New Mining Law Draft Incoming
Minister of Mining and Heavy Industry Ts.Dashdorj and Minister of Justice and Internal Affairs S.Byambatsogt have approved a concept for a new Mining Law draft in January 2017. A new working group was established at the Ministry of Mining and Heavy Industry to draft the new Mining Law, which would form the basis of the mining legislation and considered to be one of the most important legal approaches to the geological and mining industry.
The new Mining Law covers the gap that the current legislations that regulating mining where the issues related to the investment, prospecting, mining, processing of minerals, rehabilitation, occupational safety as well as the mine closure are left uncovered. The existing Minerals Law, adopted on 08 July 2006 and amended numerous times, focuses more on regulating licensing and cadastral activities. However, the current Minerals Law will remain effective and will not be replaced by the proposed Mining Law, whereas, current Law on Common Minerals will be completely replaced by the Mining Law.
Scope of the new Mining Law draft
The new Mining Law now being drafted aims to regulate all aspects of the mining lifecycle starting from the establishment to closure of mine including geological survey, exploration, conducting a feasibility study, mining, processing and sale of minerals, protection of the environment, health and safety of the miners themselves. It covers 145 articles.
There is a widely-held hope that the new Mining Law will bring positive changes that clarify the roles and responsibilities of government authorities and license holders and will help to regain the foreign and domestic investment.
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Draft Law on Investment Banking has been submitted
On December 28, 2016, several parliament members including Javkhlan.B, submitted the bill of law on Investment Banking (the “Draft Law”) to the Parliament of Mongolia. However, the Draft Law was not included in the agenda of the matters to be discussed in the spring session of the parliament, the Draft Law had put to be discussed in the economic standing committee of the parliament and general discussion of the parliament session within April 2017.
Main points of the Draft Law are:
- only foreign banks can establish an investment bank;
- the foreign bank that intends to incorporate a bank in Mongolia is required to establish its representative office and carry out its operation at least one year before opening the bank.
- operation by investment banking is limited by certain banking and financial activities that are specifically permitted by law, such as, to issue long-term debt, to conduct transactions related to its borrower’s account, to issue guarantee and warranty, to buy and sell loans and securities, underwriting, etc.
- the minimum share capital of the investment bank is MNT500 billion (approx. USD200 million);
- the minimum amount for a single loan and guarantee or warranty is MNT100 billion (approx. USD40 million)
- one of the independent directors of the board of investment bank must be a Mongolian citizen;
- Mongol Bank must consider any potential adverse effect to the national security in issuing its permission to establish an investment bank;
- Mongol Bank will issue its decision on permission within 90 days;
- The matters not specifically regulated by Investment Banking Law shall be governed by the Banking Law (2010) and other applicable laws.
The restrictions stated in the Draft Law are only applicable to the bank fully-owned by a foreign bank, and it appears that restrictions will not apply if a foreign bank owns the share interest less than 100% in such bank.
We assume that financial experts in the area and foreign banks which already established their representative office in Mongolia will deliver their opinion on the Draft Law.
Our opinion is that, without enacting the separate law, it is preferable to regulate the operation and licensing of the foreign bank’s branches or fully owned subsidiaries through the amendment of the existing financial and banking laws and regulations. Therefore, it is insignificant, if the definite global terminology “investment banking” is used as an instrument to regulate the operation and licensing procedures of foreign banks. If it is deemed necessary to enact the separate act by the legislators, it would be appropriate to formulate the law by modifying and rephrasing it, without collision and conjunction with the other laws and regulations.
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