Category Archives: Uncategorized

What is a Dominant Position in Mongolia Competition Law



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We have already posted a brief introduction about the Competition Law of Mongolia earlier. This time, we would like to address this blog on issues related to the legal regulation of business entities in dominant position.

The legal regulation of the business entities in dominant position is currently governed by the Competition Law, the Procedure for Determining Legal Monopolies and Dominant Entrepreneurs, and the Procedure for Reorganizing a Dominant Legal Entity by Acquiring and Merging with Other Legal Entities and Concluding the Purchase of a Competitor’s Shares.

A business entity in dominant position is an entrepreneur who solo or in association with other persons in a particular product market accounts for one-third or more of the production, sales, or purchases of the product in that market. In addition, the business entity accounts for less than one-third of the production, sales or purchases of the product in the market, but the ability to block other entrepreneurs from entering the market or to push them out of the market, could be considered as business entity in dominant position based on its range of products, market geographical boundaries and market concentration.

The dominance of any business entity shall be determined in accordance with the procedure set forth in the Regulation for the Determination of Natural Monopolies and Dominant Entrepreneurs. If a dominant entity is identified in accordance with such regulation, the Authority of Fair Competition and Consumer Protection issue a decision confirming the dominant entity and register it in the list with “Dominant Enterpreneur Registration”.

The dominant business entity shall be ogliged to submit its audited financial statements of the previous year, market research, proposals and other necessary documents to the Authority of Fair Competition and Consumer Protection within the first quarter of each year.

Based on sources, such as the information, reports, research and analysis conclusions issued by the Customs authority, Tax authorities, the Central Statistical Office and other government organizations, plus the report, research and proposal submitted by the legal entity, Authority of Fair Competition and Consumer Protection shall make a decision excluding the business entity from the list with“Dominant Entrepreneur Registration”.

It is strictly forbidden that the business entity in dominant position use their dominance illegally in the market by restricting the number, quantity and price of goods sold in the market in order to block other entrepreneurs from entering the market, restricting competition and sabotaging consumers.

Special Shareholder Meeting in Mongolia



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In our previous post, we looked at basics of a Regular Shareholder Meeting. Today, we will take a closer look at requirements for holding a Special Shareholder Meeting.   

A Special Shareholder Meeting may be convened only in the following situations:

  • If more than 50 percent of the Board of Directors unable to work or resigned;
  • If two (2) or more independent members of the Board of Directors, or shareholders with 10 or higher percent of voting rights has issued a proposal or demand;
  • If the loss incurred by the company exceeds 30 percent of the owner’s equity at the time of the last financial report;
  • If the company debt has exceeded the owner’s equity for two (2) years in a row, and is a negative figure;
  • the Board of Directors has issued a decision;
  • the audit committee demanded to convene a special session of the shareholders meeting;
  • all other cases specified in the company charter.

Under the Company Law, (61.1.2) it states to convene the a special shareholders meeting if two (2) or more independent members of the Board of Directors, or shareholders with 10 or higher percent of voting rights (further to call “ meeting initiator ”) has issued a proposal or demand, and it closely regulates the procedure of the proposal and its resolution. This is one of the significant differences and regulations between regular and a special shareholder’s meetings.

The Company Law directs that when the above describer 2 or more independent members if the Board of Directors and shareholders with 10 or higher percent of voting rights demand to convene the a special shareholders meeting they must issue the written proposal to the Board of Directors or Executive management reflecting i) meeting initiator’s full name ii) the number of voting shares iii) reason for convening the meeting iv) agenda v) draft resolution.

The Board of Directors (in its absence, the executive body) could decide whether or not to call such a special shareholder meeting within ten (10) business days following the date that they receive the demand. The Board of Directors may decide one of the following two alternatives:

1) Resolve to convene the a special shareholders meeting according to the meeting initiator’s demand. In this case, the meeting should be convened within 45 days of receipt of a valid proposal for a meeting. The company must  bear the cost associated with the shareholders’ meeting.

2) If the voting rights of the shareholders demanding the calling of the special meeting do not reach ten percent (10%) of the company`s aggregate voting rights; or none of the issues proposed for the agenda of the special shareholders meeting are within the authority of such meeting the Board of Directors or the executive management shall refuse to the proposal and the decision shall be immediately notified to the Board of Directors member or shareholder proposed the meeting.

If the meeting initiator disagrees with the refusal, they could appeal to the court.

