/The word "company" was deleted from this Law's title according to the law as of July 16, 1999/

PART I

GENERAL PROVISION

CHAPTER ONE

COmmon basis

Article 1.Purpose of the law

The purpose of this Law is to regulate relations arising in connection with the establishment and registration of partnerships, establishing their management, organization and control structure, registration and reporting, reorganization and liquidation.

Article 2.Definitions of terms

Terms used in this Law shall have the following meanings:

1/"a founding agreement" means a written agreement signed by several persons to combine their assets for the purpose of making a profit and agree to carry out certain types of production and services organized in the manner prescribed by this Law;

2/"a founding document" means the decision of the authorized body, partnership agreement /draft/, rules;

3/"a member" means a person who invests in the partnership. Individuals, partnerships, and state authorities can be members.

Article 3.Forms of partnership

1.Partnerships can be organized in the following forms:

1/all members are fully liable;

2/some members are fully liable;

3/limited liability.

/This sub-paragraph was added according to the law as of July 9, 2013/

Article 4.Foreign trade rights

Partnerships have the right to independently participate in foreign economic relations.

Article 5.Getting a permit

/The word "license" stated in the title of this article was changed to "permit" according to the law as of June 17, 2022, and this change shall enter into force from the date of January 1/

1.Partnerships for production and services that require permits shall obtain permits from the relevant authorities in accordance with the procedures specified in the legislation.

/The word "license" stated in this paragraph was changed to "permit" according to the law as of June 17, 2022, and this change shall enter into force from the date of January 1, 2023/

2.When the partnership is liquidated, the permit issued by the competent authority shall be revoked, and the registration authority shall notify the competent authority thereof.

/The word "license" stated in this paragraph was deleted according to the law as of June 17, 2022, and this change shall enter into force from the date of January 1, 2023/

Article 6. /Revoked/

Article 7.Merging partnerships

In order to coordinate their activities and represent their interests in state authorities and/or other organizations, partnerships may merge in territorial and other ways according to the Civil Code.

Article 8.Name of partnership

1.The partnership has a name. The name is concise and clear in public official letters, and it is not duplicated with the name of other partnerships.

2.Enterprises organized in the form specified in Article 3 of this Law are prohibited from being named differently than specified in this Law.

Article 9.Registration of partnerships

1.The partnership shall be registered in the state registry by the territorial registration authority of the place where it is located.

/Amendment was made to this paragraph according to the law as of January 29, 2015/

2.Legal entities of the same type as the partnership established in a foreign country, their branches and representative offices shall be registered in accordance with the procedure specified in the Law on State Registration of Legal Entities, and shall comply with the laws of Mongolia.

/This paragraph was amended according to the law as of January 29, 2015/

3.The partnership is considered to be established from the date of registration.

Article 10.Content of registration application

1.The application shall indicate whether conditions specified in Article 32 and paragraph 3 of Article 88, of this Law are fulfilled.

2.The following items shall be attached to the application:

1/a founding agreement /hereinafter referred to as "the agreement"/;

2/a charter, if prescribed by law;

З//This sub-paragraph was revoked according to the law as of July 4, 2002/

4/a guarantee issued by the relevant organization regarding the assets invested by the members in the partnership and state registration certificate of immovable property.

/Addendum was made to this sub-paragraph according to the law as of January 9, 1997/

5/in the case of a limited liability partnership, a document of permission to engage in professional activities issued by the competent authority to the members of the partnership.

/This sub-paragraph was added according to the law as of July 9, 2013/

/This Article was revoked according to the law as of January 29, 2015/

Article 11.Power of registrar

1.If the registration body receives and reviews the application and deems that it meets the requirements set forth in this Law, it will register the partnership in the state register within 7 working days and issue the certificate.

2.The registration authority shall exercise the following powers in matters related to registration:

1/check whether the partnership is established in accordance with the law;

2/remove the partnership from the state register if it has not started the main production or service specified in the agreement or charter within one year from the date of registration, or if it has started its operation but has been interrupted for more than 12 consecutive months;

3/refuse to register on the grounds mentioned below:

a/did not approve the agreement and charter in accordance with the procedures stipulated in this Law;

b/the purpose of the activity does not comply with the law;

c/the founder lacks legal capacity;

d/a name is duplicated.

