(2022.10.11-ний өдрийн орчуулга)                           Unofficial translation

LAW OF MONGOLIA

April 30, 2004                                                Ulaanbaatar city

ON INSURANCE

/Revised edition/

CHAPTER ONE

General provisions

Article 1.Purpose of this law

1.1.The purpose of this law is to establish legal grounds for conducting insurance activities, and is to regulate relations associated with coordinating and monitoring insurance activities by an authorized state body, granting licenses for conducting insurance activities, and protecting the rights of insured persons.

Article 2.Legislation on Insurance

2.1.The legislation on insurance shall consist of the Constitution of Mongolia, Civil Code, Company Law, this law and other legislative acts issued in conformity therewith.

2.2.If an international treaty to which Mongolia is a party is inconsistent with this law, then the provisions of the international treaty shall prevail.

Article 3.Scope of this law

3.1.Relations concerning social insurance and citizens' health insurance shall be regulated by their respective laws.

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

3.2.Contractual relations between insurers and insured persons shall be regulated by the Civil Code.

3.3.Legal statuses of insurance brokers, insurance agents and loss adjusters shall be governed by the Law on Insurance Intermediaries.

3.4.Relations concerning a mandatory bank deposit insurance shall be regulated by the Law of Mongolia on Bank Deposit Insurance.

/This paragraph was added according to the law as of January 10, 2013/

3.5.Index-based livestock insurance shall be regulated by a law.

/This paragraph was added according to the law as of June 13, 2014/

3.6.This law shall regulate relations concerning insurance activities other than those specified in paragraphs  3.1 - 3.5 of this law.

/Amendments were made to this paragraph and the number of this paragraph according to laws as of January 10, 2013 and June 13, 2014/

Article 4.Definitions of terms

4.1.The following terms used in this law shall be interpreted as follows:

4.1.1."insurance activities" shall mean activities of undertaking liability by the insurer, under a contract of insurance, to pay damages or compensation to the insured person upon occurrence of an insurance event;

4.1.2."insurer" is a company holds a special license to engage in insurance activities according to this law;

4.1.3."insured person" shall mean a citizen or a legal entity that has insured certain items for its own interest and concluded a contract with an insurer;

4.1.4."insurance event" shall mean the occurrence of a contiguous situation when damage is inflicted on the insured item;

4.1.5."insurance fee" shall mean payment made by the insured person to the insurer for insuring certain items;

4.1.6."insurance compensation" shall mean cash paid by the insurer to the insured person in case of occurrence of an insurance event according to the contract;

4.1.7."set of insurance regulations" shall mean the rules, procedures, instructions conditions and requirements issued by an authorized organization for the purpose of regulating insurance activities;

4.1.8."actuary" shall mean a person with the duties to evaluate insurance risks in advance and who provides activities based on economic and mathematical calculations to ensure the solvency and stable financial condition of the insurer;

4.1.9."reinsurance activities" is a reinsuring process whereby the insurer partially or fully reinsures its liabilities to an insured person;

4.1.10."foreign regulatory authority" shall mean a foreign authority that exercises functions in relation to the supervision of insurance activities;

4.1.11."authorized officer" shall mean a person specified in Article 81.1 of the Law on Company.

4.1.12."related party" shall mean an insurer and a legal entity that has been engaged in insurance activities and whose controlling stake is owned by them, any citizen or legal entity that owns a controlling stake in such legal entity and an affiliated person specified in paragraph 97.1 of the Law on Company.

/This sub-paragraph was added according to the law as of June 4, 2009/

4.2.Sub-paragraph 4.1.1 of this law shall similarly apply to reinsurance activities.

4.3.Activities which is deemed to be insurance activities where the liability to indemnify a person in respect of any loss or damage is calculated with regard to a formula which is intended to approximate his/her loss, whether by reference to an appropriate index or otherwise, but is not dependent upon his/her actual loss shall also apply to sub-paragraph 4.1.1 of this law.

Article 5.Insurance of foreign individuals, legal entities and stateless persons

5.1.Foreign citizens, legal entities, and stateless persons shall exercise the right to insure their material and/or non-material assets located in the territory of Mongolia to the same extent as citizens and legal entities of Mongolia.

CHAPTER TWO

Insurance classifications, types and forms

Article 6.Insurance classification, types and forms

6.1.Insurance shall be classified as long-term insurance and ordinary insurance.

6.2.Insurance types are voluntary and mandatory.

/Amendment was made to this paragraph according to the law as of October 6, 2011/

6.3.Each type of insurance shall have its own forms and the forms of mandatory insurance shall be specified by law.

/Amendment was made to this paragraph according to the law as of October 6, 2011/

6.4.Detailed regulations on the risks and conditions of mandatory insurance shall be regulated by the law defining with mandatory insurance.

/Amendment was made to this paragraph according to the law as of October 6, 2011/

6.5.The Financial Regulatory Commission shall specify forms of voluntary insurance.

6.6.If the Financial Regulatory Commission considers that an insurer's business is different from the classification, types and forms determined by this law, it may direct the insurer to bring his/her business into line with this law.

Article 7.Insurance premium

7.1.The amount of mandatory insurance premium shall be fixed by the Law of Mongolia.

/Amendment was made to this paragraph according to the law as of October 6, 2011/

7.2.The amount of voluntary insurance premium shall be fixed by the insurer according to the formula specified in sub-paragraph 14.2.5 of the present law.

Article 8.Insurance compensation

8.1.According to the conditions specified in the law and contract and based on documents specified in Article 8.4, the insurer shall pay the insurance compensation.

8.2.When stipulated in the insurance contract the insurance compensation can be paid directly to a third party who has suffered loss due to the fault of an insured person.

8.3.If an insurance event occurs after the death of an insured person, the insurance compensation shall be paid to his/her legal assessors or assessor by inheritance.

8.4.Insurance compensation shall be paid based on the following documents:

8.4.1.application of insured person;

8.4.2.insurance policy (original copy);

8.4.3.assessment act on loss written by loss adjuster;

8.4.4.where required a concluding statement from a professional organization.

8.5.The insurer may refuse to pay the insurance compensation in full or partially on the following grounds:

8.5.1.the insured person deliberately caused a loss, or created the conditions or environment to precipitate that;

8.5.2.the insured person gave wrong information to the insurer on the insured item, or forged insurance documents;

8.5.3.the loss occurred due to a reason which was not specified in the insurance contract;

8.5.4.the insured person received compensation from the person who caused his/her loss;

8.5.5.other grounds specified in the law.

8.6.The insurer shall precisely specify the grounds for refusal to pay the insurance compensation and notify the insured person of this in writing.

8.7.If specified in the insurance contract, the right of the insured person to claim loss from a guilty person shall be transferred to the insurer.

Article 9.Rights and duties of the insurer

9.1.The insurer shall exercise the following rights and has the following duties:

9.1.1.to refuse to pay full or partial insurance compensation on the grounds specified in Article 8.5. of this law;

9.1.2.when the rights and duties of an insured person are transferred to another person, to propose to that person to make an alteration in the insurance contract;

9.1.3.if an insured person fails to fulfill his/her duties under the law and contract to demand termination of the contract or alteration to the contract;

9.1.4. on occurrence of an insurance event to make insurance payment within the timeframe and to the amount specified by law and agreed in the contract;

9.1.5.to issue insurance policies to insured persons within the term specified in the contract;

9.1.6.to introduce to insured persons insurance legislation and insurance contract terms;

9.1.7.not to reveal personal information about insured persons unless permitted to do so by law;

9.1.8.to compensate insured persons for expenses made to undertake measures to reduce losses from an insurance risk;

9.1.9.in case of death of an insured person, to transfer his/her rights and duties to the legal assessors or assessors by inheritance;

9.1.10.to appeal to the court for the establishment of a guardian if in the duration of the contract, an insured person's incapability has been proven and to supervise his/her activity;

9.1.11.to publish a brief financial report according to the procedure established by the Financial Regulatory Commission.

 Article 10.Rights and duties of the insured person

10.1.An insured person may exercise the following rights and has the following duties:

10.1.1.to demand insurance compensation on occurrence of an insurance event;

10.1.2.to demand termination of a contract or alteration to the contract if the insurer fails to fulfill his/her legal or contractual duties;

10.1.3.to ask the insurer to make alterations in the contract when rights and duties of an insured person are transferred to another person;

10.1.4.to pay insurance premium to the insurer within the term specified in the law and the contract;

10.1.5.to take measures to remove an insured item from excessive risks, and in case of the occurrence of an insurance event to take all measures to decrease the loss and promptly notify the insurer;

10.1.6.to submit all necessary documents related to insurance to the insurer.