If within 10 days the Board of Directors (in its absence, the executive body) fails to make a decision, the demanding shareholders or an independent member of the Board of Directors may call to convene the a special shareholders meeting independently. In such a case company may bear costs associated or refuse to bear the cost.

Conclusion and Key Differences of Regular Shareholders Meeting and A Special Shareholders Meeting

The key difference between the regular and a special shareholders meeting is the regular meeting shall be convened at least 40 days after the decision was made, and the a special shareholders meeting shall be convened within 45 days after the decision was made.

With regard to the legal consequences, if the regular meeting was not convened within the April (4 months), the Board of Directors authority ruminates in entirety, except the right to convene the shareholders meeting. In case, it failed to convene the a special shareholders meeting, the meeting initiator is entitled to convene the meeting, and if the meeting initiator disagrees with the refusal from the convening the meeting, the meeting initiator may appeal to the court.

In connection with mandatory agenda, the regular meeting must be discussed and approved the Board of Directors conclusion on the operational report and the financial statement of the company. However, the a special shareholders meeting does not have a mandatory agenda item, and it may discuss any issue related to the authority of the shareholders meeting.

Bankruptcy and Court Appointed Trustees



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A Mongolian Court shall appoint a trustee to oversee operations of a company within 5 days after a request for trusteeship from the claimants in a bankruptcy proceeding.

The trustee can be either an individual or a legal entity. The trustee can be the person with higher education in law, finance and economics who does not have financial and economic personal interests in the respondent’s activities, or the legal entity has the rights and responsibilities to provide professional consulting services in the field of law, finance and economics. According to the relevant legislation, it is prohibited to being appointed the respondent’s and claimant’s management, their members, related persons or their family members shall be as a trustee.

The trustee has the following rights and responsibilities in concerning with the bankruptcy case:

  • take under custody the assets of the respondent according to the court order;
  • safeguard the respondent’s assets and relevant documents, conduct counting;
  • if required, conduct a documentary audit of the respondent’s activities, organize such work;
  • announce and convene a meeting of claimants;
  • review contracts and transactions conducted prior to the start of a bankruptcy case, submit to the meeting of claimants’ proposals on whether to terminate, amend, or consider invalid the contracts and transactions specified in the relevant legislation;
  • open a special account and deposit the respondent’s cash;
  • conduct contracts and transactions with others on behalf of the respondent within the scope of the rights granted by the claimants’ meeting;
  • obtain from the respondent relevant data and documents;
  • submit to appropriate parties his/her assessment of the respondent;
  • evaluate the respondent’s assets;
  • hire an assistant within the limits of compensation determined by the claimants;
  • sell the respondent’s assets according to the procedures set forth in the relevant legislation;
  • other rights and responsibilities set forth in law.

The trustee shall make an assessment of the respondent’s activities within 20 days since the his/her approval by the court and submit the court, respondents and claimants the assessment, including financial and economic calculations of the respondent, conclusions; reasons and specific features of the respondent’s insolvency; the management’s activities; claimants’ groups and amount of each claim; and proposals on whether to recapitalize the respondent, or to liquidate upon consideration as insolvent; other data and documents deemed necessary.

In addition, the trustee has the significant rights and obligations in concerning with the respondent’s recapitalization, the allocation of its assets and liquidation process of the respondent.

The trustee will be personally liable for the damages caused the respondent due to illegal activities such as fraud and negligence, and the parties to the bankruptcy case have the right to assert a complaint to the court regarding the activities of the trustee and the court may change the trustee.

Getting an Apostille in Mongolia



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Often when official documents from Mongolia are to be used abroad, the intended recipient requires these documents to go through an authentication process known as an Apostille.

Apostilles authenticate the seals and signatures of officials on public documents such as birth certificates, court orders, or any other document issued by a public authority so that they can be recognized in foreign countries that are members of the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents in 1961 which is known as Hague Convention Treaty or Hague Apostille Convention.

Mongolia has been a member of the Hague Apostille Convention since joined on December 31, 2008. It helps that the documents apostilled in Mongolia will be valid in 117 Member States of the Apostille Convention without requiring any re-certification or notarization in the receiving country. However, the apostille certificate originated by Mongolia is not recognized in Austria, Belgium, Finland, Germany and Greece, and vice versa.

The document will often be certified by the foreign ministry of the Mongolia in which the document originated and an embassy or consulate. This apostille only certifies the signature, the capacity of the signer and the seal or stamp it bears. It does not certify the content of the document for which it was issued.

