the crystal ball, page-8

Mongolpeter

I just found something that appears consistent with the article I posted above.

media.ft.com/cms/c8381460-a0d4-11e1-9fbd-00144feabdc0.doc

It is a word document, but the gramer is not correct, but it appears consistent.

I note one thing in it:

3.2. In case when foreign investors, their affiliated entities or third parties are to operate in sectors of strategic importance as described in section 5.1 of this Law or are to enter agreements as provided in Article 6 of this Law with companies that are businesses operating in sectors of strategic importance, they shall procure consent from the Government [Cabinet] through the business entity registered in Mongolia.

and

3.5. If transaction made outside the territory of Mongolia contain features indicated in Article 3.1- 3.2 of this Law, this Law shall apply.

3.6. This Law shall apply to foreign investor, related entity with common interest, and third party that newly incorporates business entity stipulated in subsection 4.1.1 of this Law, or seeks acquiring shares of a company that is business entity referred to in Article 4.1.1.

3.7. Shareholding of foreign investor in business entities operating in sectors of strategic importance may be up to 49 per cent, if this is to exceed and the amount of the investment is more than 100 billion togrogs, then the State Great Hural shall resolve as submitted by the Cabinet .

Further

4.1.2. “vetoing management decision” means possibility for foreign investor, related entity with common interest and through third party to stay the management decision ought to be approved by the majority in accordance with laws, bylaw of the entity or contract;

4.1.4. “related entity with common interest” means entity referred to in Article 99.1. of the Company Law;

4.1.5. “third party” means legal person or individual who has continuous ties with foreign investor and its related entity with common interest and not registered in Mongolia.

6.1.7. have consequences of diluting shareholding in business entities or companies of strategic importance by entering an agreement between others and itself, or affiliated entity or third party.

So, from my interpretation (if this is real), and I am not a lawyer, it would appear that when VOR goes to raise new capital, even though it is outside Mongolia it will need to seek approval which would delay a capital raising.

So even though the law is not retrospective, it would appear that any change in the ownership may need approval on a look-through basis.

I do note that the only transactions that require permission in accordance with Article 6.1 is entities that acquire one third, but the issue is that it is unclear of all the other tests are an "and/or" so are they mutually exclusive or all have to be satisfied. I would say that all have to be satisifed rather than one in isolation.

Happy for any and all comments, and if anyone can confirm if this is the legislation.