4 Chapter M&A

    • M & A trends in Mongolia

      Mongolia has a low attention as an investment country, but it is said to be the world's largest reserve of abundant mineral and energy resources. As a result, in 2011 Mongolia's resources became a mining boom from the world and the GDP growth rate from 2011 to 2013 was 17.3%. However, since 2014, resource prices are weak and the uncertain investment environment loses the trust of foreign investors, and foreign direct investment will decline sharply to US $ 580 million in 2014 compared to US $ 4.9 billion in 2011. Since the geological survey and coal mine account are about to over 70% of the content of FDI, the Mongolian economy has been stagnating since 2014 due to the slump in the mining field.

      However, there are signs of concluding contracts with RioTinto's Oyu · Tolgoi project on December 16, 2015, and growth in the Mongolian mining field is expected.

      When trying to invest in a developing country, the barrier of culture and language becomes a big issue. Although Mongolia is considered to have a lower level of labor wage than other Asian countries, it is generally thought that there are a shortage of excellent talent, but in recent years there have been many returnees who returned home, excellent human resources who can speak Japanese and Chinese are increasing. Also, in most areas, I taught a second foreign language together with Mongolian from elementary school. Companies also tend to seek talent who can speak second foreign languages, and issues such as language barriers arising when investing in developing countries are being solved.

      The number of M & A transactions in Mongolia in FY2011 was 39, total amount exceeded 2 billion USD, twice the amount in FY2010. Most of these are mining fields such as mining and exploration.

      According to Eurasia Capital statistics, since 2007, M & A coal industry in Mongolia has more than 50 M & A transactions, totaling US $ 2.1 billion. Looking at only FY 2011, the coal industry has 27 M & A transactions, with an investment scale of US $ 1.65 billion. The biggest deal throughout the year of 2011 is Mongolian MiningCorp. (Mongolia), then BanpuMinerals (Thailand), NobleGroup (Hong Kong), GuildfordCoal (Australia), which gained great attention to the country. However, due to the economic downturn in recent years, foreign investment has decreased, and the number of M & A is also decreasing. The number of M & A transactions in 2014 was 13, compared with 13 in FY 2015.


      ■ M & A cases of Japanese companies

      The number of Asian companies' acquisitions (In-Outs) by Japanese companies is 202 in 2013 and 219 in 2014, among which 0 M & A for Mongolia, 1 respectively (according to Recoff). The following table shows a case of M & A from Japan to Mongolia held in 2013.
    • Laws and regulations concerning M & A

      The laws and regulations relating to M & A in Mongolia include investment law, corporate law, securities market law, and tax law.

      In Mongolia, we are currently developing foreign investment regulations to protect domestic demand. This was triggered by a huge acquisition that in April 2012, Chinese aluminum company (Aluminum Corp.) of China acquired a 56% stake in South Gobi Resources, a major coal mining company in Mongolia. When the time that the deal was announced, the Mongolian government was not obligated to explicitly approve or notify.

      However, with this acquisition, the Mongolian Government formulated a law stipulating that foreign investment for industries, which is considered to be "an important entity for the state", approved by the government in May of that year, strengthening regulations on foreign investment. As a result, China aluminum has decided not to approve by the Mongolian government in September of the same year and abandoned the acquisition. In addition, many foreign companies such as Oyu tolgoi ceased operations and withdrew due to inadequacies of Mongolian law and instability.

      As a result, the mining industry who is supporting the economy of Mongolia has been sluggish, and as a result, Mongolia has lost its attractiveness as an investor country, and foreign investment has decreased significantly since 2013. Foreign exchange reserves also declined and the $ 4.1 billion in 2012 fell to US $ 1.4 billion as of October 2015 the inflation rate has expanded to 11% in FY 2015.
        As a measure for raising foreign investment, the New Investment Act was enacted in 2013. Under the new law, foreign-funded enterprises will receive the same treatment as domestic companies and will be subject to regulations similar to all companies conducting business in Mongolia. There is also enactment about tax exemption and tax reduction, and it is said that considering corporate support compared with the previous investment law.
    • Investment regulation

      ■ Regulation by investment law

      The revised Investment Law enacted in 1993 was aimed at "encouraging foreign investment, protecting the rights and property of foreign investors in Mongolia, and disciplining matters related to foreign investment". The law has been revised several times since 1993, 1998, 2001, 2002, 2008, but the revision in 2008 had a big impact.

