implementation of this law was not satisfactory. The right to acquire land for ownership is opened to all Mongolian citizens according to LALMCO, but implementation mechanism were not set out in this law, as result, many citizens face obstacles to their legal acquisition of land for their ownership. Those individuals who live in an apartment in the city, in particular have encountered difficulty in gaining access to land ownership despite the  guarantee in the LALMCO. Since LALMCO’s implementation only 7.6% of the 1.2 million city dwellers in Mongolia have been granted the land rights as guaranteed.

Reasons for the unsatisfactory implementation of LALMCO are not for lack of available land, or   limitations on use of land. The law is missing specific regulations and procedures with regard to establishing and confirming land ownership rights obtained under LALMCO. As a result of the lack of clear regulations and procedures, some national and local authorities have used the law to distribute land to friends and family through corruption and without transparency or public oversight.

As set forth in the new draft law, a Certificate of the Right to Own Land will be issued to each citizen, and upon establishing Land Ownership, a Certificate of Land Ownership will be issued. A Certificate of the Right to Own Land will represent each respective citizen’s right to own land. The Certificate of Land Ownership will clearly set out the individual’s ownership rights to a specific plot of land.  Details regarding issuance of these certificates and relevant regulations are also set out in the draft law.

The draft law also provides an interesting mechanism regarding the Land Ownership Certificate. Land Ownership Certificates will be able to be securitized and traded via the Mongolian Stock Exchange. This will provide an avenue for profits for those citizens, such as city dwellers, who are not planning on living on or using the granted land rights themselves.

While real estate can be very valuable, undeveloped land, may not always offer any profit or other benefit to the owner. Development of the land often takes substantial resources and time commitment, which owners may not be able to provide. The ability to trade ownership interests in these plots of land could be a major reform for the Mongolian economy enabling many citizens to profit off land ownership in new ways.

Currently, it remains unclear whether foreign individuals or companies will be able to invest in and trade the Land Ownership Certificates once they are listed on the exchange. This could also be a substantial opportunity for foreign investments in Mongolia. We will keep our eye on developments and update here when we know more.

Fresh Amendment to Mongolia Company Law Incoming

A new draft law to amend to the company law was submitted to the Mongolia Parliament recently. The purpose of the proposed amendments is to improve the regulation of liability limited companies with majority state ownership. There have been problems which have occurred with corporate governance of such majority state owned companies, in areas such as shareholder and board meetings and selecting members of the Board and executive management.

The amendment aims to improve legislation concerning proposals to call regular and irregular meetings of shareholders of these companies and improve the effectiveness of the regular Board of Directors meeting so as to aid is role as decision maker and to ensure normal operations of these companies.

The draft amendment includes the regulations clarifying procedures for to the call of regular and irregular meetings of shareholders of and the effectiveness of Board of Directors meetings.

Once the draft law enacted, rights, obligations and liabilities associated with the liability limited companies dominated by state ownership shall be clear and no additional funding from state budget shall be required for enforcement of this law.  We see this as a positive step to encourage independent decision making among leadership of key state owned enterprises, which are the primary vehicles by which Mongolia facilities and draws profits from several of its major mining operations.