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Law of Mongolia No. 22-A: On Non-Bank Financial Institutions

Unofficial English Translation

This is an unofficial English translation of the Law of Mongolia No. 22-A, “On Non-Bank Financial Institutions,” dated June 20, 1997, as amended.

Overview

The law defines a non-bank financial institution (NBFI) and outlines its requirements for establishment, operation, supervision, and liquidation. It also establishes the framework for NBFI’s governance, risk management, and consumer protection.

Key Aspects of the Law

  • Establishment: To establish an NBF, one must obtain a permit from the Financial Regulatory Commission (FRC).
    • The FRC will review the applicant’s financial statements, business plan, and other documents to ensure compliance with the law.
  • Governance:
    • NBFI’s governing bodies include shareholders’ meetings, board of directors, and management.
    • Shareholders have ultimate decision-making power, while the board of directors oversees management and ensures compliance with laws and regulations.
  • Risk Management: NBFI must establish risk management policies and procedures to mitigate risks associated with lending, investments, and other financial activities.
  • Consumer Protection:
    • NBFI is responsible for protecting consumers’ rights and interests.
    • This includes providing clear information about products and services, handling complaints fairly, and ensuring that customers are not misled or deceived.
  • Supervision: The FRC supervises NBFIs to ensure compliance with the law and other regulations.
    • If an NBFI violates these requirements, the FRC may take measures such as issuing a written admonition, suspending or revoking the permit, or proposing the dismissal of the executive director.
  • Liquidation: An NBFI can be reorganized or liquidated by decision of the shareholders’ meeting based on the approval of the FRC.
    • The liquidation process must comply with the procedures specified in the legislation.

Liability for Violating the Legislation

The law establishes liability for violating the legislation, which may include civil service law, criminal code, or laws on infringement.

Notes

This translation is provided as a reference and may not be an exact reproduction of the original text. For official purposes, it is recommended to consult the original Mongolian language version of the law.