Personal Data Protection in Mongolia



Posted by , , , ,

In the 26 years since the Personal Secrets Law was enacted in 1995, legal revise and reform for personal data protection was required due to changes in social interactions and digital transition. Therefore, on December 17, 2021, the Parliament adopted a new Law on the Personal data protection (PDPL), which began to be implemented on May 1, 2022.

This law applies to all individuals, legal entities and organizations without legal status collecting, processing, using and protecting personal data in Mongolia. Under the previous Personal Secrets Law, only the data subject was responsible for the security of his/her information but now the PDPL provides that the data controller and collector are obliged to ensure information security and protect personal data as well.

Personal data protection is categorized as personal information and sensitive information and it is defined as below.

  • Personal data means sensitive data, first and last name, date and place of birth, residence address, location, ID number, assets, education, membership, online identifier, and other information that directly or indirectly identifies a person or makes it identifiable;
  • Sensitive data encompasses a person’s race, ethics origin, religion, beliefs, health, correspondence, genetic and biometric information, digital signature private key, information on whether an individual is serving or served any sentence, sexual orientation, gender identity, expression, and information about sexual intercourse.

When governmental authorities or legal entities collecting, processing, and using personal data, the data owner’s consent must be obtained in writing or electronically. Unless otherwise allowed by law or a convention to which Mongolia is a party, it is forbidden to transfer personal data outside of Mongolia without the consent of the data subject. Transferring personal data from one group company to another in oversees would be considered a personal data transfer because the legislation does not allow an exception to this rule of permission.

The data processors and controllers are required to undertake data security assessment. When data is collected, processed, and used electronically, it is especially important to conduct a data security assessment in the following situations:

  • when making decisions that have an impact on the rights, freedoms, and legitimate interests of the data subject;
  • when processing sensitive data on a regular basis.

the National Human Rights Commission (NHRC) is responsible to review and recommend for assessment whether data shall be collected, processed and used using electronic data processing technology.

Moreover, data controller shall keep a record of the response taken to eliminate the violation and its negative consequences. The record shall be submitted to the NHRC in January of each year or as requested.

Protection of Newly Created Plant Varieties in Mongolia



Posted by , ,

Following a process of technical consultations with the Food and Agriculture Organization of the United Nations and the International Union for the Protection of New Varieties of Plants, Mongolian Parliament enacted the Law on Seeds and Varieties of Plants on October 15, 2021 to regulate issues related to supporting the development of the sector of crop seeds, stimulating research and innovation in the seed sector, establishing fair trade of seeds, protection and sustainable use of plant genetic resources, creation of new plant varieties, protection of breeder’s rights and ensuring food safety.

In specifically, this law regulates the registration of a new plant varieties and the protection of the breeder’s rights. Any person who produces, sell, export and import a registered and protected plant varieties is required to obtain permission from a breeder. The protection of breeder’s right is valid for 20 years for plants and 25 years for trees and climber plants.

Ministry of Food, Agriculture and Light Industry is entitled to register a new variety plant in Mongolia and to protect breeder’s right. In determining whether or not the breeder is entitled to apply a new variety plant registration, the Minister of Food, Agriculture and Light Industry should identify that the plant is new, various, identical and stable by doing necessary field experiments and laboratory tests. These four requirements are described as below.

New – the seed and plants variety are considered new if it is not sold or distributed throughout a certain time prior to the request date:

  • 1 year ago, in the territory of Mongolia;
  • four years ago, in the territory of other countries and six years ago for trees and shrubs.

Various – if the newly created variety differs clearly from other popular varieties at the time of the request, it is considered to be different.

Identical – if the basic characteristics of the variety are sufficiently maintained during changes that may depend on the characteristics of the reproductive structure, then the seed is considered an identical variety.

Stable – After repeated reproductive cycles, if the basic characteristics of the seed do not change at the end of a specific cycle, the seed is considered a stable variety.

Therefore, it is significant to first clarify whether a plant variety can be considered as a new variety plant in Mongolia, whether breeder’s plant variety sold or distributed before in Mongolia and oversees during period mentioned above.

Invalidating a Mongolian Trademark



Posted by ,

In the past weeks the firm’s Mongolian lawyers have been approached with an inquiry regarding the possibilities to request trademark invalidation in Mongolia.

Registration of trademarks can be invalidated by a request filed with the Dispute Resolution Committee (DRC). There are several acceptable reasons for trademark invalidation.

Any interested person may submit to the DRC a request for invalidation of a trademark registration on the ground of followings:

  • Trademark is registered in violation of registration requirements;
  • The trademark is registered in the member country of Paris Convention under name of any representative of distributor without permission of rights owner of the given trademark;
  • A trademark owner hasn’t used the trademark for 5 years without any reasonable excuses.

Such an invalidation request is acceptable in Mongolia if it was submitted within one year from the date on which the registration of the conflicting trademark was published by the Intellectual Property Office. The DRC with the authority to decide whether or not a trademark is invalid within 6 months from the date of receipt and notify it to petitioner.