CHAPTER THREE

State regulations of insurance activities

Article 11.The state central administrative organization in charge of insurance matters

11.1.The state central administrative organization in charge of insurance matters shall have the following full powers in respect of insurance activities:

11.1.1.to develop proposals to improve the legislation on insurance;

11.1.2.to provide policy advice to the Government;

11.1.3.other full powers stipulated in the law.

Article 12.Insurance Regulatory Commission

12.1.The Insurance Regulatory Commission (hereinafter referred to as the 'Regulatory Commission') shall carry out the coordination and supervision of insurance activities.

12.2.The State Great Khural shall adopt the business strategy and the organizational structure of the Regulatory Commission and its activities shall be financed from the state budget.

12.3. The Regulatory Commission shall be accountable to the State Great Khural.

Article 121.Insurers Association

121.1.An insurer who has obtained a license to conduct mandatory insurance activities shall become a member of the Association of Mandatory Insurers (hereinafter referred to as 'Association').

121.2.Every mandatory insurer shall join the Association, and the board of the Association shall include representatives of the insurer, the insured, the Financial Regulatory Commission and the state central administrative organization in charge of  financial matters, and the structure and composition of the board shall be approved by the Financial Regulatory Commission.

121.3.The Association shall have a department and a fund to implement the following core activities:

121.3.1.an integrated insurance database with the function of supervising mandatory insurance activities and exchanging information;

121.3.2.an emergency department with the function of collecting information on the insured event from an insurer, an insured, a victim and a citizen that provides the insurer, the insured and the victim with prompt and accurate determination of the insured event;

121.3.3.mandatory insurance fund.

121.4.Relations concerning the formation and disbursement of the insurance fund specified in Paragraph 121.3.3. of this law shall be regulated by the law establishing the form of mandatory insurance.

121.5.The Association shall exercise the following main rights and duties:

121.5.1.to ensure coordination of members' activities;

121.5.2.to protect the interests of members;

121.5.3.to protect the interests of members at the court;

121.5.4.to reduce the number of insurance cases, and to conduct mandatory insurance trainings and promotions.

121.6.The assets of the Association shall consist of the following main sources:

121.6.1.assets transferred from the founder;

121.6.2.registration fee, membership fee and other fees;

121.6.3.loans, grants and donations;

121.6.4.other sources permitted by law.

121.7.The Financial Regulatory Commission shall approve the rules, regulations and guidelines related to the activities of the Association, and monitor the activities of the Association.

121.8.The Association shall report its activities to the Regulatory Commission annually, and shall publish summary financial statements of the Association through the mass media within the first quarter of each year.

121.9.The Association shall have a charter approved by the Financial Regulatory Commission and in accordance with the regulations.

 /This article was added according to the law as of October 6, 2011/

Article 13.Full powers of the Financial Regulatory Commission

13.1.The Financial Regulatory Commission has the following full powers:

13.1.1.to monitor and supervise the insurance activities of an insurer who has been granted an insurance license;

13.1.2.to monitor whether issuance, suspension, restoration and revocation of licenses is complied with terms and conditions of the license;

13.1.3.to adopt a set of insurance regulations, and to monitor their implementation;

13.1.4.to study foreign and domestic insurance markets, to issue official information about insurance;

13.1.5.to maintain a unified register of insurers and insurance intermediaries;

13.1.6.other full powers stipulated in the law.

13.2.The Regulatory Commission shall provide continuous supervision to protect the insured, and other persons engaged in insurance activities, against losses arising from the bankruptcy of insurers or from malpractice or dishonest actions.

Article 14.Set of insurance regulations

14.1.Insurance activities shall be regulated by the set of insurance regulations adopted by the Regulatory Commission.

14.2.The set of insurance regulations shall consist of the following rules, procedures, instructions, conditions and requirements:

14.2.1.requirements for insurers, and index shall be followed by insurers;

14.2.2.criteria for insurer's solvency and procedures for monitoring it;

14.2.3.procedures for formation, allocation and controlling of insurance reserve fund, mandatory insurance fund and other funds;

/Addendum was made to this sub-paragraph according to the law as of October 6, 2011/

14.2.4.the amount of funds to be collected in the insurance reserve fund and the compulsory insurance fund, and conditions and requirements for allocating investments;

/Addendum was made to this sub-paragraph according to the law as of October 6, 2011/

14.2.5.the formula for estimation of insurance rates and insurance premium;

14.2.6.the methodology for insurance valuation;

14.2.7.the formula for calculation of the commission or other payment that may be offered or provided directly or indirectly to an insurance intermediary from or by an insurer or by any other person;

14.2.8.requirements of persons qualified to act as an auditor of an insurer;

14.2.9.granting of the right to act as an actuary, actuarial standards, valuations and procedures for actuarial investigations and reporting;

14.2.10.conditions and requirements for insurers who opening and/or carrying out activities through a branch or a representative office in foreign countries;

14.2.11.conditions and requirements for foreign insurers who opening and/or carrying out activities through a branch or a representative office in Mongolia;

14.2.12.terms and conditions for paid services providing information and documents by the insurer to the insured, and standard payment rates;

14.2.13.instructions for insurers to submit reports, information and applications under this law;

14.2.14.procedures for reviewing applications submitted by insurers for transferring to others or consolidation of a certain part of their operations;

14.2.15.list of documentation required for obtaining the license specified in this law;

14.2.16.requirements for the insurer's reinsurance plan;

14.2.17.fees and charges payable to the Regulatory Commission;

14.2.18.procedures for the liquidation and recapitalization of insurers outside of the Bankruptcy Law and the Company Law;

14.2.19.conditions of temporary suspension of an insurer's activities;

14.2.20.instructions for determination of activities related to insurance;

14.2.21.procedures for the publication of information specified in this law.

Article 15.Rules of Business Conduct and Procedure

15.1.The Regulatory Commission may issue separate regulations for the proper conduct of the insurer's activities.

15.2.The insurer is not obliged to comply with the regulations specified in Article 15.1 of this law, but failure to comply with can be a ground to consider that the insurer is not suitable to hold a special license for insurance activities, or has not properly conducted its activities.

CHAPTER FOUR

Grant of insurance license

Article 16.Prohibition of carrying out insurance business without a license

16.1.Except as provided in paragraphs 16.3 and 17.2 of this law, no person may carry out insurance business in or from Mongolia without a license issued by the Regulatory Commission.

16.2.If a legal entity established under the laws of Mongolia engages in insurance activities in the territory of a foreign country, it shall be considered as conducting insurance activities in the territory of a foreign country from Mongolia in accordance with paragraph 16.1 of this law.

16.3.Paragraph 16.1 of this law does not apply to a legal entity formed under the laws of another jurisdiction that carries on reinsurance business under a contract with an insurer.

16.4.For the purposes of paragraph 16.1 of this law, an insurer whose license has been suspended or revoked under this law shall not carry out insurance business.

16.5.Relations related to the granting of a special license to engage in insurance activities, other than those specified in this law, shall be regulated by the Law on Permits.

/The phrase 'the Law on licensing for business entity activities' stated in this paragraph was amended to 'the Law on Permits' according to the law as of June 17 of 2022, and it shall be followed starting from the date of January 1 of 2023/

Article 17.Property to be insured by an insurer

17.1.An individual, legal entity residing in Mongolia, or a property located within the territory of Mongolia may be insured only by an insurer who holds an insurance license issued according to this law.

17.2.In accordance with this law, an insurance contract may be concluded with a foreign insurer who has not obtained a special license, and in each case of signing a contract, the approval of the Regulatory Commission shall be obtained.

/This paragraph was amended according to the law as of June 4, 2009/

17.3.The approval to enter into a contract specified in paragraph 17.2 of this law shall be granted by the Regulatory Commission only in the following cases:

17.3.1.insurers specified in paragraph 17.1 of this law have insufficient capacity to insure the risk; or

17.3.2.there is some other good reason why the risk should not be insured by an insurer, specified in paragraph 17.1 of this law.

17.4.Paragraph 17.3 of this law does not apply to an insurer that enters into a reinsurance contract with an insurer established outside Mongolia where the reinsurance contract:

17.4.1.is entered into in accordance with reinsurance arrangements approved by the Regulatory Commission under the provision of paragraph 47.1 of this law; or

17.4.2. is exempted from approval by the Regulatory Commission under paragraph 47.2 of this law.

