The legal entity listed on a foreign stock exchange is allowed to request a dual-listing and issue securities at the Mongolian Stock Exchange.
Although trading volumes and capital in circulation are still low, the Mongolian Stock Exchange has the highest growth rate among the developing countries. The number of national citizens interested in the stock market increased rapidly in recent years and the number of people with securities accounts reached 72% of the total population. The Top-20 Index, the benchmark of the MSE, jumped 130% in 2021 alone. Being publicly listed at the MSE provides a unique opportunity for companies to receive wide public support from the locals as well as promote their operations to the broader public.
To submit a request for dual-listing, the following documents must be delivered to the Financial Regulatory Commission, along with their Mongolian translations:
- Securities registration application
- Proof of legal entity
- Receipt of payment of regulatory service fees and state stamp duties
- Minutes of a shareholders meeting, or an authorized person’s written resolution on issuing securities
- Copy of the certificate of incorporation
- Audited year-end financial statements of the previous year
- Legal assessment carried out by a law firm
The profile of the legal entity shall include the following:
- Name of the legal entity, postal address of the place of residence, and description of operations
- Legal entity’s country of origin, name of the initially listed exchange, type of entity, as well as amount and date of issuance of the securities listed at the exchange
- Amount, type, and value of securities issued in Mongolia, as well as the terms of the initial public offering (IPO)
- The organizational structure of the legal entity in question and information regarding the authorized official
- Information regarding the amount, type, and value of previously announced issued and repurchased shares
- Audited year-end financial report of the previous year
- Information on sources and links to the public about the relevant entity and the contract made with that entity
- Information regarding any allocation of dividends
- Rights, obligations, and securities convertible into shares to be certified by securities offered to the public, and information on the terms and procedures for converting the securities into shares
- Expenditure plan of the capital to be raised by issuing securities in Mongolia
- Information that presents the viewpoint of the entity’s management on potential risks to the operations and risk management.
- Discrepancies between the laws and regulations of the initially listed country and Mongolia, and potential risks to securities holders and regulation that allows them to implement their rights
If the legal entity is not listed in other stock exchanges, this legal regulation will be considered inapplicable.
Buying the equity of Mongolian companies as a foreign investor
Except for real estate, local and foreign investors both share the same rights in creating, buying, transferring, and possessing properties, equities, land, private entity, and movable assets, as well as convertible securities. There is no general limitation on foreign ownership that would take over assets.
When purchasing the entire stock or control package of a company voluntarily, or when buying the shares of a company that exceeds its control package, the “Procedures for Issuing and Purchasing Shares of a Joint-Stock company” approved by the Financial Regulatory Commission shall be followed.
According to the procedure, the purchaser shall announce the information to the commission, to the MSE, to the Central Securities Depository, and to the public all at the same time. Once the offer expires, the buyer shall prepare a report on the purchase of shares within 5 business days to the commission.