Legal Alert: Shareholders' Meeting Regulation Under The Company Law of Mongolia
Under the current Company Law (hereinafter the “Company Law”) of Mongolia, shareholders’ meeting (hereinafter the “Shareholders’ meeting) is the highest governing body of a company. Articles 59-74 outline a diverse range of regulations, covering Shareholders’ meeting, their authority, notice of meeting, attendance procedures, and criteria for decision validity. Furthermore, Article 70 of the Company Law encompasses the shareholders’ entitlement to lodge complaints regarding the Shareholders’ meeting and resolutions therefrom.
Basic rights of shareholders
- receive dividend;
- attend meetings and vote agenda;
- receive a portion of proceedings from the sale of assets remaining after the liquidation of the company;
- attend meetings and exercise voting rights in proportion to their share ownership for all matters discussed.
Shareholders' meeting
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Shareholders’ meeting |
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Annual |
Extraordinary |
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Issue resolution on convening |
Board of Directors /executive management in the absence/ |
Board of Directors /executive management in the absence/
*(i) two or more independent board members, (ii) or shareholders holding 10 or more percent of voting rights is entitled to propose or demand convening shareholders’ meeting |
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Convening period |
Four months from the end of fiscal year |
In accordance with grounds and timeline under the Company Law |
The shareholders’ meeting represents the entire company structure comprised of all shareholders and is mandatory to convene. Failure to convene the Shareholders’ meeting within the legally established timeframe leads to the termination of the authorities vested to the Board of Directors (hereinafter the “BoD”), as defined by the Company Law and the company’s charter, leaving only the authority to convene the Shareholders’ meeting.
In distributing the notice of the Shareholders’ meeting, the responsible person ensures that eligible shareholders are duly informed to attend (Art. 65.1 of the Company Law). In other words, it is necessary to include the information (Art.65.4 of the Company Law) specified in the law in the notice of the meeting, and failure to meet these requirements will render the shareholders’ decisions invalid.
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