Doing business in Mongolia – 2021. Mongolia’s business climate, its vast mineral reserves, its agricultural endowments, and its proximity to Asia’s vast markets make Mongolia an attractive destination for medium to long-term foreign direct investment (FDI). The Gross Domestic Product (GDP) in Mongolia is worth 10.4 billion US dollars as of September 2021 according to the national statistics of Mongolia.
The GDP value of Mongolia represents 0.01 percent of the world economy. The significant features and advantages of Mongolia include, but are not limited to the following:
The new Investment law in Mongolia enables an open investment environment for investors focusing on:
- no approval is required to enter into the market and buy a local company.
- no discrimination between foreign and local investors.
- fast registration process.
- stability guarantees- Provision of Tax stabilization certificate.
- flexibility and friendly conditions for investors.
In 2021, the Ministry of Economy and Development was newly established, replacing the National Development Agency of Mongolia that had been in charge of investment-related matters.
Including in its remit the new Ministry seeks to improve integrated investment policy and planning, the investment legal environment, ensure and oversee the implementation of relevant legislation, attract, support, and protect investment, implement comprehensive measures to develop the public and private partnership, define integrated policy for a loan, and develop the national investment program.
- Joint Ventures, Consortium.
- Mergers and Acquisition.
- Concession (PPP), Product sharing, management contract.
- Bond, Securities and other assets.
- Financial leasing, Franchising.
Other investment types; Legal forms for doing business in Mongolia:
Despite the fact that Mongolian legislation provides for a wide range of legal forms of commercial entities (limited liability company or LLC, joint-stock company or JSC and joint venture), in practice, private businessmen and foreign investors mostly prefer with foreign invested LLC. Representative office of foreign legal entities is also common. Limited Liability Company (LLC) with a foreign investment: according to the law, a foreign invested company is defined as “a business entity with an overall equity of US$100,000 or more (or MNT equivalent), where not less than 25% must be owned by (a) foreign investor(s)”. Investments into Mongolia can be made in the following ways:
- By establishing a solely or jointly owned business entity.
- Through the purchase of a Mongolian companies’ shares, bonds, and other types of securities.
- Through merging or wholly acquiring Mongolian and foreign companies.
- Through the establishment of franchise or financial leasing agreement.
- In other ways acceptable and not prohibited by law.
If two or more investors are planning to incorporate a foreign invested LLC in Mongolia, each investor must invest 100,000 USD (or MNT equivalent). A LLC is the most frequently used form of a legal entity established by one or more individuals or legal entities – founder/s/ or investor/s/ – who are not liable for its obligations while bearing the risk of losses related to the company’s activity to the extent of their personal contributions (participatory interests).
The liability of the company is limited to its assets. The bodies of a limited liability company are: a) the supreme body of a company shall be the Meeting of Shareholders(MoS). A LLC has exclusive powers with respect to the issues covering business, finance, management, and structure of the company. b) The executive body of a company (individual or collective). The day-to-day management of the company is performed by the Director (individual executive body) or Board of Directors (collective executive body).