In order to develop the practice of corporate governance in Mongolia, the Financial Regulatory Commission/“FRC” approved the Corporate Governance Code (hereafter “the Code”) in 2007 for the first time and l ‘revised later in 2014. Under these codes, or by shares whose shares are freely traded on the stock exchange were committed to mandatory compliance with this Code, while limited liability companies and other legal persons were asked to comply with this Code. use the Code optionally.
On March 23, 2022, the FRC re-approved the Code, requiring insurers, companies that provide non-bank financial fiduciary services and investment management comply with the Code in addition to public companies.
This legal alert will provide a brief summary of the amended regulations in the Code as of 2022.
The revised Code is structurally composed of two main parts: an introduction and nine principles of corporate governance which will be explained in detail.
Implementation of the Code and its reporting
Depending on the nature, structure, size and stage of development of the company, it is not mandatory to apply in full certain provisions of the Code that it is not possible to apply specifically. However, if it has not been implemented, what structural measures have been taken to replace it, and if the goal has been set, the period of implementation should be explained in detail according to the approved form.
The periodicity of the reports on the implementation of the principles of governance is at least once a year and is introduced in the annual activity report of the company (in a separate chapter) and published on the website of the company .
Corporate Governance Principles
1) Nine fundamental principles of corporate governance are defined and explained in detail in the new Code.
The structure and organization of the board of directors
The content of this principle includes the concept that “the Board of Directors/the ‘BoD’/ shall be a visionary, creative and effective structure with appropriate multi-faceted skills, knowledge, experience and independence” and companies will take the following actions within the framework of this principle, including:
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.