4/publish the information specified in this Law to inform the public about the partnership.

/This Article was revoked according to the law as of January 29, 2015/

Article 12.Location/address and its changes

1.The location of the partnership is determined by the location of their head office.

/Amendment was made to this paragraph according to the law as of July 4, 2002/

2.If the partnership decides to change its place of office, it shall notify the registration authority of its jurisdiction in writing within 14 days.

3.Within two days after receiving the notice specified in paragraph 2 of this article, the registration authority shall make a note in the state register of the transfer and notify the registration authority of the jurisdiction of the new place in writing, and shall attach to it all relevant documents related to the partnership.

/Amendment was made to this paragraph according to the law as of January 29, 2015/

4.If the registration authority of the jurisdiction of the new location deems that the transfer has been made in accordance with the procedure specified in paragraph 3 of this Article, the partnership shall be registered with the state register.

/This paragraph was revoked according to the law as of January 29, 2015/

Article 13.Change the type and form of partnerships

Partnerships can be reorganized in accordance with types and forms specified in the law and in accordance with the procedures specified in this Law and the Law on State Registration of Legal Entities.

/Amendment was made to this Article according to the law as of January 29, 2015/

Article 14.Liquidation

1.The partnership shall be liquidated by the decision of the meeting of members on the following grounds:

1/the period specified in the agreement and charter has expired;

2/members holding the majority of voting rights proposed;

3/the permit granted to the partnership that exclusively engages in production and services requiring a permit is invalid;

/The word "license" stated in this paragraph was replaced by the word "permit" according to the law as of June 17, 2022, and this change shall enter into force from the date of January 1, 2023/

4/changed the type of organization;

5/other grounds specified in this Law in connection with the characteristics of partnership;

6/if the partnership has not started the activities specified in the agreement within one year from the date of registration of the legal entity in the state register, or if the partnership has started but has been interrupted for more than 12 consecutive months, the state registration body has removed it from the state register based on the determination of the relevant tax authority;

/This sub-paragraph was modified according to the law as of January 29, 2015/

7/other grounds specified in the agreement and charter.

2.The court shall dissolve the partnership on the following grounds:

1/bankrupted;

2/in the case of a limited liability partnership with no remaining members or less than two members remaining;

/This sub-paragraph was modified according to the law as of July 9, 2013/

3/has not made a decision to liquidate on the grounds specified in sub-paragraphs 1 and 6 of paragraph 1 of this Article, or has made a decision but continues to operate;

4/repeated or serious violations of the law;

5/other grounds prescribed by law.

Article 15.Liquidation committee

1.The liquidation committee appointed by the organization that made the decision on liquidation shall carry out the liquidation work.

2.With the appointment of the liquidation committee, management powers of the partnership shall be terminated and transferred to the liquidation committee.

Article 16.Obligations and responsibilities of liquidation committee

1.The liquidation committee shall perform the following duties:

1/notify the public within 3 days after the decision to dissolve the partnership;

2/prepare the final balance sheet and report, and discuss it at the members' meeting;

3/settlement of debts in accordance with the order and procedure prescribed by law;

4/distribute the remaining property to the members according to the law;

5/notify the registration authority of the completion of liquidation.

2.The partnership shall be deemed to have been dissolved by removing it from the state register by the registration body. The registration body shall inform the public about this.

3.If the liquidation committee causes any damage to the partnership due to its wrongful actions while performing its duties, it shall be responsible for such damage in accordance with the procedure prescribed by law.

4.Disputes between liquidation committee and members of the partnership shall be resolved by the court.

Article 17.Obligations of customers

1.Unless otherwise specified by law, customers are obliged to settle payments with partnerships that are being dissolved within 3 months after the announcement of the dissolution.

2.If the customer does not make the settlement within the period specified in paragraph 1 of this Article, he/she shall lose the right to claim.

Article 18.Responsibilites for violators

/This Article was modified according to the law as of January 10, 2020/

18.1.If the act of an official who violates this Law is not a crime, he/she shall be held liable in accordance with the Law on Public Services.

18.2.Any person or legal entity who violates this Law shall be held liable as provided for in the Criminal Law or the Law on Violations.