Although Mongolian Trademark law provides any interested person to dispute about trademark registration validity within specific reasons, a one-year limit for a request submission is too short. After this time frame has passed, it becomes more difficult to invalidate trademark registration based on a request of likelihood of confusion.

The Paris Convention for the Protection of Industrial Property (Paris Convention) which is ratified by Mongolia, provided longer time limit for filing a trademark invalidation request. For example, article 6bis of the Paris Convention entitles the owner of a well-known mark to file an invalidation request of conflicting trademark in 5 years from the date on which the registration of the conflicting trademark was published. Therefore, a period extension for invalidation request is required for the purpose of harmonizing Mongolian law with international treaty.

Obligation to Report Beneficial Owner



Posted by , ,

Does a new Mongolia company have to register their beneficial owner’s information with Mongolian authorities?

Mongolia revised the General Tax Law in 2019, and the article 18 of the law regulates the exchange of taxpayer information with other countries that have the international agreement, treaty or convention (Agreement) concluded with Mongolia. Among those exchanges is information of the legal entity’s beneficial owner.

Therefore, Mongolia has implemented a policy to create database of beneficial owner’s information of companies in order to provide opportunities to enhance cooperation between the State Registration Authorities and the Tax Organization as well as to exchange information for tax purpose with other countries that have the agreement with Mongolia.

In this connection, additional amendments to the Law on State registration of a legal entity were adopted which requires all registered legal entities in Mongolia to register information about their beneficial owners at the Legal Registry of the General Registry of Mongolia. Also, new establishing companies is entitled to register the company on the basis of the requirement to register their beneficial owner’s information.

Under the Law on Combating money laundering and the financing of terrorism and the Law on State registration of a legal entity, a beneficial owner is a person who has a significant or controlling ownership interest solely or jointly with others of holds a management function of the legal entity or is represented by other persons or ultimately owns the legal entity earning benefit and profit by exercising control of the legal entity, its transactions and arrangements to implement the transactions.

To summarize the above, newly founded company is obliged to register beneficial owner’s information with the state registration authority with an application to register a company.

Trademark Infringement Investigations and Penalties



Posted by ,

The Investigation procedures for handling trademark infringement in Mongolia are governed by the Law of Intellectual Property, the Infringement Procedure Law and the State Inspection Law. The penalty for trademark infringement is specified by the Infringement law or the Criminal code depending on the extent of the harm and loss actually caused, which means both civil and criminal fines may be imposed. Although, it is common practice in Mongolia to violate trademark, most violations are investigated as trademark infringement under the Law, not as criminal offenses. Therefore, with today’s blog, we will focus on trademark infringement investigation and civil penalties.

Pursuant to Article 12.3 of the Law on Trademarks and Geographical Indications of Mongolia, a trademark owner is entitled to exclusive ownership, usage rights, and legal right to demand discontinuance of unauthorized use, along with monetary damage in compensation for infringing use.

The state officer for intellectual property shall be responsible for matters related to the intellectual property, in particular trademark infringement. The authorized inspector shall carry out the inquiry into the alleged the infringement case upon the receipt of the complaint and information about the trademark infringement. Upon receiving a complaint, the inspector shall decide whether to initiate the infringement case based on the claims and evidence provided. After the investigation is complete, the authorized official shall make the decision on whether to terminate the case without penalty, or to impose penalties.

According to the Infringement law of Mongolia, authorized official shall impose following penalties for trademark infringement:

  • Seizure of property and profits related to the infringement;
  • Cessation of unauthorized use;
  • Compensation of damages to the trademark owner;
  • Individuals involved in the infringement may be fined up to 300,000 MNT while companies may be fined up to 3,000,000 MNT.

The trademark infringement decision will be enforceable in the territory of Mongolia.

Domain Name Dispute Settlement in Mongolia



Posted by , ,

Recently, one of our clients had been seeking our advice on Mongolian communications law, particularly on the domain name registration and dispute settlement issue. Meanwhile providing legal analysis to our client’s inquiry, we have decided to provide the post in concern with background of the domain name monitor in Mongolia.

Communications Regulatory Commission of Mongolia (CRC) is the government authority that is responsible to monitor the implementation for registration and usage of domain name. Only one company, a Datacom LLC, has the authority from the CRC to register domain name in Mongolia. Datacom LLC’s website has a WHOIS owner database.

One of the powers of the CRC is resolving disputes between a domain name registrant (domain name holder) and a third party. In 2020 CRC adopted a “Regulation on registration and use of domain names”. This Regulation specifically provides for that “CRC will follow laws and regulations of Mongolia when processing requests and complaints. When dealing with issues not specified in laws of Mongolia and this Regulation, CRC may follow relevant parts of the Uniform Domain Name Dispute Resolution Policy adopted by the Internet Corporation for Assigned Names and Numbers (UDRP)”.

