Author: Managing Partner B. Enkhjavkhlan  

Welcome back to our blog. In this publication, we provide an overview of the legal frameworks and procedures for establishing a Foreign-Invested Limited Liability Company (hereinafter referred to as an "FDI LLC") in Mongolia.

Foreign nationals and multinational entities frequently seek to incorporate local subsidiaries or form joint ventures with Mongolian partners. Conversely, it is standard practice for domestic entrepreneurs to structure joint ventures with foreign investors to attract foreign direct investment into their local enterprises.

This article will comprehensively address the following key areas:  

1. Statutory requirements for incorporating an FDI LLC 

2. Procedural stages of establishment 

3. Associated regulatory and administrative costs 

4. Estimated timelines for incorporation 

5. The role of legal counsel in executing the establishment process 

We explore these topics in further detail below.  

1. Statutory requirements for incorporating an FDI LLC  

Under Article 3.1.5 of the Investment Law of Mongolia, a Foreign-Invested Business Entity is defined as “a business entity incorporated under Mongolian law, in which a foreign investor owns 25 percent or more of the total issued shares, and the individual investment amount per foreign investor is no less than 100,000 USD (or the equivalent in MNT)”.  

To qualify for this status, the following criteria must be met:   

• Ownership: A minimum of 25 percent of the total equity must be held by a foreign individual (who is a non-resident of Mongolia) or a foreign legal entity. 

• Capital Threshold: The minimum investment contribution by each foreign investor must be at least 100,000 USD (or the MNT equivalent). 

Note on Legislative Developments: A revised draft of the Investment Law is currently under parliamentary review. If enacted, this amendment may redefine a "foreign-invested legal entity" to base the capital requirement on a threshold determined by the Government, rather than the current fixed USD amount. We recommend consulting with our firm to monitor these legislative changes and ensure your investment structure remains compliant.   

2.Procedural stages of establishment 

Establishing an FDI LLC involves a structured, multi-stage process:

а) Name reservation

The founder or shareholder must reserve a corporate name with the General Authority for State Registration (GASR). The name must strictly adhere to the Procedure for Verifying the Name of a Legal Entity. (https://legalinfo.mn/mn/detail?lawId=208780&showType=1).    

b) Drafting documents  

We draft the foundational legal documentation, including:   

• Founders’ Resolution or Meeting Minutes;

• Articles of Incorporation (Charter);

• Shareholders’ Agreement.

To draft the above documents, the founders and shareholders must finalize key issues such as the number of shares and the price per share, the management structure, and whether to have a Board of Directors.

Our service: Our Service: We provide professional drafting services in English, Japanese, and Mongolian, ensuring full alignment with Mongolian corporate governance standards. 

c) Document certification

Documents executed abroad must be notarized and certified with an Apostille (or legalized) by the competent authority in the country of origin to ensure validity in Mongolia.  

The format of Apostille certification varies depending on the country. For example, in Japan: A notary public with a special license from the Ministry of Foreign Affairs (located in major cities such as Tokyo, Osaka, Fukuoka) certifies the document. The documents are sealed as one package, a notary stamp is stamped on each page, and the notary and Apostille certificates are attached to the last page.   

d) Certified translation 

All foreign-language documents must be translated into Mongolian by a certified translator. Our firm ensures high-accuracy certified translations between English, Japanese and Mongolian language pairs that maintain legal integrity.  

e) Temporary bank account   

A temporary corporate bank account must be opened in a Mongolian commercial bank to receive the initial foreign investment. (Note: This is not required if the investment is made in non-monetary assets/property).   

f) Investment

The source of funds must be verified as originating from abroad. Monetary investments are confirmed via bank remittance records; non-monetary investments (property) are verified via customs declaration documents. 

g) Proof of registered address  

A lease agreement and the corresponding property ownership certificate are required to confirm the company’s official business address. The company can be registered at its own premises, a leased space, or even at the residential address of the executive director.    

h) Submitting materials, registration

The final application is submitted to the One-Stop Service Center for Foreign Invested Enterprises. (Currently, the district state registration departments do not accept the registration of FDI LLCs)  

Subsequent operational steps such as obtaining a corporate seal, tax registration, and social insurance registration are handled comprehensively by our legal team. 

3.Estimated Costs 

Incorporation costs typically include:    

• Name verification service fee: 3 USD  

• Seal control number page: 3 USD  

• State stamp duty: 210 USD  

• Apostille certification costs (vary by jurisdiction)  

• Seal issuance: 18.2 - 23.8 USD  

• Notary service fee: 5.6 - 14 USD  

• Minimum opening balance for corporate accounts: approx. 2- 6 USD  

4.Timeframe 

The full establishment process generally takes 2 to 4 months. Timelines are contingent upon the efficiency of international document preparation (Apostilles), shareholder negotiations, and the complexity of the chosen operational structure. 

Legal Requirement: Applications for registration must be submitted within 15 working days following the formal decision to establish the entity to avoid penalties under the Law on Violations.  

5.The role of legal counsel in executing the establishment process  

While the incorporation process is highly regulated, engaging professional counsel mitigates risks related to document compliance, governance structuring, and interactions with regulatory bodies. 

Our firm provides comprehensive end-to-end support for foreign investors, including:

• Corporate & Investment Law: Strategic advice on shareholding, governance, and shareholder agreements. 

• Certified Translation: Accurate translation of all legal and corporate documentation. 

• Employment & Labor Law: Drafting employment contracts and internal policies in compliance with the Labor Law of Mongolia. 

• Dispute Resolution: Providing representation in court and arbitration proceedings to protect client interests. 

If you need detailed information and advice regarding the establishment of a Foreign-Invested Company, please contact us by phone at (+976) 77041414 or at contact@akp.mn.  

 Alison & Kate Partners-your trusted legal counsel in Mongolia.