As for apostille, It requires that a copy of original document which originated from Mongolia shall be notarized and translated by a certified translation bureau in the language used in the receiving country. That translation of the document is also required to be notarized in Mongolia for the submission.

The following documents shall be eligible to apostille in Mongolia:

•           ID, passport, birth certificate and marriage certificate;

•           Reference letter by police and state registration office;

•           All types of education certificates or diploma;

•           Decision by the court and prosecuter; and

•           Administrative documents issued by government agencies of Mongolia.

In general, the apostille certificate is issued within 3 business days from the submission date of the documents.

If you need help to obtain your documents, please contact our firm and let us know how we can help.

Well Known Trademarks in Mongolia



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In case of a dispute in connection to the unfair competition and conflict of interests of your trademark, the trademark owner is entitled to apply a request for declaration of your mark as well-known in Mongolia him/herself or through representation of an authorized intellectual property agent to the Dispute Settlement Committee of the Intellectual Property Office of Mongolia.

For this purpose, the trademark owner shall file an application only in relation to one trademark and such request shall include, aside from providing basic personal and business information on the applicant and/or the authorized intellectual property agent, following information:

  • Description of the trademark for the declaration as well-known mark;
  • The name list of the well-known trademark product and services;                    
  • The date of the trademark declaration as well-known;
  • The status of the intellectual property rights of that particular trademark in Mongolia;
  • The justification/reasons for declaration of trademark as well-known mark along with their proofs and evidences.

Furthermore, the Intellectual property office of Mongolia is responsible for the public distribution of the well-known marks, yet unfortunately according to the unofficial statement, no such applications for declaration of trademark as well-known have been submitted and hence there is no list of the well-known marks in Mongolia as of today.

Well-Known Trademarks in Mongolia



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The Paris Convention for the Protection of Industrial Property, to which Mongolia joined in 1985, provides that the countries of the Union undertake, ex officio if their legislation so permits, or at the request of an interested party, to refuse or to cancel the registration, and to prohibit the use, of a trademark which constitutes a reproduction, an imitation, or a translation, liable to create confusion, of a mark considered by the competent authority of the country of registration or use to be well known in that country as being already the mark of a person entitled to the benefits of this Convention and used for identical or similar goods.

These provisions shall also apply when the essential part of the mark constitutes a reproduction of any such well–known mark or an imitation liable to create confusion therewith. Accordingly, Article 3.1.3 of the Law on Trademark and geographical indication defines the well-known mark as “the well-known trademark in the respective sector of Mongolia and the one, which does not require any IP registration. Within its duty for drafting and adoption of the Regulation concerning the IP-related matters, the Intellectual property office of Mongolia adopted a “Regulation concerning the IP-related matters, on the determination of the trademark as being well-known” on 08th April 2014.

It is important to note that the Regulation applies only within the territory of Mongolia and covers the trademarks /it may be both national and international ones/ that are well-known to the general public of Mongolia. Those companies interested in settling the question whether their trademark may be considered to belong to this category, they shall file a request to the Dispute settlement committee of the Intellectual property office of Mongolia.

Domain Names and the Legal Framework: Part I



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Due to its singular and inimitable feature, the assigned website names constitute an “online” name card for business operators and serves as an essential tool aimed at building and maintaining their position in the market. Such assigned names of websites are extended by the so-called domain name extensions/ top-level domains/ such as .com, .de, edu.com or gov.mn, which illustrate the country of operation or the type of operation.

The legislations of very few countries including Singapore allow granting of the registration and usage rights of their country’s domain name extensions only to those companies, that have been duly registered in these respective countries. However, the laws and regulations of Mongolia do not provide such restriction or prohibitions. In other words, Mongolia’s official domain extension name “.mn“ may be registered not only by local companies, but as well as by any foreign entity, who wish to promote their operations to Mongolian consumers and/or perhaps to protect their world-wide known brand in Mongolian market.

In Mongolia, the relations concerning the establishment of communications network, the operations and protection thereof and the proper furnishing with the high-quality communications and information technology products and work services to citizens and legal entities is regulated by the Law on Communications. The Amendments to this Law dated 30th May 2019 provide that the Communications Regulatory Commission composed by the Government of Mongolia shall be in charge for the adoption of the Procedure related to the registration and usage of domain names and the execution monitoring thereof.

According to the unofficial statement from the Communications Regulatory Commission, the working group responsible for drafting of these Procedures has been established. As a whole, the state policy and the legal framework with regard to communications, in particular internet and domain names, are vague and unsophisticated. On 05th June 2019, the Provisional committee for digital policy at the Mongolian Parliament adopted a Resolution on the Directives to the Government of Mongolia /GoM/ and pursuant to Article 12 of the Resolution, the GoM shall establish the legal environment concerning domain names and define the state policy in relation to this matter.

