An Overview of the Law of Mongolia on Investment Funds

The Parliament of Mongolia approved the Law of Mongolia on Investment Funds on 3 October 2013 ("Investment Funds Law") and the law entered into force on 1 January 2014.

The Investment Funds Law is the first comprehensive law aimed at regulating the licensing, operation, management and supervision of investment funds in Mongolia and follows the adoption of the Law of Mongolia on Securities Market Law enacted on 24 May 2013 ("Revised Securities Market Law"), which sets out the principal general framework within which investment funds are allowed to operate in Mongolia.

Although the previous securities market law enacted in 2002 did provide for investment funds, and the Financial Regulatory Commission ("FRC") issued Regulations on the Operation of Investment Funds in May 2003, investment funds have not been a feature the Mongolian capital market and no licences have been issued for investments funds in Mongolia.

Whilst the Investment Funds Law aims to provide comprehensive regulations covering a range of issues relating to investment funds such as their establishment, operation, management, supervision and liquidation, detailed regulations on a range of matters have yet to be adopted by the FRC. The FRC issued the Regulations on Licensing and Operation of Investment Management Companies on 15 January 2014 ("Investment Management Companies Regulations"). These enable the establishment and operation of investment management companies, paving the way for the implementation of the Investment Funds Law.

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