Aspire: Update on Mongolian Foreign Investment Law
The Parliament of Mongolia last night approved a law that regulates foreign direct investment into a number of key sectors of strategic importance which includes mineral resources. Unless vetoed by the President (which is unlikely), the Law will have immediate effect.
This law does not limit foreign direct investment. It does set up a process of review and approvals for significant investments into those industries of strategic importance to the country. The approvals regime is based on the following levels of investment:
• All foreign direct investments in excess of 5% in an entity operating in a sector of strategic importance must register with the Foreign Investment Agency of Mongolia ("FIA").
• Foreign direct investments in excess of 33% in an entity operating in a sector of strategic importance must receive Government of Mongolia approval.
• Foreign direct investments in excess of 49% in an entity operating in a sector of strategic importance and in excess of 100bn MNT (approximately AUD$75m), requires approval from the Mongolian Parliament.
• Foreign direct investments made by a company with state ownership will require Government of Mongolia approval.
This law does not apply retrospectively.
The enacting of this foreign investment law now provides legislative certainty surrounding future foreign direct investments into Mongolia and in particular into its rapidly growing resources industry. The regime is not dissimilar to regimes enacted in other resource rich jurisdictions such as Australia and Canada.
This law does not limit foreign direct investment. It does set up a process of review and approvals for significant investments into those industries of strategic importance to the country. The approvals regime is based on the following levels of investment:
• All foreign direct investments in excess of 5% in an entity operating in a sector of strategic importance must register with the Foreign Investment Agency of Mongolia ("FIA").
• Foreign direct investments in excess of 33% in an entity operating in a sector of strategic importance must receive Government of Mongolia approval.
• Foreign direct investments in excess of 49% in an entity operating in a sector of strategic importance and in excess of 100bn MNT (approximately AUD$75m), requires approval from the Mongolian Parliament.
• Foreign direct investments made by a company with state ownership will require Government of Mongolia approval.
This law does not apply retrospectively.
The enacting of this foreign investment law now provides legislative certainty surrounding future foreign direct investments into Mongolia and in particular into its rapidly growing resources industry. The regime is not dissimilar to regimes enacted in other resource rich jurisdictions such as Australia and Canada.
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