Legal regulation of public offering and sales of securities

One of the alternative ways to attract investment and expand one’s business is the public offering and sales of securities. As of 2021, there are 314 joint-stock companies (hereinafter the “JSC”) registered in Mongolia, and securities worth MNT 1.4 trillion (app USD 452.09 million) were traded on the market which is 21.6 times higher from 2020 and increased results by 64.3 percent from 2017. Out of the total trade, 74.1% accounts for corporate bonds, 4.0% for units of investment funds, 0.3% for asset-backed securities, and 21.6% for shares, respectively. Further, in terms of the trade level of shares, it reached a total of MNT 304.9 billion (app USD 98.4 million) in 2021, an increase of 3.9 times compared to 2017, and 5.7 times compared to the previous year. Moreover, corporate bond trade increased 103.2 times compared to the same period in 2017 and 180.1 times compared to the same period in 2020, reaching MNT 1,048.2 billion (app USD 338.4 million) (Financial Regulatory Committee, 2021). 

With the capital market growth, companies increasingly tend to use the issuance of securities to attract investment instead of high-interest loans from commercial banks. In this regard, regulations and requirements on issuing securities for the raising of capital are outlined in this legal alert. 

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This legal information was prepared by Umguulliin GRATA International Mongolia LLP, the Mongolian office of GRATA International, an international law firm that has its branches in 20 countries around the world. The material contained in this article is provided for general information purposes only and does not contain a comprehensive analysis of each item described. Prior to undertaking (or not undertaking) any action, readers should seek professional advice specific to their situation. No liability is accepted for acts or omissions taken in reliance upon the contents of this article.