      (E.g. the establishment of overseas subsidiary with 100% foreign capital, the establishment of a representative office of a foreign company, etc. are permitted, and an environment that facilitates foreign investment, such as lowering the minimum capital to 100,000 US dollars or more, was established.)

      However, it cannot meet the demands of current foreign companies, the New Investment Act was enacted in November 2013. Under the new law, "the protection of investor rights and interests in Mongolia, the common guarantee provision on investment, promotion of investment, stabilization of tax environment, authority's on investment and the right and obligation of investors and to adjust other relationships related to investment and investment.”

      Apart from the Investment Law, investment in certain industries is restricted regardless of foreign capital, depending on the Special Business Permit Law. It falls under a specific type of business, you must obtain permission from relevant ministries beforehand.


      Investment forms in Mongolia are as follows; (Article 5, paragraph 1 of the Investment Act).


      · Investor establishes a corporation alone and jointly with other investors

      · Investors purchase shares, bonds or other securities

      · Company integration and merger

      · Concession, product sharing, marketing, management and other contracts concluded

      · Financial lease and franchise

      · Other forms of investment not prohibited by law


      The biggest merit of the New Investment Law is tax incentives. You can receive tax incentives by obtaining the stabilization certificate of the tax rate issued by the country. Tax rate stabilization certificate is a certificate to be issued by a competent authority with the aim of stabilizing tax and fee rates for corporations that satisfy the following requirements (Article 3, paragraph 1 of the Investment Act 9).

      The requirement to acquire a stabilization certificate is that the investment amount specified by the business plan and feasibility study satisfies the following two tables (Investment laws 16, 2, 1, 2) and 16 (3), the provision of the law If there is, we have already implemented the environmental assessment, create stable employment, introduce advanced technology (Investment Law 16 Article 1).

      The period certification of stabilization for investment in mineral resource mining, heavy industry and infrastructure field is as follows (Investment Law Article 16 (2) (1)).


      The period of granting the stabilization certificate for investment in other fields is as follows (Investment Law Article 16 (2) (2)).
      For the investment to implement the following projects, the period for granting the stabilization certificate mentioned above will be extended by 1.5 times (Investment Law Article 16, Paragraph 3).

      · Production of import substitute products and export products with special significance for the long-term stable development of national society and the economy, as well as production of export products, and 500 billion Tugulg at the official rate of the central bank on the day that feasibility study was approved. With the investment of a size exceeding, it took more than 3 years for construction and maintenance, operated a factory processing products with added value regardless of region and field, and project to export products


      Documents necessary for applying for stabilization proof are as follows; (Investment Law Article 17 (2)).

      · Notice of the corporation concerning satisfying the requirement of stabilization proof

      · Introduction about the corporation, certificate from the national registration authority and special permit (license) or other certificate copy

      · Introduction on introducing advanced technology

      · If there is a provision in law, the Environmental Assessment Report

      · When the investment amount of the project is less than 10 billion Tugulg, the business plan is notified, the result of the certificate issuance to the corporation is notified within 30 days after submitting the feasibility study document in case of over 10 billion Tugrug. If it takes time to review it will be extended an additional 15 days. (Article 18 (1) of the Investment Act)


      ■ Prohibited industries

      The prohibited industries under Article 8, Paragraph 1 of the Business Special Permit Law are the following four businesses.;


      · Manufacture, import and sale of drugs

      · Organization, advertisement, encouragement in a form contrary to public order and morals

      · Casino business / business not subject to free zone law /

      · Sales of MLM and pyramid type for profit purposes


      ■ Regulation by ownership ratio

      In Mongolia there is no special foreign capital regulation concerning the equity investment ratio.