/words "company" and "branch" was deleted from this chapter according to the law as of July 16, 1999/

Part II

Partnership

Chapter two

all members are fully liable Partnership

Article 19.All members are fully liable partnership

1.A partnership in which all members are fully liable for the obligations of the partnership with the property invested in the partnership and their personal property is called a partnership with full liability.

2.All members shall use the distinguishing mark "FL" after the name given by the full liability partnership.

Article 20.Establish and register all members are fully liable partnership

1.All members are fully liable partnership /hereinafter referred to as a "partnership"/ shall be established on the basis of the agreement specified in paragraph 1 of Article 2 of this Law.

2.The following must be included in the agreement:

1/the name and address of the partnership;

2/the type of production and service to be engaged, and the period of operation;

3/the name, address, and civil registration number of the person authorized to manage and represent;

/This sub-paragraph was amended according to the law as of June 3, 2022/

4/the amount of assets invested in the partnership by each member, assessment and evaluation methods, conditions for refund and state registration number of immovable property;

/Addendum was made to this sub-paragraph according to the law as of January 9, 1997/

5/if the ability to work is combined, its evaluation, evaluation method, services provided, and period;

6/profit and loss sharing principle;

7/signature date of the agreement;

8/members' surnames, first names, citizenships, addresses and signatures;

 things deemed necessary.

3.Members shall submit an application for registration to the registration authority within 15 days after the agreement is approved.

/This paragraph was amended according to the law as of February 10, 2011/

/This paragraph was amended according to the law as of June 21, 2018/

Article 21.Management and monitoring of partnership

1.Each member has the right to manage and represent the partnership.

2.In the agreement, the right to manage and represent the partnership may be provided to one or more members.

3.Members with the right to manage will make decisions by majority votes and jointly bear the responsibility arising from the decision.

4.Members authorized to manage the partnership shall manage the daily activities of the partnership and keep simple records.

5.Other members will monitor the activities of the members with the right to manage and represent and operations of the partnership.

6.If the member with the right to manage or represent does not properly fulfill his management duties, the members may release him/her from that duty.

7.The member authorized to manage and represent the partnership shall regularly inform other members about the activities of the partnership.

Article 22.Relations between partnership and members

1.The members will assess the money, property, and working ability required for the operation and put them into the partnership.

2.The member must personally participate in the activities of the partnership.

3.A member of the partnership is not allowed to be a member of another partnership.

4.The number of voting rights of each member shall be stated in the agreement based on the amount of capital contributed by the member to the partnership.

5.Members must resolve the following issues unanimously:

1/amendments to the agreement;

2/change the main activity.

Unless otherwise specified in the agreement, other matters shall be decided by a majority of voting rights of the members.

Article 23.Admission, leaving and dismissal from the partnership

1.A new member may join the partnership and shall be responsible for the obligations assumed by the partnership in the same way as other members. 2. Leave the partnership on the following grounds:

1/the period specified in the agreement has expired;

2/other conditions specified in the agreement.

3.Dismissal from the partnership on the following grounds:

1/it has been established that he/she is unable to fulfill his obligations to provide services under the agreement, or that he/she is unable to invest his capital;

2/serious breach of contractual obligations.

4.The member will be notified in advance of the grounds for dismissal from the partnership. The member does not have the right to vote when discussing and deciding the issue of dismissal.

5.Dismissed member has the right to appeal to the court within 30 days after the decision.

6.Unless otherwise specified in the agreement, the funds invested in the partnership by the member who left or was dismissed from the partnership shall be returned within 3 months after the date of dismissal.

Article 24.Profit and loss sharing principle

Unless otherwise specified in the agreement, the partnership shall determine its profits and losses annually. Profits and losses per member are proportional to the capital contributed by them to the partnership.

/This Article was amended according to the law as of July 4, 2002/

Article 25.Dividing properties

1.After the dissolution of the partnership, the members have the right to return the capital invested in the partnership. However, the assets of the partnership cannot be distributed to the members until the customers' payments are fully settled.

2.After all settlements of partnership are made, members' invested funds will be returned, and remaining assets will be distributed among members in proportion to their invested funds. If the funds invested in the form of property cannot be returned in physical form, the valuation and conditions stipulated in the agreement shall be followed.