Pursuant to Regulation on registration and use of domain names, after the third party (other than domain name registrar and domain name registrant) submits a request or complaint, provided that all required documents are submitted along with request or complaint, CRC shall notify domain name registrar, domain name registrant and other relevant parties and obtain relevant response from them within 14 days from the date of submission of request or complaint. CRC will resolve the request or complaint within 21 days from the date of receipt of relevant responses. Depending on the content of request or complaint CRC may appoint a panel consisting of 3 experts with the purpose of carrying out an expert opinion on the matter. In such case the time to process a request or complaint against domain name will be longer. Pursuant to this Regulation, if CRC deems necessary, complaining party and domain name registrant may participate in the dispute resolution hearing.

What is an Employer’s Responsibility for Social Insurance?



Posted by ,

Lately, our Mongolian lawyers have assisted the client to establish a company, and which has led to the next inquiry about what responsibilities the company (an employer) will have after the company establishment. One of the considerations is the employer’s duty to pay insurance premiums of its employees.

Mongolian Social Security system provides benefits such as the retirement, health, disability, and unemployment for every single person who are currently employed within Mongolian territory including citizens of Mongolia, foreign employees and stateless persons. Social Security contribution is the premium levied on both employers and employees to fund the Social Security program.

The Social Insurance Law of Mongolia has determined the social insurance premium rates that both employers and employees are required to pay. As of 2023, depending on the industry, rate of premium payable by employer’s payroll is between 12.5% to 14.5%. Employee premium rate is fixed at 11.5% from salary and similar income but employee monthly contributions are capped at the minimum wage MNT 550,000.

An employer should be registered to the General authority for social insurance and responsible for withholding social insurance premiums and transferring them to the authorities on a monthly basis. Also, the employer is required to submit a report on the monthly social insurance premium payment to the social insurance within the 5the of the following month. Primary and accounting records and balance statement related to social insurance should be kept in accordance with the relevant procedure.

Establishing a Branch of Foreign Company in Mongolia



Posted by , ,

A foreign company may establish a branch in Mongolia as a secondary establishment of the parent company. Legally, such a branch is considered a part of the parent company, and as such, it is able to perform the principal functions of the company, however it is dependent on the foreign parent company. This type of branch will not be deemed to be a unique legal entity and must conduct its activities on behalf of the foreign company that established it. The foreign parent company will be responsible for the activities of the branch.

A branch of a foreign legal entity in Mongolia shall be registered with the registration authority. An executive director, founder, a person to represent without the power of authority or other persons authorized by the company will apply an application to the state registry and will include the following documents:

  • Foreign company’s registration certificate and the Charter. (copy)
  • Shareholders resolution to establish a branch in Mongolia.
  • Shareholders resolution to appoint a director of a foreign company’s branch and to provide an address and contact details where a branch will be.
  • A branch’s rule which includes branch address, contact information and conducting activities.
  • If a director of a branch is a foreign resident, a copy of the citizen’s passport.
  • Evidence of the branch office address such as rental agreement or an immoveable property certificate.

All the documents made in foreign language should be translated. Also, documents issued in a foreign country should be apostilled.

Domestic Arbitration for Foreign Companies in Mongolia



Posted by ,

Our Mongolian lawyers frequently assist clients engaged in a range of international business. One of the questions asked by our clients is about domestic arbitration proceeding in Mongolia.

Domestic arbitration in Mongolia is arbitration proceedings other than international arbitration proceeding. If parties have agreed to solve their dispute by domestic arbitration or such agreement is provided in the contract, any disputes related to the contract will be settled by the Mongolian International Arbitration Centre in Mongolia.

The claimant shall submit a written claim which should state the facts supporting the point at issue and the relief or remedy sought and the respondent is required to state his/her defense in respect of these particulars within the period of time agreed by parties or determined by the arbitration tribunal, unless the parties have otherwise agreed. Within 30 days of receiving a notice of arbitration initiation notice, the parties are entitled to appoint an arbitrator from the list of international arbitrators in Mongolia. If the parties did not appoint within a specified time frame, the presiding arbitrator of the tribunal appoints an arbitrator. Following this, a preliminary hearing will be held to establish procedures for resolving arbitration cases, and the following issues will be discussed in the hearing. Among them:

  • Whether an arbitration proceeding has been negotiated between the parties,
  • Whether the dispute subjects to jurisdiction of an arbitration,
  • Place of arbitration proceedings and hearings,
  • Judicial norms for dispute resolution and proceedings,
  • Arbitration language,
  • Basic and additional costs of arbitration,
  • Resolving requests such as summoning a witness, appointing an expert, including an interpreter, a translator, and providing evidence;
  • Whether the arbitration proceedings will be open or closed,
  • The date of the arbitration hearing.

Arbitration will be conducted in accordance with the agreed procedures of the parties, the Arbitration Act, and the rules of arbitration proceeding.

Value-Added Tax in Mongolia



Posted by ,

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.