As we posted previously, the Mongolian Law on Pledge of Movable and Intangible Property was adopted on July 2, 2015. This new legislation was supposed to come into force on September 1, 2016. However, effective date of the law had been postponed until March 1, 2017 due to lack of preparation of the required online database for registration of pledges.
In order to fully implement this new law, the Ministry of Justice and Internal Affairs, the International Finance Corporation, the Intellectual Property Rights and State Registration Office, the Bank of Mongolia, and other organizations have cooperated to establish an online database for the registry of pledges on movable property and information regarding collateral.
According to the law, collateral may be all kinds of stocks, securities, rights to demand, industrial designs, trademarks, all creative works of sciences, arts and other movable properties or intangible assets and present or future movable properties of individuals that are usable and transferable to other’s ownership of individuals that is valid and transferable to other’s ownership. Under the law, a Pledge will be perfected upon registration of a notice of the pledge with online registry, whether collateral is not transferred to the pledgee’s possession or a pledge is created by operation of law.
As for movable and intangible assets which have been pledged prior to the new law coming into effect, these collateral need to be registered with the new online database within six months after the entry into force of the law.
The new online database shows how Mongolia is utilizing new technologies to make its legal and financial systems more efficient, and will benefit Mongolian citizens and foreign investors alike. The implementation of this law provides a new lifeline for the economy and will create new opportunities in the business sector. Furthermore, information in the database will be available to the public, and registered information will become official records of assets and collateral.