3.If the assets of the partnership are not sufficient for settlement of payments, except for the conditions stipulated in the agreement that each member has the right to one vote, the proportion of the funds contributed by the members shall be taken from their private property and the payments of the customers will be fully settled.

Article 26.Distinction of liquidation

The partnership shall be dissolved if the heir of a member who has left the partnership, has been excluded, has become insolvent, or has died or is considered missing, is not included in the partnership. However, if the partnership is to continue its activities in the future, it shall renew the agreement and re-register with the registration authority.

Chapter three

some members are liable partnership

Article 27.Some members are liable partnership

1.A partnership in which at least one member is fully responsible for the obligations of the partnership with the capital and personal property invested in the partnership, and the other members are responsible only in the amount of the capital invested in the partnership, is called some members are liable partnership.

2.Some members are liable partnership uses the distinguishing mark "SML" after the name.

Article 28.Distinction of some members are liable partnership

1.In addition to what is stated in paragraph 2 of Article 20 of this Law, the responsibility of each member shall be distinguished in the founding agreement.

2.Only fully responsible members of some members are fully liable partnership have the right to manage and represent the partnership.

3.Paragraph 3 of Article 22 of this Law apply equally to fully responsible members.

4.Members who are responsible for the amount of their invested capital may not personally participate in the activities of the partnership.

5.A change in the composition of the members who are responsible for the amount of capital invested shall not be a ground for liquidation of the partnership. But if all of them leave, the partnership will be dissolved.

6.In case specified in paragraph 5 of this Article, by the decision of the remaining members, the partnership may continue to operate in the form of a fully responsible partnership. In this case, the agreement will be renewed and re-registered with the registration authority.

7.Members who are responsible for the amount of their invested capital have the priority to return their invested capital when the partnership is liquidated.

8.Relations other than those specified in paragraphs 1-7 of this Article shall be regulated in accordance with the relevant articles and paragraphs of Chapter 2 of this Law.

Part III

Company

/This part was revoked according to the law as of July 16, 1999/

Chapter four

Limited liability partnership

Article 29.Limited liability partnership

1.A limited liability partnership shall be jointly established by two or more citizens with a permit to engage in professional activities, and the members shall be fully responsible for the partnership's obligations in the amount of capital invested in the partnership, and the compensatory liability shall be in the amount of the capital invested in the partnership and personal property of the member who engaged in wrongful activities.

2.Citizens who have the right to engage in professional activities may choose from other types of legal entities, unless the law prescribes to operate in the form of a limited liability partnership.

3.The partnership for joint legal professional activities shall be in the form of a limited liability partnership specified in paragraph 1 of Article 29 of this Law.

4.Relationships related to practicing law in Mongolia through the establishment of a foreign-invested enterprise shall be regulated by the procedure approved by the member of the Government in charge of legal matters.

5.After the name assigned to the limited liability partnership, the distinguishing symbol "LLP" shall be used.

6.A limited liability partnership may have its own symbol and identity to represent professional activity.

Article 30.Establishing and registering limited liability partnerships

1.The limited liability partnership shall be established on the basis of the agreement specified in paragraph 1 of Article 2 of this Law, and the following shall be included in the agreement:

1/the name and address of the partnership;

2/engaging activity;

3/the number of members of the partnership, member's surname, father's/mother's name, first name, citizenship, address and signature;

4/surname, parent's/mother's name, first name, residential address, civil registration number of the member authorized to manage and represent;

/This sub-paragraph was amended according to the law as of June 3, 2022/

5/the amount of assets invested in the partnership by each member, assessment and evaluation methods, conditions for refund and state registration number of immovable property;

6/if combining professional activity skills, its assessment, assessment methods, and services provided;

7/decision-making methods and procedures;

8/principle of profit distribution;

9/procedures for determining transactions with large amounts and conflicts of interest;

10/date of signing the agreement;

11/other things deemed necessary.

2.In the case of new members entering the partnership, or leaving or releasing from the partnership, changes to the agreement will be made and this shall be registered with the legal entity registration authority.

3.If there is a dispute about the assets invested in the partnership by the member of the partnership and the ability of the professional activity and its evaluation, the evaluation will be determined by an external expert according to the market standards. The cross-examiner shall be appointed by mutual agreement of the parties.

