Ulaanbaatar /MONTSAME/. The sixth regular meeting of the Financial Regulatory Commission (FRC) in 2021 was held on March 26 and a total of 34 issues were discussed.

Erdenes Tavantolgoi JSC’s debt instruments registered in securities registry

The ‘MNT 10 trillion comprehensive plan to protect health and revitalize the economy’ was approved by Government Resolution No. 42 of 2021. The objective of the plan is to intensify the work of projects whose sources of loans and financing – to revive the economy - have been identified. Within the plan, Erdenes-Tavantolgoi JSC issued up to MNT 20.0 million worth of debt instruments in the domestic stock market. Participants of the FRC meeting agreed to register the transaction in the securities registry. The company plans to sell its debt instruments to the public in three phases during 2021, and raise up to MNT 2.0 trillion.

Funds raised from the domestic stock market will be used to finance large infrastructure projects, such as railways, power plants, and improved fuel productions which the government plans to implement in 2020-2024. Erdenes-Tavan Tolgoi JSC, a leading mining company in Mongolia, is the first state-owned company to offer open-ended debt instruments to the public; raising a significant amount of funding that will affect the domestic stock market.

The FRC meeting participants decided to deregister the additional ordinary shares issued by Suu JSC. And to issue a license to Mandal Asset Management LLC (to conduct investment management activities in the securities market).

Discussion by draft temporary procedure

Article 3 of the Law on Procedures for Enforcing the Law on Amendments to the Banking Law - approved by Parliament on 29 January, 2021 states, ‘Reorganize the bank into an open joint-stock company, change the structure and amount of the bank's share capital in accordance with this law. 

The FRC and the BoM shall jointly approve the temporary procedure for developing, implementing, reporting and reviewing the plan specified in Article 1 of this Law.  The joint order will provide for the submission of a plan to the FRC and the BoM, which will include the transformation of the bank into an open (or closed) joint-stock company, a study of potential investors, and a review of the plan. With the introduction of the temporary regulation, banks will develop a plan to change the form of the company into an open joint-stock company, change the structure, composition, and amount of shareholders and submit it to the FRC and the Bank of Mongolia by 1 July, 2021.

Decision to cancel licenses

At the meeting, licenses to operate as an insurance agents were extended to two business entities. Moreover,

-a license to conduct non-bank financial lending was extended to one business entity

-license (for savings and credit cooperatives) were extended to six business entities, and

-licenses for two people to run real estate brokerage organizations were resolved.

However, it was decided to revoke the licenses of two people, to operate as dealers in precious metals and stones. The Regulatory Authority also decided to recover the license of one company to conduct non-bank financial activities, suspend the license of another (conducting investment management activities), and deregister the securities of two business entities that are allowed to be offered to the public.

Source: Financial Regulatory Commission