      ■ Industry requiring prior permission

      There are no restrictions on the shareholding ratio, but in doing business, there are specific industries that must obtain prior permission from related ministries and agencies. Regulated industries are decreasing year by year, but as the contents are divided finely, it is difficult to judge whether or not it applies, and it takes time and effort to obtain permission.

      The regulated industries are listed in the following table (Article 15 of the Business Special Permit Law).

      When investing in these regulated industries, it is necessary to register for licenses at each relevant ministries and agencies in Mongolia. The following documents are required for license application of regulated industry; (Article 11 of the company special permission law).


      · License acquisition application form (enter business details, type of business, period)

      · In case the license applicant is a company, a corporate registration certificate from the corporate registry authority

      · Copy of national certificate (notarized notary) if license applicant is individual,

      · Receipt paid for certificate fee

      · Other documents required by law due to its production, business characteristics


      After applying for the above documents, the result will be notified within 30 days from the Registration Authority.


      [Period of license, extension]

      Licenses are issued in principle for a period of three years or more, but sometimes it is depend on the type of industry. The period can be extended and it takes about 3 days for the extension procedure. However, if you find that it violates the terms of the license, you cannot obtain the extension permission.
    • Other regulations

      ■ Regulations concerning capital

      Under the Old Investment Law, the minimum capital of foreign companies was set at 100,000 US dollars or more, but under the New Investment Law, the amount of investment per employer was regulated by Tugguru equivalent to or more than US $ 100,000 .

      Therefore, if two incorporators are involved, a minimum capital of 200,000 US dollars or more is required. Also, companies with over 25% capital contributed by foreign companies are defined as foreign companies (Investment Law Article 3, 1, 5).

      On the other hand, there is no restriction on the minimum capital of domestic companies. Until 2011, the regulation of capital, which was 10 million Tugrique for a public company and 1 million Tugrug for a private company, was relaxed by the new company law amended in 2012, the minimum capital regulation under the Corporate Law abolished it was done.


      However, as shown in the table below, the minimum capital is specified separately for specific industries.


      ■ Regulations on land ownership

      In Mongolia, according to the Constitution, only individuals who are Mongolian citizens are allowed to possess land, it is impossible for Mongolian corporations, foreign corporations, foreigners to possess land in Mongolia. However, foreign corporations and foreigners can acquire the right to use for a certain period of time under the contract between the local government in the jurisdictional area and the owner Mongolian for the private property for state-owned land.


      ■ Regulations concerning foreign exchange

      In Mongolia there are relatively few restrictions on foreign exchange. (E.g. there are no special restrictions on borrowing from the parent company or remittance to overseas. However, it is necessary to prove whether you earn money earned in Mongolia when transferring money to your country.)
    • Company Law

      ■ Stock transfer

      In the case of a corporation, shareholders can dispose of their own shares without the approval of other shareholders unless otherwise specified in the articles of incorporation (Article 4, paragraph 1 of the Companies Act). It is possible to issue shares in public and private, and purchasers of shares issued in a private order of a public company can freely dispose of shares. However, you can sign a contract to restrict the right to dispose of shares by mutual consent of shareholders (Article 4, paragraph 5 of the Companies Act).


      On the other hand, in the case of a limited liability company, the number of shareholders must be 50 or less. The company issues shares and their purchase rights and securities convertible to them only exclusive in private order, but other securities can be issued either publicly or privately (Company Article 5, paragraph 2). Unless otherwise provided for in the articles of incorporation, shareholders may propose to third parties, the shares to be sold by the company and other shareholders, the purchase rights and the securities to convert to them, in proportion to the number of shares owned by the third party, (Article 5, paragraph 3 of the Companies Act) in accordance with the provisions of the company's articles of incorporation.

      Shareholders who propose the transfer of shares shall report their proposal to the company and the company must also report to other shareholders in writing (Article 5, paragraph 4 of the Companies Act). In this written report we will clarify the type, number and price of shares, number of shares that can be purchased preferentially, duration, regulations. Shareholders who preferentially purchase shares will report resolutions to the company in writing within the time limit. It is necessary to clarify the purchaser's name, address, number of purchased shares, and attach a payment certificate to this resolution. Unless otherwise provided for in the articles of incorporation, the shareholder may exercise all or part of the right to preferentially purchase the shares of another shareholder as stipulated in Article 5.3, or the right to transfer this right in whole or in part to other shareholders (Article 5, paragraph 8 of the Companies Act).

