OPERATION OF BUSINESS  ENTITIES
WITH FOREIGN  INVESTMENT

Article 12.  Approval  Procedure for Establishing a Business Entity with Foreign Investment.

1. The application of the investors establishing a business entity with foreign   investment  shall be subject to approval by a Central State Administrative  Authority which is responsible for the implementation of foreign investment policy  (hereinafter referred to as "Ministry of Trade and  Industry").
 
2. An application shall contain:

(i) names, addresses and nationality of investors;
(ii) types and amount of investments;
(iii)  the form of a business entity to be  established;
(iv)  main areas of  investment  and type of  production and services to be undertaken;
(v) stages and duration of making and implementing the  investment.

3. The following documents shall be enclosed with the application:

(i) information on  the investors   and a copy of the  Certificate of Incorporation,  if  they are legal persons;
(ii) Memorandum of Incorporation of a business entity with foreign investment;
(iii) Articles of  Incorporation of a business entity with foreign  investment;
(iv) marketing, management, technology and other agreements related to the investment;
(v) technical and financial plans and estimates;
(vi) a confirmation of the investors' financial resources from the bank of the investors;
(vii) authorization from competent organizations of Mongolia to search for, extract  and process  natural  resources,  to use land and  to be  engaged  in  production and services which are subject to special authorization. 
 
4. An application with the aforementioned enclosures shall be considered and decided by the Minister of Trade and Industry within 60 days from its receipt on the  basis of the following assessments produced by the specialized organizations:

             (i) compliance with  legislation;
             (ii) impact on the natural environment;
             (iii) meeting of  health and sanitary requirements;
             (iv) appraisal of the level of technology.

5.  Assessments referred to in paragraph 4 (ii), (iii)  of  this   Article shall be based on international standards and standards of Mongolia.
 
6. The assessment referred to in paragraph  4 (iv) of  this Article shall be made in  accordance with regulations of the Government of  Mongolia.
 
7. Should the establishment of a business entity with foreign investment be  approved then the Ministry of Trade and  Industry shall issue a Certificate of Approval.
 
8. If  the activities of a business entity with foreign investment to be established  are considered  inconsistent with  requirements of laws, environmental protection,  health and sanitary standards or technological standards then the    approval shall not be granted provided that the reasons for such refusal are   given.
 
9. The form of Application and Certificate referred to in paragraphs 2, 7  of  this Article shall  be adopted for use by the Minister of Trade and Industry.
 
10. A business entity with foreign investment shall give the Ministry of Trade  and Industry 30 days notice  prior to altering the share capital or  the Memorandum or the Articles of Incorporation. The Ministry of Trade and  Industry shall  examine such  alterations according to the procedures set forth in this  Article and shall give its ruling within 30 days.