Article 18.Eligibility for an insurer's license

18.1.The following persons are eligible to submit an application for an insurer's license:

18.1.1.a company established under the Company Law of Mongolia;

18.1.2.a company formed under the laws of another jurisdiction.

Article 19.Application for an insurer's license

19.1.A person specified in Article 18 of this law shall submit his/her application for an insurer's license to the Regulatory Commission.

19.2.An application for an insurer's license shall be in writing, shall state the class, type and form of insurance business for which the applicant seeks approval, shall be in the form set by the Regulatory Commission and shall attach documentations specified in this law and the set of insurance regulations.

19.3.The Regulatory Commission may request additional information and documents from the applicant as deemed necessary.

Article 20.Granting or refusal of an insurer's license

20.1.The Regulatory Commission may grant an insurer's license to the applicant if it is satisfied with the following conditions and may set additional requirements with regard to the type and form of insurance:

20.1.1.the applicant, its governing person or a person holding solely or collectively 10 percent or more of the applicant's ordinary shares is an adequate person to carry out insurance business;

20.1.2.the applicant shall, upon the granting of the license, fully be in compliance with this law and the set of insurance regulations;

20.1.3.the management, organization and financial resources of the applicant are adequate for carrying out of the relevant insurance business;

20.1.4.issuing the license is not against the interests of an insured person or against the public interest.

20.2.The Regulatory Commission may change the terms and conditions for the license at any time, depending on the scope of the insurer's activities, the type and form of the license.

20.3.The Regulatory Commission shall not issue a license to engage in long-term and regular insurance activities at the same time.

20.4.The license shall be issued in writing and shall specify the following items:

20.4.1.a name of the licensing authority;

20.4.2.a name and address of the license holder;

20.4.3.a class, type and form of insurance activities;

20.4.4.conditions and requirements for activities;

20.4.5a number and date of the license;

20.4.6.a signature and seal of the authorized official of the licensing authority;

20.4.7.whether or not he/she has the right to engage in reinsurance activities.

20.5.An insurance license shall not be subject to an expiry date but shall be valid until it is suspended under Article 69 or revoked under Article 70.

20.6.If the Regulatory Commission refuses to grant a license to the applicant or grants a license but refuses to authorize a certain type or form of insurance activities, it shall notify the applicant in writing of the refusal and shall state the reasons for its refusal.

20.7.The Regulatory Commission shall decide whether or not to issue the license within 45 working days from the date of receipt of the application.

20.8.The Regulatory Commission may refuse to grant a license on the following grounds:

20.8.1.if the applicant does not satisfy the conditions set forth in paragraph 20.1. of this law;

20.8.2.if the applicant fails to submit all the documentations specified in the set of insurance regulations;

20.8.3.other reasons specified by law.

20.9.The Regulatory Commission shall inform the public about the granting of a special license in accordance with the set of insurance regulations.

20.10.The Regulatory Commission may issue instructions to determine the "appropriate person" specified in sub-paragraph 20.1.1 of this law.

CHAPTER FIVE

Control of the licensee's activities

Article 21.Control of the transferring assets by the insurer

21.1.A person owning or holding 10 percent or more of the ordinary shares of an insurer solely or collectively shall not transfer his/her property to others without prior written approval of the Regulatory Commission.

21.2.A person shall not, whether directly or indirectly, solely or collectively, acquire or own 10 percent or more of the ordinary shares of an insurer without the prior written approval of the Regulatory Commission.

21.3.An insurer, without the prior written approval of the Regulatory Commission, shall be prohibited from taking the following actions with regard to property specified in the provision of paragraph 21.1 of the present law:

21.3.1.to dispose of it by sale, transfer, mortgage, or allow others to dispose of it;

21.3.2.issuing and/or allocate shares that will result in increasing or decreasing equity capital, conducting transactions that will result in decreasing or increasing the share of shareholders.

21.4.The insurer shall submit an application for approval of activities specified in paragraph 21.3 of the present law to the Regulatory Commission.

21.5.The Regulatory Commission shall grant approval if it is satisfied that a person who seeks to acquire or own 10 percent or more of ordinary shares, solely or collectively, is an adequate person to have an interest in an insurer.

21.6.The Regulatory Commission may set other conditions and requirements if it deems necessary when issuing the approval specified in paragraph 21.5 of this law.

CHAPTER SIX

Capitalization, financial resources and solvency

Article 22.Minimum capital to be maintained by the insurance company

22.1.The authorized capital of the insurance company consists of the money invested by the shareholders, and its minimum amount is determined by the Regulatory Commission, taking into account the insurance classification and the characteristics of reinsurance. It is forbidden to create the charter fund with loan funds.

/The first sentence of this paragraph was amended according to the law as of June 4, 2009, and the amendment was made to this paragraph according to the law as of October 6, 2011/

22.2./This paragraph was invalidated according to the resolution No.4 as of October 11, 2006 of the Constitutional Court of Mongolia/

22.3.The insurer shall be granted a reasonable period of time to reach the minimum amount of authorized capital specified in paragraph 22.2 of this law.

22.4.In the event that the authorized capital of the insurer does not reach the amount specified in paragraph 22.1 of this law, the insurer shall immediately notify the Regulatory Commission in writing.

Article 23.Shares of the insurance company

23.1.After the date of compliance with this law, all shares issued by insurance companies shall be paid in cash.

23.2.Article 45 of the Law on Company does not apply to insurance companies.

Article 24.Minimum solvency margin

24.1.An insurer shall ensure that it maintains a solvency margin not less than:

24.1.1.the amount specified in the set of insurance regulations; or

24.1.2.the amount set by the Regulatory Commission according to the paragraph 24.2 of this law.

24.2.Depending on the nature and scale of the insurance activity, the Regulatory Commission may set the solvency margin of the insurer higher than the amount specified in sub-paragraph 24.1.1 of this law.

24.3.A reasonable time period shall be provided for the insurer to maintain its solvency margin at an amount specified in paragraph 24.2 of this law.

24.4.If the solvency margin of an insurer falls below the amount that it is required to maintain under paragraph 24.1 of this law, the insurer shall immediately notify the Regulatory Commission in writing.

Article 25.Insurance reserve fund

25.1.An insurer shall maintain a reserve fund to ensure fulfillment of its contractual obligations.

25.2.The amount of the insurance reserve fund, the conditions for the creation of the reserve fund and its investment shall be determined by the set of insurance regulations.

25.3.The insurance reserve fund specified in paragraph 25.1 of this law shall be placed in a special account. The Regulatory Commission shall supervise its creation and disposal.

25.4.If the level of insurance reserve fund falls below the amount that it is required to maintain under paragraph 25.2 of this law, the insurer shall immediately notify the Regulatory Commission in writing.

25.5.It is forbidden to spend the funds of the insurance reserve fund in a way that is not specified in the set of insurance regulations.

/This paragraph was added according to the law as of June 4, 2009/

Article 26.Conditions for payment of dividends

26.1.Dividends shall not be paid to shareholders if any of the following conditions may arise after the distribution of dividends:

/Amendment was made to this paragraph according to the law as of October 6, 2011/

26.1.1.the authorized capital of the insurer does not reach the amount specified in Article 22.1 of this law;

26.1.2.the insurer's solvency cannot meet the criteria specified in paragraph 24.1 of this law;

26.1.3.the insurance reserve fund does not reach the amount specified in paragraph 25.2 of this law.

Article 27.Prohibitions relating to advances and loans

27.1.From the date on which this law comes into effect an insurer shall not:

27.1.1.lend money and receive an advance on its securities as payment guarantees;

/Amendment was made to this sub-paragraph according to the law as of May 24, 2013/

27.1.2.lend any of its funds to a related person;

27.1.3.grant unsecured credit to any person;

27.1.4.provide guarantees and sureties for loans taken from others by related persons.

27.1.5.deposit the capital of the insurance company and the insurance reserve fund at the related party's bank and/or the bank established by him/her.

/This sub-paragraph was added according to the law as of June 4, 2009/

27.2.The Regulatory Commission shall specify persons who are 'related persons' for the purposes of paragraph 27.1 of this law.

27.3.Paragraph 27.1 of this law does not apply to a dividend permitted to be paid under Article 26 of this law.

