25 may2015 _anthony woolley senior associate_hogan lovells

1. Revised Law on the State Registration
of Legal Entities
Anthony Woolley
Hogan Lovells Mongolia
25 May 2015

2. www.hoganlovells.com
Contents
• Corporate presence
• Change in the regime
• Features of the revised law
• Notes/remarks
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Investing in Mongolia?
Corporate presence in Mongolia:
- representative office; or
- limited liability company.
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Legislative framework
• Main legislation:
 The Law of Mongolia on the State Registration of Legal Entities,
enacted on 23 May 2003 was repealed and replaced with the Revised
Law on the State Registration of Legal Entities adopted on 29 January
2015 ("Revised Law")
– The relevant ancillary regulations adopted on 27 February 2015 by
the Ministry of Justice and the State Registration Office
– All effective from 1 March 2015
• Other relevant legislation
– Law of Mongolia on Investment (3 October 2013)
– Classification of Business Activities in All Economy Sectors, issued by
the Minister of Finance and the Chairman of the National Statistics
Office on 17 November 2006 (the "Business Activities
Classification")
– Law of Mongolia on Special Licensing for Commercial Activities,
adopted on 1 February 2001, as amended (the "Licensing Law")
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Main authorities
Legal Entities
Registration Office
Tax authority
Invest Mongolia
Agency
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Background on the registration process
• Until 1 November 2013
3 steps: FIRRD -> LERO -> tax authorities
• 1 November 2013 – 1 March 2015
2 steps: LERO -> tax authorities
• 1 March 2015 – onwards
2-3 steps: online submission -> LERO -> tax authorities
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Features of the Revised Law
• "Simplified" registration process
– Registration time period
– Local invested legal entities – 2 days
• Foreign-invested legal entities – 10 days
• Electronic submission of incorporation documents is
possible
• Electronic data transfer between government
authorities
• Registration certificate available in printed and
electronic form
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Features of the Revised Law
• Name reservation
o Electronic reservation possible
o 3 names per application
o Application for registration within 10 days of the
name reservation
o Reservation of names containing certain words
possible (e.g. "Mongolia", "Ulaanbaatar")
o Names already registered and in use by legal
entities may be used again by the same entity who
initially registered the same (e.g. Tumur LLC:
Tumur Corporation LLC, Tumur Construction LLC)
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Features of the Revised Law
Information available online:
– address (in part)
– date of incorporation
– name and type of the legal entity
– title and the name of the personnel that may
represent without a power of attorney
– scope of activities
– bank accounts (bank branch and account
number)
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Features of the Revised Law
• Registration of changes to the principal details
– Before: within 3/10 days
– Now: within 15 working days -> a fine equivalent
to 1-3 times the minimum monthly wage
(approximately US$ 100-300).
• Subsequent material breaches may lead to potential
liquidation of the legal entity
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Uncertainties/Issues
• Legalisation of documents executed abroad
not expressing but in reality will be required
• Official address –> "Catch 22" situation
• General-purpose companies are not possible
• Online registration possible, however, within 5 days
of such submission, certain documents must be
submitted in person
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Uncertainties/Issues
• Obtaining of reference letters is possible, however,
detailed information may only be obtained in hard
copy
• Regulations becoming more stringent for
representative offices
– Total of 4 years of existence
– Failure to apply for an extension of registration
(within 10 days) may result in deregistration
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Notes
• Promising revised legislation, but yet to be fully
functional
• Uncertainties still exist
• On-going compliance is vital throughout a legal
entity's existence-deregistration/liquidation
• Consider time required for documents to be
obtained from abroad
• Document heavy process
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