Foreign ownership restrictions / limitation of foreign investments and equity in corporations in Mongolia

1) Are there any restrictions on foreign ownership in companies?

Foreign legal entities and business entities with foreign investment are not entitled to own land in Mongolia. However, they may become land users in accordance with the law, based on a specific purpose, duration, conditions, and contractual arrangement.

2) Is government approval required for foreign investment in local companies?

A prior approval shall be obtained from the Ministry of Economy and Development if a foreign state-owned legal entity holds 33 or more of the total shares of a Mongolian legal entity operating in the following sectors:

1. Mining;
2. Banking and finance;
3. Press, media, and communications.

3) Which sectors are subject to special rules or restrictions for foreign investors?

1. Mining;
2. Banking and finance;
3. Press, media, and communications.

4) Can foreign persons own 100% of a limited liability company or joint-stock company?

Yes. According to Article 3.1.5 of the Law on Investment, a "business entity with foreign investment" is defined as a business entity established under the laws of Mongolia in which a foreign investor holds 25 percent or more of the total issued shares. Therefore, a foreign investor may hold at least 25 percent or any higher percentage of shares.

5) Are beneficial ownership rules applicable to foreign participants?

Foreign investors and business entities with foreign legal entity participation are equally subject to the requirement of disclosing their ultimate beneficial owners (UBOs) in a transparent manner.

6) Are there any quotas or thresholds on foreign ownership in strategic companies?

In the mining, banking and finance, press, media, and communications sectors, if 33 percent or more of the total issued shares of a legal entity operating in Mongolia are owned by a foreign state-owned legal entity, prior approval is required. 

A “foreign state-owned legal entity” is defined as a legal entity in which 50 percent or more of the total issued shares are directly or indirectly owned by a foreign government.

7) Is disclosure of foreign shareholders/participants required when registering a company?

Yes, all shareholders' information is required.

8) Are there any restrictions on the acquisition of real estate by foreign legal entities?

A foreign legal entity is not entitled to hold land acquisition rights in Mongolia. While it is possible to purchase and own buildings and structures, if the building is inseparable from the land - i.e., ownership of the building implies ownership or joint possession of the land - then land rights will also come into consideration, making such ownership not permissible for foreign entities.

9) Are there any business or office localization requirements for foreign investors?

In order to open a representative office or branch, it is mandatory to have a permanent address, a designated representative (head of the office), and an officially registered office in Mongolia. When establishing a legal entity, a registered address in Mongolia must be provided and reflected in the corporate documents.

10) Are sanctions or other restrictions applied to investors from specific countries?

A “foreign investor” refers to a foreign legal entity or individual (including a foreign citizen or stateless person who is not a permanent resident of Mongolia, as well as a citizen of Mongolia who is a permanent resident of a foreign country) who invests in Mongolia.

There is no system for imposing special sanctions or restrictions on investors from specific countries. All foreign investors are subject to the same regulations.

Authors: Bolormaa Volodya, Khulan Ganbold