      If shareholders do not exercise their rights within the statutory period, the rights will be transferred to the company, the company will discuss this exercise and the resolution shall be resolved within five business days after the period of the report under Article 5, paragraph 4. If shareholders and companies prescribed in Article 5, paragraph 3 and Article 5, paragraph 9 of the Companies Act do not exercise their right to purchase, the shareholders who will transfer the shares will pay less than the price of the report prescribed in Article 5, paragraph 4 You have the right to transfer to a third party (Article 5, paragraph 10 of the Companies Act). Employees of a limited liability company are entitled to all information, financial affairs and other documents of the company (Article 5, para. 11 of the Companies Act).


      Affiliated companies and subsidiaries

      Affiliated companies and subsidiaries can hold shares in the parent company. However, since this stock does not have voting rights, it is calculated by subtracting the number of shares held by the subsidiary from the attendance quota of the general meeting of shareholders (Article 6, paragraph 10 of the Companies Act).






      ■ Merger

      Regarding the planning and contract of the company's merger plan, it is necessary for each companies to be merged and the merged company to undergo a resolution by a shareholders meeting (Article 20, paragraph 2 of the Companies Act). Also, in the merger agreement, you must state the merger condition of the company, the securities of the merging company, and the regulations to convert to other assets. Acquisition resolution will be decided upon approval of more than majority of voting rights shareholders participating in the general shareholders meeting.

      However, if you have already acquired 75% or more of the issued shares of the company to be merged and the company's articles of incorporation are unnecessary, the board of directors of the merged company (or shareholders meeting if not established) And can approve the merger agreement (Article 20, paragraph 5 of the Companies Act).


      [Registration Procedure of Merger]

      If you change the company to a form other than merger, you will be changed the company form by registering a newly established company (Article 18, paragraph 3 of the Companies Act).


      In the process of registering a merger, the company to be merged must be deleted from the registration of the National Registry. In addition, when there is a change in the articles of incorporation of the merged company, it is necessary to apply for change to the State Registry Bureau and re-register (Article 18, Paragraph 4 of the Companies Act). Within 15 business days after the resolution of the change of company form, the Company will notify the lender and other business parties in writing about changes in the company form. The contents of the notification include the following information;


      1. Types and means of company form change

      2. Company name, address for each company changed and newly established

      3. Date and time when resolution of change of company form was resolved

      4. When dividing, split balance sheet


      Co., Ltd. must notify the financial regulation committee and the stock exchange within three business days after the settlement of the change in the form of company (Article 18, paragraph 6 of the Companies Act). When the Financial Regulatory Committee approves changes in the company form of the stock company, a settlement decision document according to the Securities Market Law, it shall be registered at the State Registry Bureau (Article 18.7).


      ■ Obligations of shareholders who gained control

      Those who have obtained one third or more of the issued shares of the company independently or jointly do not report the following information to the affiliated company and the financial regulation committee within ten business days after the acquisition. (Article 58 (1) of the Companies Act). This report will be received by the Financial Regulatory Committee and published on the website.


      · Name, address (if any) of those who gained control

      · Number of shares held

      · Purchase price for other shareholders

      · Validity period of purchase


      [Protection of Minority Shareholders]

      Shareholders who oppose or do not participate in a resolution at the General Meeting of Shareholders have the right to request the company to acquire their own shares (Article 53 (1) of the Companies Act).


      1. When mergers, acquisitions, divestitures and companies are changed to limited liability company form

      2. When carrying out important transactions to be resolved at the shareholders meeting as stipulated in Article 11 of the Company Law

      3. If the company's articles of incorporation have restricted shareholder rights, added, changed or newly updated the articles of incorporation with such content

      4. Other cases stipulated by the Articles of Incorporation


      If shareholders own 75% or more of the issued shares of the company alone or jointly and acquire control of a company that was a state-owned enterprise, other minority shareholders are entitled to request the acquisition of shares from the company Article 53 (2)). The company allows shareholders who hold control to purchase with market value at the time of acquisition of control (Article 53 (3) of the Companies Act).