Article 28.Supervision of the insurer's solvency

28.1.The Regulatory Commission may establish criteria for evaluating the solvency of the insurer and conduct an examination.

28.2.The Regulatory Commission shall inform the insurer in writing about the criteria established in accordance with paragraph 28.1 of this law.

CHAPTER SEVEN

Accounting and auditing

Article 29.Accounting records and financial reports

29.1.The insurer shall keep accounting records and issue financial reports in accordance with the Law on Accounting and the set of insurance regulations.

29.2.The insurer shall maintain its accounting on the accrual basis, and paragraph 5.2 of the Law on Accounting shall not apply to the insurer's activities.

29.3.Unless otherwise specified in the set of the insurance regulations, the Regulatory Commission may determine the content and form of the insurer's accounting documents and financial statements.

29.4.The financial statements shall consist of the documents specified in paragraph 10.2 of the Law on Accounting and any other documents specified in the set of insurance regulations or documents set by the Regulatory Commission under paragraph 29.3 of this law.

29.5.An insurer shall prepare financial statements satisfying the requirements of paragraph 29.4 of this law every quarter, and audited annual financial statements by the first quarter of each year and notify the public of this through the media.

29.6.The value of the assets and liabilities of an insurer shall be determined in accordance with the set of insurance regulations.

29.7.An insurer shall retain its accounting records for a period of at least six years and shall notify the Regulatory Commission in writing about the place where its accounting records are kept.

Article 30.Following accounting standards

30.1.The insurer shall apply international accounting standards in its accounting activities.

Article 31.Annual financial statements

31.1.An insurer shall submit its audited financial statements to the Regulatory Commission within the time specified under Article 13 of the Law on Accounting together with:

31.1.1.a management report;

31.1.2.an auditor's report;

31.1.3.in case of a long-term insurer (hereinafter referred as "a long-term insurer"), a report prepared by the actuary appointed under paragraph 40.1 of this law;

31.1.4.references and explanations of events affecting the company's operations in the relevant financial year; and

31.1.5.other documents as may be specified in the set of insurance regulations.

31.2.The set of insurance regulations may specify the form and content of the annual financial statements and other documents.

31.3.If the report and other documents specified in paragraph 31.1 of this Law are not submitted to the Regulatory Commission, the financial report shall be deemed not to have been submitted.

Article 32.Quarterly report

32.1.An insurer shall submit quarterly financial statements to the Regulatory Commission within the time specified in the Article 13 of the Law on Accounting.

32.2.The set of insurance regulations may specify a form and content of quarterly financial statements and other relevant documents.

32.3.In case of failure to submit documents specified in the set of insurance regulations, the financial report shall be deemed not to have been submitted.

Article 33.Auditing

33.1.An insurer shall appoint an auditor who shall be responsible for auditing the insurer's financial statements.

33.2.An auditor specified in the paragraph 33.1 of this law shall meet following requirements:

33.2.1.hold the license specified in Article 17 of the Law on Auditing; and

33.2.2.an authorization to verify the insurer's financial statements was obtained from the Regulatory Commission.

33.3.The Regulatory Commission shall notify the public of the list of authorized auditors specified in paragraph 33.2 of this law and any changes to it in accordance with the set of the insurance regulations.

33.4.The insurer shall provide the auditor with conditions and opportunities for conducting audit activities.

33.5.An insurer shall, within five working days of the appointment of its auditor, submit a notice of appointment to the Regulatory Commission.

Article 34.Auditor to rely on actuarial valuations

34.1.The auditor of an insurer who carries on long-term insurance business may accept, for the purposes of an audit, a valuation by the approved actuary, of:

34.1.1.the insurance policy liabilities as at the end of the financial year; and

34.1.2.any changes, during the financial year, in the policy liabilities of the insurer in relation to a particular fund.

Article 35.Audit report

35.1.The auditor shall provide an audit report on the insurer's financial statements to the insurer complying with the set of insurance regulations.

35.2.The Regulatory Commission may at any time require the insurer to submit an audit report in order to determine the quality of the insurer's assets, the adequacy of the precautionary ratio, and the adequacy of the accounting and control system.

35.3.The insurer shall bear the expenses related to the preparation of the report specified in paragraph 35.2 of this law.

Article 36.Obligations of auditors

36.1.The auditor shall immediately notify the Regulatory Commission of the following conclusions based on the insurer's documents:

36.1.1.the insurer is insolvent or is likely to become insolvent;

36.1.2.a criminal offence has been or is being committed by the insurer in connection with its insurance activities;

36.1.3.the insurer is in any way in breach of Articles 22 - 27 of this law; or

36.1.4.the insurer seriously violates this law, other laws and the set of insurance regulations.

36.2.If the insurer terminates the contract with the auditor, or the auditor declares that he/she is unable to work, the auditor shall inform the Regulatory Commission on the following matters:

36.2.1.about the termination or release of the contract and its grounds; and

36.2.2.if the auditor has sent a report under paragraph 36.1 of this law, information on this matter.

36.3.The Regulatory Commission may require the auditor to provide additional information regarding the auditing.

36.4.Where, in good faith, an auditor or former auditor provides a report or any information to the Regulatory Commission under Article 35 of this law, the auditor is deemed not to be in contravention of any law or professional code of conduct to which he/she is subject, and no civil, criminal or disciplinary proceedings shall lie against him in respect thereof.

Article 37.Appointment of auditor by the Regulatory commission

37.1.If an insurer fails to appoint an auditor in accordance with paragraph 33.1 of this law, the Regulatory Commission may appoint an auditor.

37.2.An auditor appointed under paragraph 37.1 of this law shall, for the purposes of this law, perform the functions and duties of an insurer's auditor.

Article 38.Requiring accounting reports of members of the group of companies

38.1.Where an insurer is a member of a group of companies, the Regulatory Commission may require it to submit financial statements for any other members of the group and consolidated group accounts.

38.2.The Regulatory Commission may require this report to be certified by the insurer's auditor or its designated auditor.

38.3.The content and format of the report of the group of companies specified in paragraph 38.1 of this law may be determined by the set of the insurance regulations.

CHAPTER EIGHT

Actuaries, actuarial investigations and reports

Article 39.Granting the right to engage in actuarial activities

39.1.The Regulatory Commission shall select Mongolian and foreign citizens and/or non-citizens with appropriate qualifications and experience to act as actuaries and grant them the right to engage in actuarial activities.

39.2.Process of granting the right to engage in actuarial activities shall be carried out in accordance with the set of the insurance regulations.

39.3.The Regulatory Commission shall publish the list of actuaries approved under paragraph 39.1 of this law and shall notify any amendment thereto, as may be specified in the set of insurance regulations.

Article 40.Power of long-term insurer to appoint an actuary

40.1.A long-term insurer shall at all times have an actuary who shall be an individual approved as an actuary by the Regulatory Commission under paragraph 39.1 of this law.

40.2.The insurer shall notify the Regulatory Commission in writing within 5 working days of any appointment or dismissal of its actuary.

40.3.If the person appointed as an actuary becomes unable to perform his duties, the insurer shall appoint another actuary within 30 working days after such inability.

Article 41.Actuarial compliance standards

41.1.The actuary shall follow the actuarial standards set forth in the insurance package rules in his activities.

Article 42.Actuarial investigations/examinations and reports

42.1.A long-term insurer is obliged to conduct an actuarial audit of its operations at least once every two years by its own actuary.

42.2.The actuarial inspection specified in paragraph 42.1 of this law shall be carried out in accordance with the set of the insurance regulations.

42.3.The Regulatory Commission may require the insurer to submit an actuarial report and conduct an actuarial examination/investigation of the issues which it deems necessary regarding the financial condition of the insurer.

42.4.The actuarial investigations can be performed by an actuary appointed by the insurer or by an actuary appointed by the Regulatory Commission.

42.5.The actuary shall produce a report of his/her investigation in such format and content specified in the set of insurance regulations.

42.6.The insurer shall bear the expenses related to the implementation of the investigation and the preparation of the report specified in paragraph 42.3 of this law.

Article 43.Powers of actuary

43.1.The actuary shall exercise following rights:

43.1.1.to check the necessary information and documents in connection with the implementation of actuarial activities;

43.1.2.to provide necessary information and documents about the insurer, and to require the insurer, its authorized officers and employees to answer questions.