Mining License Renewal



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Do the originals of the Mining Licences need to be taken physically to MRPAM for the annual registration?

The license-holder is obliged to pay license fees annually in order to keep the license valid.   When you pay the annual license fee the original mining license certificate is required to be taken physically to MRPAM  (Mineral Resources and Petroleum Authority of Mongolia) and make the appropriate record on the annex of the license certificate.

According to the internal rule of MRPAM, when MPRAM receives original documents such as mining license, request letter, license fee and MRPAM will provide the receipt confirmation. The receipt confirmation shall contain the documents received by the MRPAM and the date on which the license certificate was recorded the annual payment will be returned to the license holder or authorized person.  Practically speaking, the registration will take 3-7 days depending on the workload of MRPAM. Please note that if license holder is unable to do the annual payment and registration, an annual registration could be done with MRPAM if agent has a proper POA to act on behalf of the license holder. 

What’s the process for in case of the Mining Licences were lost or damaged and can the Mining Licences be reissued?

MRPAM will re-issue the mining license and following documents are required when apply for new license certificate:

–          Official request letter to reissue the license;

–          A receipt of the stamp duty fee of 250 000 MNT for mining license and 200 000 MNT for exploration license paid to MRPAM;

–          Announcement of invalidation of the lost license in the newspaper (piece of announced newspaper including the name, date, number of the newspaper);

–          A copy of Company certificate issues by the LERO;

–          Completed application form (reissuance of license) (available at MRPAM’s website to download)

Legal provisions regarding the inheritance succession



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Inheritance succession means the manner in which the property is distributed or transferred after the death a person either by his/her own will or by legal provisions.

Pursuant to the Mongolian legislation following persons are entitled to the devolution of the property and are deemed as rightful heirs:

  • Husband, wife /the marriage shall be duly registered/, child and adopted child, child born after the death of the person, parents and adopted parents.
  • If persons stated above are absent or such people denied the interitance succession, then grandparents, brothers, sisters and grandchildren.
  • If persons stated above are absent or such people denied the interitance succession, then great-grandchildren.

In case the rightful heirs mentioned above did not reside at the same address together with the deceased person, then he/she shall file the request on the receipt of the inheritance property to the notary within 1 year upon the date of the death of the decedent. If, however, both the decedent and the rightful lived at the same address such requests are not required.

Moreover, if they failed to file such requests, it shall be deemed as denial from the inheritance. Also, one shall register the request on the denial from the inheritance within 3 months after the death of the decedent.

In case there are several heirs, then the covenant and settlement regarding the allocation of the property to be inherited may be certified at the notary. If the related parties fail to do settle the dispute amicably, then such succession dispute is a subject of the court jurisdiction.

One shall also consider the fact that the succession is not restricted solely to the property and its associated rights, but the obligations and liabilities of the decedent shall be devoted to the heir in accordance to the inherited property.

The heir shall submit the “Request on the certificate of the inheritance succession” at the notary of the district where the decedent resided and the “Certificate of the inheritance succession” is granted 1 year after the death of decedent.

Benefits of Notarial Notice Deed in Mongolia



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A notarial notice deed is a legally enforceable document of a notary produced based on the payment proof during the notarization of contract with an aim to secure the return of money or property and secure the pledge.

If you have a notarial notice deed, you can easily settle the disputes related to the non-performance of the agreement because instead of undergoing three instances at court proceedings, the judge shall issue for you an order obliging the other party to perform the obligations under the Agreement.  Moreover, you can also save court costs ad there is no requirement to pay the State stamp duty as in the court litigations. Therefore, in case one of the Parties failed to satisfy the Agreement performance in good faith and on a voluntary basis, upon the submission of the judge order and the execution deed at the Executive agency of court decision within 7 days after the issuance of the execution deed an enforcement procedure for the performance of obligations under the Agreement shall be commenced.

And these are the requirements for the notarial notice deed that can save both time and money:

  • To have a provision in the Agreement stating that the Parties shall perform the obligations under the Agreement in “undisputable manner” ,
  • The Agreement and the documents shall be notarized,
  • Not more than 3 years shall have passed after the commencement of claim rights,
  • Parties shall have accepted /no dispute or conflict/ the payment under the Agreement,
  • There is no court decision regarding this same Agreement.