      Shareholders of the company to be merged may exercise the right to demand the purchase of shares held in written form to the company in the event of disagreement or non-participation in the reorganization. In writing the name, address of the shareholder, the type and number of shares requesting the acquisition are stated (Article 54 paragraph 2 of the Companies Act). In addition, shareholders who do not exercise the right to request the purchase of shares must comply with the company's reorganization resolution.

      If shareholders purchase 75% or more of the issued shares of the company alone or jointly, or purchase more than one third of the company's outstanding shares. As a result of privatization, the board of directors must report to the other shareholders (hereinafter referred to as minority shareholders) that it is possible to request the purchase of the shares held within thirty days from this time (Article 54 paragraph 4 of the Companies Act). The company also has an obligation to inform the minority shareholders of the result of the share acquisition within 30 days (Company Law Article 54 (6)). Minority shareholders will send written opinions to the Board of Directors (executive officers if not established) within 30 days (Article 54 paragraph 5 of the Companies Act). If minority shareholders have objections to this result, they may file a petition in the court within three months from the resolution (Article 54 paragraph 7 of the Companies Act).
    • Securities Market Law

      ■ Tender offer regulation

      In accordance with the revision of the Securities Market Act in FY 2013, the Tender Offer Regulation was also amended to "Registration of Securities Registration" in January 2014. As stipulated in Article 8, Paragraph 2 of the Securities Market Act, the Financial Regulatory Committee will decide on the content of regulation and will do all the practices such as registration. Therefore, the Financial Regulatory Commission will issue permission to propose securities in the primary market. The primary market of securities is the issuer selling securities for the first time. Secondary market is to re-trade securities sold in primary market (Securities Market Law Article 4 (1) 5).

      Documents necessary for application of registration by the Financial Regulation Committee are as follows; (Regulation of Securities Regulation 12 (2)).


      1.Application form (Annex 1 to regulate securities registration)

      2. Introduction of securities (contents of description stipulated in Article 13 and 14 of Securities registration regulation)

      3. Certificate paid fee

      4. concluded a contract with the law firm's office and summarized the conclusion on the following




      · Is the company established according to the law

      · Has the experience of the company's board of directors, executives and authorities and the requirements of the "Corporate Governance Code"

      · The company's articles of incorporation and internal regulations comply with the law and "corporate governance code"

      · Whether sales contracts concluded with other companies, loan contracts and contracts important to the business of the issuer of the securities comply with the law

      · Whether important transactions and conflict of interest transactions conducted in the past year are in compliance with the law

      · Are special impacts on the project, expiration date of service logo, obligation affect business

      · Validity of ownership of securities, fixed assets and other assets

      · Application form required for registration of securities information, documents to prove that there is no error in that information

      · Have you judged the executor of the securities issuer under the information of the parent company, subsidiary company, affiliated company


      5. Conclusion of agreement with the audit office, summarizing the conclusion on the following;


      · The accounting standards and financial statements comply with the "International Financial Reporting Standards"

      · The company's accounting policies, internal auditing requirements for preparing financial statements according to "International Financial Reporting Standards", capital and usage efficiency status thereof

      · Securities introduction, certainty of financial information of other documents


      6. Asset valuation certificate of the company that has concluded a contract with the asset evaluation office and creates (In some cases, the financial regulation committee may request business evaluation)

      7. If necessary, conclusions of independent experts


      After the receipt of the above documents, the financial regulation committee will register the securities introduction and issue a resolution if there is no problem. Resolutions will be made public on the Financial Regulatory Committee and the stock exchange website. In addition, the applicant must notify in writing 10 days from the date of applying to the Financial Regulatory Committee that the applicant is preparing for securities registration.

      The securities issuer will announce securities, securities introductions and additional introductions from the registration of the financial regulatory committee for six months. It cannot be announced after that. Registration requirements and necessary documents for securities vary depending on the type of securities, the financial and business contents of the issuer of the securities, and the type of issuance of securities. There are two kinds of securities other than stocks and stocks.

