“MDS and KhanLex” LLP (hereinafter referred to as “MDSK“) offers legal consulting services for establishing non-bank financial institutions. We prepared this information to individuals and organizations interested in such services.

Any non-banking financial institution to be established and operated in Mongolia (hereinafter referred to as “NBFI“) must adhere to the Law on Company, Investment, Non-Banking Financial Activities, State Registration of Legal Entities, regulations adopted by the Financial Regulatory Commission (hereinafter referred to as “FRC” or “Commission”), or directives from the Commission, along with other pertinent laws and regulations.

STAGE 1

ESTABLISHING A LIMITED LIABILITY COMPANY IN ACCORDANCE WITH THE PROVISIONS OUTLINED IN THE COMPANY LAW

STAGE 2

ACQUIRE A SPECIAL LICENSE FOR ENGAGING IN NON-BANKING ACTIVITIES FROM THE FRC

To acquire a special license for engaging in non-banking financial activities from the FRC, the company must undertake several steps. These include preparing the necessary documentation, formulating and approving operational rules and regulations, and ensuring full compliance with the requirements stipulated in relevant laws and regulations.

Upon submission of a comprehensive application for a special permit, along with all required materials, the FRC will assess the application within 10 working days and then make a decision within an additional 5 days regarding the issuance of the permit. The overall process, including composition control (2 working days) and the decision-making period (30 days), should not exceed 15 working days.

However, the FRC retains the discretion to extend this timeline by up to 5 additional working days if it deems it necessary to seek opinions or definitions from state or professional organizations.

Develop business plan

If the shareholder is a legal entity or citizen of a foreign country, the following requirements must be met:

ü  Financial stability and solvency;

ü  Possession of policy regulation and guarantee;

ü  Absence of coercive or administrative sanctions by competent state authorities;

ü  No record of business or ethical violations;

ü  Free from conflicts of interest;

ü  Absence of customs and tax debts or payments in the country of jurisdiction;

ü  No overdue debt resulting from loan or guarantee agreements in the country of jurisdiction;

ü  Must not have been involved in money laundering, terrorist financing activities, or other crimes.

Foreign-invested NBFIs will be subject to requirements outlined in the Law on Investment, and the Commission may impose additional requirements if deemed necessary.

Provide guidance and information regarding the sources of authorized capital, as well as the preparation of qualified materials and information. (MNT 2,500,000,000 in Ulaanbaatar, MNT 600,000,000 in Bayan-Ondur of Orkhon Province, Darkhan Sum of Darkhan-Uul Province, MNT 200,000,000 in other provinces and sums)

*Share capital source: If the shareholder is an individual, it comprises the legal income of the individual. If the shareholder is a legal entity, it consists of the net profit and accumulated profit from the financial year.

STAGE 3

REGISTRATION IN THE STATE REGISTRY OF LEGAL ENTITIES