4.Unless otherwise specified in the agreement, profit distribution shall be calculated taking into account the proportion of capital invested by the members in the partnership and the results of their professional activities in the current year.

Article 31.Governing body and monitoring of limited liability partnership

1.The governing body of the partnership is the meeting of all members.

2.If the majority of all members of the partnership participate in the meeting of all members, the meeting will be considered valid, and the following issues will be discussed and resolved at the meeting:

1/amendments to the agreement;

2/change the organizational form of the partnership;

3/dissolution of partnership;

4/discuss and approve the partnership's annual operational and financial reports;

5/whether or not to allow transactions and contracts with large amounts of money and conflict of interest;

6/determine whether the partnership will have an executive management, and if it has an executive management structure, determine its powers and responsibilities, the amount of salaries and bonuses;

7/determine the amount of profit to be distributed to members and approve the distribution procedure;

8/admission of a new member to the partnership, leave and dismissal from the partnership;

9/other issues to be discussed by executive management and members.

Article 32.Rights and obligations of partnership members

1.A member of the partnership shall exercise his/her rights and duties fairly in accordance with the interests of the partnership.

2.A member of the partnership shall contribute his/her assets, professional knowledge and skills to engage in professional activities together, and shall personally perform the rights, duties and professional activities as a member of the partnership.

3.Unless otherwise specified in the agreement, each member of the partnership has an equal number of votes.

4.Unless otherwise specified in the agreement, any member of the limited liability partnership may represent the partnership.

5.A member of the partnership is not allowed to be a member of another partnership engaged in the same type of activity, or hold a joint job or position, except for teaching, academic and professional non-governmental organizations.

6.If the customer makes a request, the partnership and the member of the partnership are obliged to provide accurate information about their ability to take responsibility.

Article 33.Responsibilities of limited liability partnership and members

1.The limited liability partnership shall be responsible for its obligations under the law and agreement with its own funds. A member of the partnership has limited liability for the capital invested in the partnership.

2.In cases mentioned below, the following persons shall be liable individually or jointly with personal funds:

1/a member of the partnership, if it was established by the decision of the competent authority that he/she has committed a wrongful activity;

2/a member who is responsible for monitoring the activities of a member of the partnership or other persons who engaged in wrongful activity, or a member who knew or should have known about the wrongful activity, but did not take the necessary measures.

3.Damage caused by a member of the partnership to others shall be compensated with the assets of the partnership in the first place. If the assets of the partnership are not sufficient to compensate for the damage, the member who committed the wrongful act in accordance with paragraph 2 of this Article shall be responsible for the compensation.

Article 34.Admission to the partnership, leaving and dismissal from the partnership

1.New members may join the partnership if they meet the requirements set forth in the law, and they will be responsible for the obligations of the partnership in the same way as other members.

2.A member of the partnership may be dismissed by a majority vote of all members.

3.The member of the partnership shall be dismissed on the following grounds:

1/it is determined that he/she is unable to perform the obligation of providing professional service under the agreement, or that he/she is unable to invest;

2/serious breach of contractual obligations;

3/other conditions specified in the agreement.

4.The reason for the dismissal of a member of partnership shall be notified to the member in advance, and the member shall have the right to participate and comment on the issue of dismissal. The decision to dismiss a member of the partnership shall be notified to that member.

5.The dismissed member has the right to appeal to the court within 30 days after the decision.

6.A member of the partnership may leave the partnership by notifying other members 30 days in advance.

7.When the permit of a member of the partnership to engage in professional activity becomes invalid, it shall be considered that the right of a member of the partnership has been lost.

8.In case of loss of rights of a member of a partnership who has left the partnership or has been released in accordance with paragraphs 2, 6, and 7 of Article 34 of this Law, the funds, profits, and customer information to be distributed to that member shall be in accordance with the paragraph 4 of Article 30 of this Law, and the loss shall be decided and distributed respectively according to the Article 33 of this Law.

9.Unless otherwise specified in the agreement, the funds invested in the partnership by the member who has lost the right to be a member of the partnership, has left the partnership, or has been dismissed shall be returned within three months from the date of dismissal.

/This chapter was added according to the law as of July 9, 2013/

THE CHAIRMAN OF THE STATE GREAT KHURAL OF MONGOLIA R.GONCHIGDORJ