      This regulation also applies to companies registered on foreign stock exchanges, but the following additional documents are required for application.


      1. Introduction of securities registered at foreign stock exchanges, introduction, other notarized related documents, their Mongolian translation

      2. If a foreign institution or securities exchange has issued a resolution to register the company's securities, the resolution (submitted within one business day from issue)

      3. Declaration on the number, price and total amount of securities traded in the primary market of foreign securities (submitted within 1 business day after submission to relevant organizations in that country)


      ■ Insider trading regulation

      The definition of "internal information owner" in Mongolia is as follows;


      · Shareholders, officers, employees and stakeholders who are influential to the issuer of securities (Securities Market Law Article 77 (1) 1)

      · Person who got internal information of the company on business and when engaging in contract etc. (Securities Market Law Article 77 (1) (2))


      Regardless of whether internal information is obtained directly or indirectly from the above-mentioned person, he / she shall be an internal information holder (Securities Market Law Article 77 (2)).

      The following actions are prohibited to the internal information owner (Securities Market Law Article 78 (1)).


      1. Participation in financial transactions with fluctuating exchange rates and transaction volumes according to the information and financial transactions based thereon

      2. Recommend someone to participate in financial transactions based on exchange rates, transaction volumes that fluctuate whether or not they knew that information as internal information and based on that information

      3. Publish information unless there is an obligation to disclose information on work

      The securities issuer must disclose internal information based on the regulations of the stock exchanges and the Financial Regulatory Committee and report it to the stock exchanges and the financial regulation committee for disclosure (Article 79 (1)).


      Competition law

      In Mongolia for the first time in 2010 competition law is enacted. This is equivalent to the antitrust law in Japan.


      ■ Exclusive and dominant company

      A company that is capable of being able to have a minimum social average cost only by having one company supplying a certain product to the market is considered an exclusive company (Competition Law Article 5.1).

      A dominant company is a company in the case that products are sold on the market alone and jointly with other companies occupying more than one third of production, selling or purchasing (paragraph 2 of the same). Even if this third is not met, a company that can regulate entering the market of other businesses can be considered a dominant company (paragraph 3 above).


      Business regulation of an exclusive company

      The Fair Competition and Consumer Protection Agency will make the following restrictions on the business of an exclusive company; (Article 6 (1)).

      1. Quantity of goods to be supplied to the market, management of change according to capacity

      2. Control fluctuation in the selling price of products based on actual costs

      However, this regulation does not apply to companies subject to price regulation under special permission under the law.


      The following acts are prohibited for an exclusive company;

      1. To stop artificial product shortages by stopping manufacturing or sales or suppressing quantity

      2. Setting unreasonably high product prices

      3. Request businesses to purchase additional products, sell products of the same kind as those on the market at a price different from the market price, and refuse to sell products unfairly. However, it does not apply to the price of the product, the actual transportation cost according to the sales area, or the price difference caused by the difference in remuneration to wholesalers and retailers of manufacturers and suppliers

      4. To sell the product at a price that is lower than the actual cost for the purpose of hampering entry of other businesses into the market or leaving the market

      5. Refuse to establish economic relationships and establish unfair criteria without economic and technical justification reasons

      6. Set resale price of product and resale area

      7. For selling products, forcing them not to purchase competitor's products

      8. Request sales to other business operators under conditions that may result in a reduction in product manufacturing and sales

      9. Unjustly request business operators to transfer financial instruments, assets and the rights and labor they hold to their company

      10. Requiring competitors to undertake organizational reorganization through merger, integration, division and separation with their company

      11. Request that the contract and agreement of a product include provisions unrelated to its contract and agreement and to make discriminatory conditions as compared to other businesses

      12. In selling the product, add products not included in the product




      ■ When a dominant company acquires, reorganizes it through merger, purchases shares of other companies (Article 8 of the Competition Law)

      When acquiring or merging, the dominant company purchases 20% or more of the competitors' common shares or 15% or more of the preferred shares, or when acquiring or merging with related businesses, fair competition / consumption Applicants will apply to the Protection Agency for People (Article 8, Paragraph 1 of the Competition Law).

