This is part 2 of the Doing Business in Mongolia series. Read the other blog posts in the series here:
Mongolia offers three main business structures: private limited companies, public limited companies, and partnerships. Private limited companies are the most popular, especially for foreign investors. This guide covers company registration, capital requirements, mergers, and accounting regulations to help you establish a compliant and successful business in Mongolia.
In Mongolia, businesses can operate as a private limited company, a public limited company, or a partnership. The Companies Act 2011 only recognizes companies limited by shares, excluding unlimited companies and those limited by guarantee.
A private limited company restricts share transfers and limits membership to 50 at incorporation. Public limited companies are classified as either open or closed. Open companies must register with a stock exchange and can offer shares to the public, while closed companies register with a securities depository and trade off-exchange.
Partnerships are legally distinct from their members and include general partnerships, where all partners share liability; limited partnerships, where only some partners are liable; and limited liability partnerships. The most common business structure in Mongolia, particularly for foreign investors, is the private limited company due to its limited liability protection.
All companies must register with the Legal Entity Registration Office (Registrar). Foreign Investment Companies (FICs) have additional requirements, including submitting the articles of association, a shareholders’ agreement (if applicable), proof of investment, and a service fee. Once the application is submitted, the Registrar typically issues the certificate of incorporation within 3–5 business days.
Mongolia generally does not require a minimum capital investment, except in certain cases. FICs, defined as private limited companies with 25% or more foreign ownership, must have each investor contribute at least USD 100,000. Companies in regulated industries such as banking, insurance, and securities must meet capital requirements set by the relevant regulatory bodies.
A company may have a single shareholder, with no nationality or residency restrictions. In terms of management, public companies must have both a board of directors (minimum of nine members) and a CEO, while private companies are only required to have a CEO but may establish a board if desired. Recognized shares include ordinary and preferred shares, and companies may also issue share warrants and debentures.
The incorporation fee for an FIC is MNT 750,000, while the fee for a locally owned company is MNT 44,000.
The acquisition of 20% or more of a competitor’s shares requires prior approval from the Fair Competition and Consumer Protection Agency (FCCPA). If a market-dominant company is involved in a merger, FCCPA approval is also required, with decisions typically issued within 30 days.
Under the Accounting Act 2015, businesses must follow one of three standards: IFRS, IFRS for SMEs, or International Public Sector Accounting Standards. Most large businesses, including FICs, listed companies, banks, and mining firms, are required to comply with IFRS.
Companies using IFRS must file financial statements semi-annually, with all filings completed electronically. Additionally, FICs, listed companies, and businesses undergoing mergers, restructuring, or liquidation must be audited by an independent firm.