43.2.The actuary is entitled to attend meetings of the directors of the company and to speak on any of the following matters:

43.2.1.that relate to, or may affect the financial condition of the insurer, its reserves, or its solvency or assets; or

43.2.2.that relate to advice given by the actuary to the directors; or

43.2.3.any matter in connection with the actuary's activity;

43.3.An actuary shall have the right to participate in a company's shareholders meeting and speak on the following matters:

/Amendment was made to this paragraph according to the law as of October 6, 2011/

43.3.1.financial and accounting reports of the insurer; or

43.3.2.and any matter relating to the actuary's powers and duties.

43.4.The actuary may make a report to the Regulatory Commission if:

43.4.1.without reasonable excuse, the insurer fails or refuses to provide its actuary with access to the documents and information specified sub-paragraph 43.1.1 of this law; or

43.4.2.the insurer, a governing person or employee of the insurer refuses to answer questions or produce necessary documents. 

Article 44.Obligations of the actuary

44.1.The actuary shall report immediately to the Regulatory Commission if he/she considers, based on the documents of the insurer, that:

44.1.1.there are reasonable grounds for believing that the insurer has or may have contravened this law, any other law or the set of insurance regulations; and

44.1.2.that the contravention of law is of such a nature that it may significantly affect the interests of insured persons.

44.2.The actuary shall report to the insurer to require taking necessary actions on any matter that may affect financial condition of the insurer, its reserves, its solvency and the interest of the insurer and insured persons.

44.3.Where the actuary reports to the insurer under paragraph 44.2 of this law and the insurer does not, within the stipulated period of time, take the action required, he/she shall immediately report the matter to the Regulatory Commission.

44.4.Where the insurer terminated the contract with the actuary or the actuary itself notified of ceasing to be its actuary, the actuary shall inform the Regulatory Commission on the following matters:

44.4.1.about the termination or release of the contract and its grounds; and

44.4.2.information specified in paragraphs 44.1 and 44.3 of this law.

44.5.Where, in good faith, an actuary or former actuary provides a report or information to the Regulatory Commission under Article 44 of this law, he/she is deemed not to be in contravention of any law or professional code of conduct to which he/she is subject and no civil, criminal or disciplinary proceedings shall lie against him/her in respect thereof.

Article 45.The Regulatory Commission to appoint an actuary

45.1.If a long-term insurer fails to appoint an actuary, the Regulatory Commission may appoint an individual approved under paragraph 39.1 of this law as an actuary.

45.2.An actuary appointed under paragraph 45.1 of this law shall perform the functions and duties of an actuary of a long-term insurer.

CHAPTER NINE

Reinsurance

Article 46.Reinsurance

46.1.An insurer may reinsure its insurance risks with:

46.1.1.a company licensed under this law to undertake reinsurance activities; or

46.1.2.a foreign insurance company that is not licensed under this law.

Article 47.Insurer's reinsurance arrangements

47.1.An insurer shall have arrangements approved by the Regulatory Commission in accordance with the set of insurance regulations for the reinsurance of liabilities in respect of insurance risks.

47.2.The Regulatory Committee may determine in writing that the requirements for approval of the reinsurance plan specified in paragraph 47.1 of this law shall not apply to the reinsurance contract of that type.

Article 48.Reinsurance statements

48.1.The insurer shall prepare a detailed report of the reinsurance plan and submit it to the Regulatory Committee within the specified period, and a copy of the reinsurance contract shall be attached to the report.

CHAPTER TEN

Obligations of and restrictions on insurers

Article 49.Insurer to carry out insurance activities only

49.1.An insurer shall not carry out any business or activities, whether in Mongolia or elsewhere, other than in connection with or for the purposes of its insurance activities.

49.2.The set of insurance regulations shall specify businesses or activities deemed to be carried on in connection with of for the purposes of the insurance business of an insurer.

Article 50.Insurer to carry out business in accordance with its business plan

50.1.An insurer must carry out its business in accordance with the most recent business plan approved by the Regulatory Commission.

50.2.An insurer may, at any time, submit an application to approve an amended business plan and shall submit such application together with the amended business plan to the Regulatory Commission.

50.3.The Regulatory Commission shall determine whether to refuse or to approve an amended business plan within 20 working days of receiving an application.

50.4.The Regulatory Commission may require the insurer to provide it with such further information or documentation as it requires to determine whether to approve the amended business plan.

Article 51.Establishing and disbursing a long-term insurer's fund

51.1.A long-term insurer shall maintain separate accounts and funds for each class of insurance business that it carries out.

51.2.The accounting and other records kept by a long-term insurer shall identify the following items separately:

51.2.1.assets belonging to each fund; and

51.2.2.liabilities attributable to each class of insurance business.

51.3.Assets of the fund shall be used only for the implementation of that type of insurance, and it is prohibited to transfer and spend assets of the fund.

51.4.Paragraph 51.3 of this law shall not apply to:

51.4.1.if the valuation of the assets of the fund exceeds the obligation under the insurance contract of that type according to actuarial calculations, in the part where it exceeds;

51.4.2.exchanging, at a fair market value, assets representing a long-term fund for other assets.

51.5.Except as permitted by sub-paragraph 51.4.1 of this law, money from a fund maintained for a long-term insurance business may not be used for the purposes of any other business of the insurer.

51.6.Neither an insurer nor a subsidiary or parent company shall declare or pay any dividend when the value of the assets representing the fund or funds maintained in respect of long-term business is less than the amount of the liabilities attributable to the long-term insurance business.

51.7.Article 51 of this law also applies to a company even though its license to undertake long-term insurance business may have been suspended or revoked.

Article 52.Avoidance of uncertain contracts

52.1.Except as provided in paragraph 52.2. of this law, a contract of insurance entered into by an insurer after the date that this law takes effect is void if it is a contract under which the insurer undertakes a liability the amount, or maximum amount, of which is uncertain.

52.2.The set of insurance regulations may specify classes or descriptions of contracts of insurance that are exempt from paragraph 52.1 of this law.

Article 53.Address of head office of insurer

53.1.An insurer that is a company established under the Company Law of Mongolia shall have its head office in Mongolia and shall notify the Regulatory Commission of the address of its head office.

53.2.If the address of the head office of an insurer change, the insurer shall notify the Regulatory Commission of the new address within five working days of the change.

Article 54.Opening a representative office or branch

54.1.An insurer shall obtain the prior written approval of the Regulatory Commission when opening, maintaining or carrying out insurance activities through a representative office or a branch in foreign countries.

54.2.An insurer established in foreign countries shall not open, maintain or carry out insurance business through a representative office or a branch in Mongolia unless it has obtained the prior written approval of the Regulatory Commission.

54.3.Unless the foreign insurer obtains written permission from the Regulatory Committee, any person is prohibited from performing the following activities on behalf of the foreign insurer:

54.3.1.to provide advertisement and promotion with the purpose of conducting insurance business, or to establish a place for such purpose; or

54.3.2.to establish or maintain a representative office or branch;

54.4.The Regulatory Commission may require such other documentation and information as it considers necessary to determine an application for approval made under paragraph 54.1 of this law.

54.5.The Regulatory Commission may approve an application under paragraph 54.2 of this law subject to such conditions as it considers appropriate and may at any time vary such conditions.

Article 55.Appointment of governing persons

55.1.The insurer and the Association specified in Article 12 of this law shall appoint the governing person of the company and the Association based on the written authorization of the Regulatory Commission.

/This paragraph was amended according to the law as of October 6, 2011/

55.2.The Regulatory Commission shall grant an approval specified in paragraph 55.1 of this law if it is satisfied that the individual concerned is an adequate person to hold the appointment of a governing person.

55.3.Where a governing person resigns or otherwise ceases to hold office on his/her own request, the insurer shall, within five working days, provide written notification to the Regulatory Commission on this matter.

Article 56.Prohibition of payment of commission to unlicensed insurance broker, insurance agent or loss adjuster

56.1.An insurer shall not pay any remuneration, including commission, to any person acting as an insurance broker, insurance agent or a loss adjuster unless that person is licensed.

Article 57.Change of information

57.1.Where, before the determination by the Regulatory Commission of any application made under this law or the set of insurance regulations, whether by a person applying for an insurer's license, an insurer or any other person, there is a material change in any information or particulars provided by the applicant to the Regulatory Commission, the applicant shall immediately give written particulars of the change.

CHAPTER ELEVEN

Market ethics

Article 58.Misleading advertisements

58.1.An insurer shall not issue, or cause or permit to be issued, any advertisement, statement, brochure or other similar document which is misleading or which contains an incorrect statement of fact.

