Series 1: Considerations for Establishing a Foreign-Invested Company

We have prepared a series of articles to present the issues that foreign investors need to consider and plan in advance when establishing a foreign-invested company in Mongolia. In this edition, we briefly introduce the legal regulations and practical issues to consider regarding address proof documents required by the state registration for the registration of a foreign-invested company, namely real estate ownership certificates and lease agreements.

According to the Law of Mongolia on the State Registration of Legal Entities, a legal entity must have a specific address and is obliged to register this address with the state registration.[1] Additionally, pursuant to the Civil Code, the registered address of a legal entity is considered the primary address for official communications and the delivery of notices; therefore, notices and requirements issued by competent state authorities, as well as court summons, are delivered to that registered address, creating legal consequences.[2][3] For instance, the tax authority sends tax assessment acts to the registered address of the legal entity, and in the event of a dispute regarding such an act, the statute of limitations begins to run from the date it was received or known.[4] Therefore, the address of a legal entity is not merely for registration purposes, but is of significant importance for participating in legal relations.

In practice, it is common for foreign investors to inquire about the possibility of using registered addresses in virtual or physical forms, receiving mail via a third-party address, entering into overlapping lease agreements at a single address, and whether it is possible to participate in civil legal relations through such addresses. Currently, specific legal regulations for registering the address of a legal entity in a virtual form or for providing such types of services have not yet been established in Mongolia. Furthermore, using an address solely for the purpose of receiving mail does not represent the actual location of the legal entity; thus, it may lead to risks such as the emergence of disputes or being deemed to have received official notices.

Therefore, when registering a company in Mongolia, investors need to take note that registering an address where they are actually located serves as the foundation for conducting future business operations stably and with minimal risk.

Sources:

[1] Article 16.1.7, Law on State Registration of Legal Entities;

[2] Article 28.2, Civil Code;

[3] 75.1, Law on Civil Procedure in Court;

[4] Articles 42.7, 43.2, Corporate Income Tax Law.

Disclaimer: This article is intended for general informational purposes only and have been prepared in accordance with the laws in effect at the time of writing. For legal advice, please consult a professional attorney.