Mongolian Company Law has a specific definition of a “Major Transaction,” with specific issues to keep in mind to ensure compliance. A Major Transaction is any transaction with a market value exceeding (25%) of the total amount of assets of a company based on the most recent balance sheet of the company, or a transaction in which certificates with right to purchase common shares or securities convertible into common shares where the number of such common shares exceeds (25%) of the common shares issued before such transaction.
A Major Transaction typically connected to sale, purchase, disposition or pledge of a property or property rights. Care should be taken to define the market price of property and property rights (including the value of a company shares and securities). The price agreed to by a seller and buyer should be understood as market price of the property and property rights which is connected to the major transaction.
The market value of property and property rights should be determined by the company`s Board of Directors (in its absence, the shareholders meeting), based on market principles. The conclusions of an independent evaluation organization or company may be used when determining the market price. This market price should be determined by a majority vote of the members of the Board of Directors without conflict of interest. A member of the Board of Directors is deemed that a free of conflict-of-interest who has no common interests with the participant, mediator, parties to the transaction, and will not receive any financial benefits directly or indirectly resulting from this transaction.