58.2.If the information, brochures and other similar documents issued by the insurer or on behalf of the insurer are found to be misleading or contain false information, or are contrary to public interest, the Regulatory Committee may order the issuance of such documents to be prohibited or rejected, or to make changes or corrections as deemed necessary in writing.

Article 59.Market ethics

59.1.The Regulatory Commission may provide rules for market conduct that shall be binding on the insurer, its governing person and insurance intermediary.

CHAPTER TWELVE

Control on names

Article 60.Restrictions on use of term 'Insurance'

60.1.An insurer shall have a name and shall use the word 'insurance' after its name.

60.2.No person shall, except the licensees specified in this law, use the word 'insurance' or any of its derivatives or make any representation in any document or in any other manner that is likely to suggest that he/she is carrying out or that he/she is licensed to carry out an insurance business.

60.3.Paragraph 60.1 of this law does not apply to a company holding a license to act as an insurance broker or an insurance loss adjuster under the Insurance Intermediaries Law provided that the name indicates only the type of business of an insurance intermediary.

CHAPTER THIRTEEN

Inspections, information gathering and reporting

Article 61.Relevant person in relation to compliance inspection

61.1."Relevant person", as specified in Chapter Thirteen of this law, means an insurer, a former insurer, and a subsidiary or holding company of an insurer or a former insurer.

Article 62.Compliance inspection to relevant person's activities

62.1.The Regulatory Committee may take the following measures at any time in order to check the activities of the relevant person within the scope of the powers stipulated in this law:

62.1.1.inspect the business and management, organization, and documents of a relevant person;

62.1.2.check and count the assets and cash under the control and possession of the relevant person; and

62.1.3.examine and make copies of accounting records, financial statements or other documents.

62.2.If it deemed necessary, the Regulatory Committee may consider the following matters related to monitoring of related persons:

62.2.1.verify the reserves, the solvency margin, and the capital;

62.2.2.compliance with this law, other related laws, the set of insurance regulations, and the requirements and duties set by the Regulatory Committee.

62.3.The Regulatory Commission shall give reasonable notice to a relevant person of its intention to undertake a compliance inspection.

62.4.The Regulatory Commission may employ such suitably qualified and experienced persons to assist it with a compliance inspection as it considers appropriate.

62.5.Operational inspections shall be conducted at least once every two years without disrupting the daily operations of the relevant persons.

Article 63.Duties of relevant person, governing persons and employees in relation to a compliance inspection

63.1.Where a compliance inspection is being undertaken, the relevant person shall:

63.1.1.give access to his/her or its premises and assets;

63.1.2.give access to accounting records, financial statements and other relevant documents; and

63.1.3.provide information and explanations that may be reasonably required;

63.1.4.obtain necessary documentation from other persons and provide it to the Regulatory Commission.

63.2.The Regulatory Committee may request in writing from the authorized officer and employee of the relevant person to provide the necessary information and explanation.

Article 64.Report on inspection

64.1.The Regulatory Committee shall deliver a brief inspection report to the relevant person within 45 working days after the completion of the operational inspection.

64.2.The report shall include:

64.2.1.recommendations concerning the conduct of business, organization or controls or concerning such other matters as it considers appropriate; and

64.2.2.shall specify whether or not it requires a response from the relevant person concerning the report and, if it does not require a response, may indicate particular aspects of the report.

64.3.Where a response is required concerning the report, the relevant person concerned must provide a response to the Regulatory Commission within 14 working days of receiving the report, or within such longer period as may be specified in the report.

Article 65.Power of the Regulatory Commission to gather information

65.1.In order to exercise its powers stipulated in this law and other related laws, or in accordance with a request made by a foreign regulatory body, the Regulatory Commission may require the following in writing from the person specified in paragraph 65.2 of this law:

 65.1.1.to provide certain types of or specially specified information; or

65.1.2.to provide certain types or specially specified documents.

65.2.The notice specified in paragraph 65.1 of this law shall be given to the relevant person, the person connected to him/her, the insurer, or the person who is believed to have information and documents related to the notice, and the notice shall specify the time and place for providing information and documents.

65.3.The set of insurance regulations shall specify persons who are 'connected persons' for the purposes of paragraph 65.2 of this law.

65.4.The Regulatory Commission may, for the purpose of performing its functions under paragraph 65.1 of this law, require:

65.4.1.any information to be provided in such format as it may specify;

65.4.2.any information provided or documents produced to be verified or authenticated; and

65.4.3.to provide explanations relating to the information provided or the documents produced.

65.5.When gathering information as specified in this law, the Regulatory Commission may take copies or extracts of any relevant documents.

65.6.Where the Regulatory Commission gives notice to a person to provide information or produce documentation under paragraph 65.1 of this law, that person must comply with the notice.

Article 66.Provision of assistance to foreign regulatory authorities

66.1.Where a foreign regulatory authority requests, in writing, that it be provided assistance in connection with the exercise of its functions, the Regulatory Commission may provide information or documentation to the foreign regulatory authority in accordance with Article 66 of this law.

66.2.In deciding whether or not to disclose information or provide documentation to a foreign regulatory authority, the Regulatory Commission may take into account any of the following matters:

66.2.1.whether the foreign regulatory body has provided or will provide mutual assistance on matters similar to the matter;

66.2.2.whether the request is consistent with the law of Mongolia, and in the public interest;

66.2.3.whether the nature of the matter is significant to Mongolia;

66.2.4.whether the foreign regulatory authority undertakes to make a contribution towards the cost of preparation of the information; and

66.2.5.whether confidential information will be provided, according to Article 81 of this law.

66.3.The Regulatory Commission may require the foreign overseas regulatory authority to give a written undertaking in relation to assistance requested.

66.4.If a foreign regulatory authority fails to comply with a requirement made under paragraph 66.3 of this law, the Regulatory Commission may refuse to provide assistance.

CHAPTER FOURTEEN

Sanctions

Article 67.Grounds for applying sanctions

67.1.The Regulatory Commission may apply sanctions against an insurer on any of the following grounds:

67.1.1.if breach of this law, other relevant legislation and the insurance regulations does not constitute a crime or a violation;

/Addendum was made to this sub-paragraph according to the law as of May 18, 2017/

67.1.2.when conditions detrimental to the public interest or to the interests of insured persons have been created;

67.1.3.the insurer is insolvent or likely to become insolvent;

67.1.4.the insurer has failed to comply with a directive given by the Regulatory Commission under Article 73 of this law;

67.1.5.if the terms and requirements of the license are violated;

/Amendment was made to this sub-paragraph according to the law as of May 18, 2017/

67.1.6.the licensee, its governing person or a shareholder of the company, who holds 10 or more percent of ordinary shares, solely or collectively, is not an adequate person;

67.1.7.the insurer is liquidated;

67.1.8.the insurer has failed to keep proper accounting and financial records;

67.1.9.the insurance business is not being carried out in accordance with sound principles;

67.1.10.the insurer has refused to co-operate with the Regulatory Commission on a compliance inspection by a relevant person;

67.1.11.arrangements have not been made for the reinsurance of risks or reinsurance agreements do not comply with the set of insurance regulations;

67.1.12.the business carried out by the insurer is different from the business plan or is in serious contravention with the most recent business plan;

67.1.13.the insurer has failed to pay a fine imposed by the Financial Regulatory Commission within the stipulated time;

/This sub-paragraph was invalidated according to the law as of May 18, 2017/

67.1.14.other grounds that may be specified by law.

Article 68.Types of sanctions

68.1.Where the Regulatory Commission is entitled to apply sanctions under paragraph 6.1 of this law, it may exercise one or more of the following powers:

68.1.1.suspend the license;

68.1.2.revoke the license;

68.1.3.appoint an examiner under Article 74 of this law;

68.1.4.issue a directive under Article 73 of this law;

68.1.5.appoint a qualified person to advise on the proper conduct of the insurance business;

68.1.6.impose a fine.

/This sub-paragraph was invalidated according to the law as of May 18, 2017/

Article 69.Suspension of license

69.1.The Regulatory Commission may at any time suspend a license if:

69.1.1.any of the grounds under paragraph 67.1. of this law are revealed;

69.1.2.the insurer fails to commence business within six months of the license being issued or ceases to carry out insurance; or

69.1.3.the insurer fails to pay the annual fee for the license within two months of the date upon which it is due for payment.

69.2.The suspension of a license shall be:

69.2.1.for a period specified by the Regulatory Commission;

69.2.2.until any directives made by the Regulatory Commission have been complied with.

