Mongolia’s Company Law says that a company is a legal entity whose main goal is to make money and whose capital is divided into shares. The Company Law allows two types of business structures:
- Joint Stock Company.
- Limited Liability Company.
Business potential
Foreign companies that want to do business in Mongolia should take note of the following significant benefits:
- Foreign companies have the same rights as domestic companies, and the law protects their interests.
- The number of foreign workers that companies can hire has gone up.
- Foreign companies can get investment incentives that include, tax stability for a certain number of years.
- There are no rules like having to buy from local sources.
How to register a business in Mongolia
Mongolia’s corporation registration process takes more than a week and has several steps before and after registration.
Set up a bank account and put money in it
Applicants must open a bank account and put the initial capital in it. They must also use this bank account to pay the fee to sign up.
Ensure that the desired company name is available
Applicants go to the Legal Entities Registration Office of the General Authority for State Registration of Mongolia to complete this process (LERO). After the corporation name is approved, the LERO will give you a slip to reserve the title and a slip to open a bank account. Applicants have 30 days to finish the corporation registration process in Mongolia.
Sign up for the business
For a Mongolian corporation to be registered with LERO, the following documents must be sent to them:
- Form for making an application (applicant must complete this document).
- Approval letter from the bank to show that the account has been closed.
- A charter Lease agreement with the official address of the applicant’s Mongolian business.
- Founding or resolution of shareholders.
- Payment of the fee to register.
- Slip with your name on it.
- Copies of the owners’ passports or other forms of identification.
Also, the office of registration is required by law to handle any company registration case in 2 business days. After it is registered, the registration office will publish a notice of corporation formation and send the company’s documents to the local tax department.
Sign up for the business for local taxes
A newly formed corporation must legally sign up as a taxpayer within 4 days of registering at LERO and getting the registration certificate, a newly formed corporation must legally sign up as a taxpayer. Also, after Mongolia company incorporation is done, the documents must be turned in to the tax office. The National Development Agency needs at least one supporting document to decide on the new corporation. Some of these are a business plan, a feasibility study, information about investors, and so on. The decision is then made by NDA within 45 days of receiving the application. It’s also important to know that any kind of business with foreign investment that wants to start up in Mongolia would need at least $100,000 to get started.
Mergers and reorganizations
Mongolia’s Company Law says that a company can be made from another legal entity through a merger, consolidation, division, separation, or transformation. But these kinds of reorganizations still need to be approved by a shareholders’ meeting, announced to all the company’s creditors within 15 days, and registered with the government as described above. Consolidation is when a lot of smaller companies get bought out and merged into a few larger ones. This means that most of the smaller companies go out of business and their rights, assets, and liabilities are transferred to the new corporation. The process of dividing an existing big company into several smaller ones, which means ending the existing company, is called “division”. Separation, on the other hand, does not end the bigger company that is already there. Instead, it is the process of separating the assets, rights, and liabilities of the bigger company to start a new one. Transformation doesn’t mean that you have to start a new company, since all it does is change a public company into a limited liability company or the other way around. All of these things can only be done if a majority of shareholders at a meeting agree to do them.