      In addition, it is forbidden that officers of dominant companies concurrently serve as executive officers of competitors (Article 9, Competition Law).


      In order to apply to the Fair Competition and Consumer Protection Agency, the following documents are required; (Mongolian Government 2012 No. 118 Supplementary Provisions).


      • Acquisition, merger, introduction of business contents by corporation purchasing stock, brochure

      • Copies of corporate registration certificates issued by the National Registry Bureau for each applicable corporation, corporate references from related organizations

      • Resolutions of rights agencies and officials regarding acquisitions, mergers, stock purchases, contracts

      • Audited two-year financial statements for each corporation

      • Information on business details, market scope, manufacturing, service, total sales, type and other economic indicators for each corporation (2 years)


      Fair competition, Consumer Protection Agency will review the content within 30 days after receiving the above application documents and notify the results. This period can be extended up to 30 days, but additional information may be requested. If we consider that we will review the application and limit competition, we will reject the application. However, it may not apply if the benefit to the national economy exceeds the negative impact on competition. (Competition law Article 8, paragraph 5). According to the fair competition, as a result of the Consumer Protection Agency, if approved, it can register corporate M & A and organization change. Conversely, if M & A is denied, you cannot register organization change.


      In cases where the dominant company finds that conducting monopoly acts twice a year or more and the legal sanctions have been imposed on the act, if it is found that the act has repeatedly performed, fair competition, the Consumer Protection Agency Based on the request of the court, the court will issue a judgment to the dominant company to reorganize by division or separation (Article 10 paragraph 1 of the Competition Law).


      Prohibition against competition and prohibition of agreement (Competition Law 11)

      Business operators prohibit the following contracts and agreements that limit competition.


      1. Set the price of the product jointly

      2. Classify the market by region, manufacture, service, sale, product name, type and purchaser

      3. Restrict product manufacture, supply, sales, shipping, transportation, market accessibility, investment and innovation

      4. In order to participate in the process of purchasing goods and services with auction, bidding and national, local assets, agree prior to standard of price and other conditions of goods

      5. Prohibit the following contracts and agreements concluded between the business operators, if the agreement contradicts the public interest or brings about a situation restricting competition;

      a. refusing to make a company relationship without economic and technical justification reasons

      b. Restrict the sale and purchase of products to third parties

      c. Collaborate refusing from important agreement on competition

      d. Competitors will prevent competitors from becoming members of the organization to improve the company's profit


      Business restricting competition (Competition law Article 12)

      Businesses restricting the following competition of businesses are prohibited.


      1. To dissuade the reputation of competitors and their products and disseminate false, misrepresented or distorted information that harms competitors

      2. Disseminate false or misleading information about their products, distort the facts, and confuse others

      3. Advertising that has a negative effect on competition

      4. Intentionally use the trademarks, logos, names, etc. used by other business operators. Also, to imitate the product name and package

      5. Sell, publish or distribute information on science, technology, industry and commerce without the permission of the patent owner or author

      6. Hiding the lives and health of people as well as products and quality defects that harm the environment

      7. Demand not to purchase competitor's products in selling their products

      8. To disseminate false information that discounts or rewards are available for the sale of certain products

      9. In procuring products, labor and services by bidding or auctioning and also to exert pressure on competitors to procure the property of the country or local area

      10. Use business methods that are illegal and illegally damage consumers


      Legal liability for violators of competition law

      For businesses who violate the competition law, a fine of 3-6% of annual sales, a fine of 10 million - 20 million Tugulg, a fine of 2-5 times the minimum wage, a capital of 5 % will be subject to administrative sanctions with a fair amount of fines (Competition Law 27).
    • Tax on M & A

      With regard to income obtained by transferring shares, tax will be levied on capital gains obtained by deducting the acquisition price from the selling price, except in the case of transferring the shares (treasury stock) issued by the company. The tax rate is the same as the usual corporate tax, 10% up to 3 billion Tugulg and 10% at the rate of 25% for more.