69.3.The period specified in sub-paragraph 69.2.1 of this law shall not exceed six months.

69.4 If a directive under sub-paragraph 69.2.2 of this law has not been complied with within six months from the date of the suspension of a license, the license shall be revoked.

69.5.Before suspending the license, the Regulatory Commission shall give the insurer written notice of its intention to suspend the license stating the grounds for this and shall record the date of such notice.

69.6.Unless the licensee, by written notice submitted to the Regulatory Commission, shows good reason why its license should not be suspended, the license will be suspended on a date not less than 14 working days after the date of the notice.

69.7.Where the license is suspended, a written notice shall be sent to the licensee stating:

69.7.1.that the license has been suspended;

69.7.2.the grounds upon which, and the date from which, the license has been suspended; and

69.7.3.the term of the suspension of the license.

Article 70.Revocation of license

70.1.The Regulatory Commission may revoke a license on any of the following grounds:

70.1.1.at the request of the licensee;

70.1.2.the insurance company is liquidated;

70.1.3.the licensee has provided false documents on making its application for a license; or

70.1.4.the insurer seriously or repetitively breached the conditions and requirements of the license;

70.1.5.the insurer has failed to comply with a directive given to it to remedy a violation during the term of suspension of the license.

70.2.Before revoking the license, the Regulatory Commission shall give the licensee written notice of its intention to revoke the license stating the grounds upon which it intends to revoke the license, and shall record the date of such notice.

70.3.Unless the licensee, by written notice submitted to the Regulatory Commission, shows good reason why its license should not be revoked, the license will be revoked on a date not less than 14 working days after the date of the notice.

70.4.Where a license is revoked, a written notice shall be sent to the licensee stating:

70.4.1.that the license has been revoked; and

70.4.2.the grounds upon which, and the date from which, the license has been revoked.

Article 71.Effect of revocation or suspension of license

71.1.The insurer shall not, without the prior written approval of the Regulatory Commission, after the date upon which he/she receives a notice of the suspension or revocation of the license:

71.1.1.enter into a new contract of insurance; or

71.1.2.renew or vary a contract of insurance entered into before the relevant date.

71.2.The insurer shall take such action as it considers necessary to ensure that reasonable provision has been or will be made for that liability and that adequate arrangements exist or will exist for payment of reinsurance premiums and other expenses on insurance policies.

71.3.Where the Regulatory Commission suspends or revokes a license; it shall publish a notice in accordance with the set of insurance regulations.

Article 72.Submission of claim to court by the Regulatory Commission in order to protect the property of insurer

72.1.If a license is suspended or revoked or in the case where grounds exist as specified in paragraphs 69.1 or 70.1. of this law, the Regulatory Commission may submit a claim to Court to protect or preserve the business or property of the insurer, or the interests of the public, its creditors or policyholders.

72.2.A claim by the Regulatory Commission under paragraph 72.1. of this law may be made without giving notice to the insurer.

72.3.Where the license of the insurer has not been suspended or revoked, a claim may be made before giving to the insurer a notice of intention to suspend or revoke the license under paragraph 69.5 or 70.2.

72.4.On a claim specified in paragraph 72.1 of this Article, the court may make one or more of the following orders:

72.4.1.an order preventing the insurer or any other person from transferring, disposing of or otherwise dealing with property belonging to him/her or in his/her custody;

72.4.2.an order appointing an administrator to take over and manage the insurance business being carried out by the insurer or carried out by it immediately before the revocation or suspension of the license;

72.4.3.an order that the licensee be liquidated;

72.4.4.an order requiring such persons as it considers necessary for the purpose to give information concerning the business carried out by the insurer.

72.5.An order for the appointment of an administrator under section 72.4.2 of this law must specify the powers of the administrator, make provision for reports to be submitted by the administrator to the court and to the Regulatory Commission and fix and provide for the remuneration of the administrator.

72.6.The court may at any time:

72.6.1.give directions to the administrator concerning the exercise of his/her rights and duties;

72.6.2.vary the powers of the administrator; or

72.6.3.terminate the appointment of the administrator.

Article 73.Directives

73.1.Where it is entitled to apply sanctions against an insurer, the Financial Regulatory Commission may issue a notice containing any of the following directives:

73.1.1.that the insurer ceases to engage in any class, type or form of insurance business;

73.1.2.that the insurer is prohibited from entering into any new contracts for any type, class or form of insurance business;

73.1.3.that the insurer is prohibited from varying any existing contracts of insurance;

73.1.4.that the aggregate premiums must be limited to an amount as specified in the directive;

73.1.5.that the insurer must cease making investments of a specified type;

73.1.6.that the insurer must realize the investments that it holds before the specified date;

73.1.7.that the insurer must appoint an actuary or such other person to undertake a financial investigation before the specified time;

73.1.8.that the insurer must provide any return or other document under this law, the set of insurance regulations or any other relevant law within a shorter period of time than that permitted under this law;

73.1.9.that the insurer makes amendments to its business plan;

73.1.10.to undertake necessary measures for the purpose of protecting the interests of the insured and shareholders.

/Amendment was made to this sub-paragraph according to the law as of October 6, 2011/

73.2.Where the license has been suspended or revoked, other directives as may be considered necessary may be given.

73.3.An insurer must comply with any directive given to it by the Regulatory Commission under Article 73 of this law.

73.4.Article 73 of this law shall also apply to a legal entity whose license has been suspended or revoked.

Article 74.Appointment of an examiner

74.1.Where the Regulatory Commission is entitled to apply sanctions under paragraph 67.1 of this law, it may appoint one or more persons as examiners to conduct an investigation on the business of the person concerned.

74.2.An examiner appointed in accordance with paragraph 74.1 of this law may inspect the following matters:

74.2.1.activities of the insurer and its characteristics;

74.2.2.specific issues of the insurer's activities;

74.2.3.supervision of insurers and shareholders

/Amendment was made to this sub-paragraph according to the law as of October 6, 2011/

74.3.An examiner may, at any time, if he/she considers it necessary, investigate the business of the person concerned or any other member of the group of companies.

74.4.The term and conditions of the examiner's appointment shall be determined by the Regulatory Commission at its discretion.

CHAPTER FIFTEEN

Transfer and amalgamation of insurance business

Article 75.Transfer and amalgamation of insurance business

75.1.An insurer shall make an application for approval to transfer or amalgamate its insurance business to the Regulatory Commission in writing.

75.2.Unless the Regulatory Commission has approved it in writing, no part of the business of an insurer may be:

75.2.1.transferred to another person; or

75.2.2.amalgamated with the business of another person;

75.3.The set of insurance regulations may specify the procedures for applications on transferring or amalgamating and the procedures in making its determination under Article 75 of this law.

75.4.Before deciding whether to grant its approval to a transfer or amalgamation, the Financial Regulatory Commission may:

75.4.1.undertake an investigation into the desirability or otherwise of the transfer or amalgamation; and

75.4.2.require the insurer and each party to provide it with such documents and information as it requires.

75.5.An investigation under sub-paragraph 75.4.1 of this law may be carried out by the Regulatory Commission or by a person or persons appointed by the Regulatory Commission and shall be at the cost of the insurer.

75.6.Any transaction to which an insurer is a party which has the effect of transferring any part of the insurance business to another person or amalgamating any part of the insurance business with the business of another person is void unless approved by the Regulatory Commission.

75.7.The Regulatory Commission may conduct a hearing of the application on the transfer or amalgamation of any part of the insurance business and may consider such evidence as it considers appropriate from the insurer and each other party.

CHAPTER SIXTEEN

Liquidation of insurers

Article 76.Bankruptcy of an insurer

76.1.The Bankruptcy Law applies to relations that are not regulated by this law in relation to starting a bankruptcy case in respect of an insurer.

76.2.The Regulatory Commission shall be given notice by the court of, and shall be entitled to attend and make representations at, any hearing relating to:

76.2.1.any claim or any request to the court to start a bankruptcy case under Article 5 of the Bankruptcy Law where the defendant is an insurer;

76.2.2.any complaint lodged under Article 6 of the Bankruptcy Law against a judge's ruling or a court resolution issued in connection with a bankruptcy case where the defendant is an insurer; and

76.2.3.any other matter to be decided by the court under Bankruptcy Law in connection with the bankruptcy of an insurer.

76.3.Where a request is made to start a bankruptcy case concerning an insurer, the Regulatory Commission may request the appointment of a temporary trustee under paragraph 5.7 of the Bankruptcy Law and propose a suitably qualified and experienced person for such appointment.

76.4.Where an insurer is declared bankrupt, the Regulatory Commission shall propose to the court the appointment of a suitably qualified and experienced person as trustee, and paragraph 8.2 of the Bankruptcy Law shall not apply.

76.5.The court shall appoint a trustee who may be the person proposed by the Regulatory Commission.

76.6.The person appointed as the temporary trustee or the trustee must, in addition to satisfying the requirements of paragraph 11.2 of the Bankruptcy Law, be a person who has sufficient knowledge about the particular aspects of an insurance company.

76.7.The insurance business shall be under the supervision of the Regulatory Commission that shall have the rights and powers to make a decision on issues specified in sub-paragraphs 8.3.3, 8.3.4 and 8.3.6 of the Bankruptcy Law.

76.8.The trustee shall provide the Regulatory Commission with such information or reports concerning his/her actions as the trustee as may be requested by the Regulatory Commission.

76.9.The Regulatory Commission may, at any time, submit a claim to the court concerning the activities of the trustee or the defendant.

76.10.The court shall have the power to extend any time limit specified in the Bankruptcy Law where the defendant carried out the insurance business.

Article 77.Re-capitalization of an insurer

77.1.A person who submits to the court a request to re-capitalize an insurer under paragraph 23.1 of the Bankruptcy Law or a plan to re-capitalize an insurer under paragraph 24.1 of the Bankruptcy Law shall, at the same time, submit a full copy of the request or the plan to the Regulatory Commission.

77.2.The Regulatory Commission shall be entitled to attend and speak at any meeting of plaintiffs held to consider a re-capitalization plan.

77.3.The court shall not approve a re-capitalization plan unless the Regulatory Commission has approved the re-capitalization plan in writing.

77.4.Article 28 of the Bankruptcy Law does not apply to the approval of a re-capitalization plan of an insurer by the court.

Article 78.Liquidation of an insurer

78.1.The Civil Code, Bankruptcy Law and Company Law apply to relations that are not regulated by this law in relation to the liquidation of an insurer.

78.2. The insurer shall be liquidated in the following cases:

78.2.1.by a court decision;

78.2.2.by a decision of the shareholders' meeting with the written authorization of the Regulatory Commission,

/Amendment was made to this sub-paragraph according to the law as of October 6, 2011/

78.3.The decision of the shareholders' meeting to liquidate the insurer shall be invalid/void without the written authorization of the Regulatory Commission.

/Amendment was made to this paragraph according to the law as of October 6, 2011/

78.4.The liquidation of an insurer commenced other than in accordance with paragraph 78.2 of this law shall be invalid and of no effect.

78.5.The Regulatory Commission may submit a claim to the court for the liquidation of an insurance company on the following grounds:

78.5.1.that the insurance company is insolvent; or

78.5.2.that the insurer's license has been revoked.

78.6.The Regulatory Commission may submit a claim to the court for the liquidation of a legal person on the grounds that it is carrying out, or has carried out, insurance business without license.

78.7.Where a claim is made to the court for the liquidation of an insurer, the court shall give the Regulatory Commission notice of the claim and the Regulatory Commission shall be entitled to attend and make representations at any hearing of the claim.

78.8.The liquidation of an insurer under the Bankruptcy Law shall be under the supervision of the court and paragraph 38.1 of the Bankruptcy Law shall not apply.

 Article 79.Liquidation of an insurer by shareholders' resolution

/Title of this article was amended according to the law as of October 6, 2011/

79.1.The list of persons proposed to be appointed as a member of the liquidation commission shall be attached to the application for liquidation of the insurer by the decision of the shareholders meeting issued in accordance with sub-paragraph 78.2.2 of this law.

/Amendment was made to this paragraph according to the law as of October 6, 2011/

79.2.The Regulatory Commission shall not grant authorization to liquidate an insurer by a decision of a shareholders meeting in the following cases:

/Amendment was made to this paragraph according to the law as of October 6, 2011/

79.2.1.the remaining part of the insurer's assets after deducting its obligations does not meet the minimum solvency criteria specified in Article 24 of this law;

79.2.2.the person proposed to be appointed as a member of the liquidation commission does not have the necessary skills and experience to work in this way.

79.3.A liquidation commission shall be appointed when the resolution of the insurer's liquidation is approved by the meeting of shareholders.

/Amendment was made to this paragraph according to the law as of October 6, 2011/

79.4.The liquidation commission must give notice of its appointment to the Regulatory Commission within the specified time in the resolution.

79.5.The powers of the liquidation commission shall be established by the Regulatory Commission in accordance with the relevant law.

Article 80.Long-term funds of an insurer

80.1.The long-term funds of an insurer are maintained by the insurer to ensure the long-term stability of its business.

80.2.Where a long-term insurer is liquidated, whether under the Bankruptcy Act or otherwise, the long-term funds of the insurer shall be dealt with only in accordance with this Article 80 of this law.

80.3.The long-term funds of an insurer shall be applied first to meet the insurer's long-term liabilities attributable to the funds and as far as they are required to meet those long-term funds, shall not be regarded for the purposes of the distribution of as assets of the insurer.

80.4.The funds remaining after spending in accordance with Article 80.3 of this law may be considered as assets to be distributed by the insurer in accordance with the Civil Code and other relevant legislation.

CHAPTER SEVENTEEN

Miscellaneous

Article 81.Protection of information

81.1.The Regulatory Commission and any organization or person acting under its authority shall not disclose to any person any information concerning the affairs of the following persons the exercise of his/her functions under this law or under any other relevant law:

81.1.1.a person who has applied for a license;

81.1.2.an insurer or a former insurer, its subsidiary or an affiliate;

81.1.3.an insured person or a formerly insured person.

81.2.Paragraph 81.1 of this law shall not apply to the following conditions:

81.2.1.disclosure of the affairs of a protected person made with the written consent of that person,

81.2.2.a specific demand from the Regulatory Commission;

81.2.3.the administration of the court, prosecutor, police or the court decision execution body made a request;

81.2.4.a relevant person needs to know for the purpose of discharging any duty or exercising any power under this law;

81.2.5.if the information disclosed is or has been available to the public from any other source;

81.2.6.where the information disclosed is in a summary or in statistics expressed in a manner that does not enable the identity of the person, specified in paragraph 81.1 of this law to which the information relates, to be determined;

81.2.7.the disclosure made to a foreign regulatory authority upon the written request of that authority in accordance with Article 66 of this law.

Article 82.Appeals of decisions of the Regulatory Commission

82.1.Any person may file a dispute concerning an insurance business for a decision to the Regulatory Commission and if the person does not agree with the decision, he/she may appeal the decision of the Regulatory Commission to the court within 10 working days of the date when the decision takes effect.

82.2.An appeal against a decision of the Regulatory Commission shall not serve as grounds for suspending the decision to impose sanctions.

/Amendment was made to this paragraph according to the law as of May 18, 2017/

Article 821.Arbitration of disputes

821.1.If there is an arbitration agreement, disputes related to insurance activities will be resolved by arbitration.

821.2.Article 82 of this law shall not apply in case of a resolution of dispute through arbitration in accordance with paragraph 821.1 of this law.

/This article was revised according to the law as of January 26, 2017/

Article 83.Penalties to be imposed on persons in breach of legislation

83.1.If a breach of the legislation on insurance does not constitute a criminal offense, an official shall be subject to liability specified in the Law on Civil Service.

83.2.A person or legal entity that breaches this law shall be subject to liability specified in the Criminal Code or the Infringement Law.

/This article was revised according to the law as of December 4, 2015/

Article 84.Limited Liability of Regulatory Commission

84.1.Employees of the Regulatory Commission shall not be liable for anything done or omitted to be done in the discharge or purported discharge of any functions, responsibilities or duties, or the exercise or purported exercise of any powers, under this law, the set of insurance regulations or any other law that assigns to it, unless it is shown that the act or omission was in bad faith.

Article 85.Entry into force of this law

85.1.This Law shall be entry into force as of 1 June, 2005.

/Amendment was made to this paragraph according to the law as of December 30, 2004/

85.2.Paragraph 22.1 of the present law establishing the capital assets of an insurance company shall be effective on 1 July, 2005.

CHAIRMAN OF THE STATE GREAT KHURAL OF MONGOLIA  S.TUMUR-OCHIR