Article 1.Purpose of the Law

1.1.The purpose of this Law is to regulate relations in connection with the principles, management, organization, financing, and state support of the innovation, possession and use of intellectual property by putting it into economic circulation, and establishment of legal basis thereto.

Article 2.Legislation on innovation

2.1.The legislation on innovation shall consist of the Constitution of Mongolia, the Law on Science and Technology, the Law on Higher Education, the Law on Companies, the Law on Patents, the Law on the Legal Status of Industrial and Technological Parks, the Law on Property Appraisal, this Law, and other legislative acts enacted in conformity with these laws.

2.2.If an international treaty, to which Mongolia is a party, stipulates otherwise than this Law, the provisions of the international treaty shall prevail.

Article 3.Definition of terms of the Law

3.1.The following terms used in this Law shall be understood in the following meanings:

3.1.1."innovation" means products, services, marketing, organizational methods and solutions created as a result of activities that transform new knowledge into wealth;

/This sub-paragraph was modified by the law as of December 20, 2019/

3.1.2."new knowledge" means an intellectual work created at the result from scientific and technological activities, is protected by rights, and that can be used with purpose of solving the economic and social problems;

3.1.3."innovation activity" means measures aimed at introducing innovation into use, improving economic efficiency, competitiveness, and productivity, and improving social services;

/This sub-paragraph was modified by the law as of December 20, 2019/

3.1.4."innovation product" means the results of innovation activities that meet the requirements and conditions established by this Law and are better than similar products and services on the market in terms of technical and economic indicators, scientific capacity, value-added creation and competitiveness;

3.1.5."national innovation system" means all forms of ownership organizations participating in innovation activities and the set of norms of their relations;

3.1.6."innovation project" means a document planned to implement complex activities for introducing innovation products and services to the market in compliance with financing requirements and organizational conditions within the certain time of period;

/This sub-paragraph was amendedby the law as of December 20, 2019/

3.1.7."innovation grant" means monetary and other funds being provided irrevocably to a specific innovation project by a citizen, legal entity, foreign or international organization on the basis of preconditions and conditions;

3.1.8."start-up company" means a company established for the purpose of producing new innovation products;

/This sub-paragraph was modified by the law as of December 20, 2019/

3.1.9."technological testing and orientation" means the activities of testing and refining the technology and product models developed at the laboratory level in manufactory conditions, and conducting technological documentation;

3.1.10."royalty" means the percentage of the profit earned by using the intellectual property under the license agreement to the lessor of the license;

3.1.11."investment company" means a legal entity established in accordance with the Civil Code for the purpose of financing innovation activities and carrying out activities specified in this Law;

/This sub-paragraph was amended by the law as of October 3, 2013/

3.1.12."management agreement" means the agreement concluded by the management of the investment company with the management company on managing the assets of the investment company in accordance with the requirements established by this Law;

/This sub-paragraph was amended by the law as of October 3, 2013/

3.1.13."management company" means a company with a special permit that manages the assets of the investment company on the basis of the agreement stipulated in sub-paragraph 3.1.12 of this Law;

/This sub-paragraph was amended by the law as of October 3, 2013/

3.1.14."science park" /hereinafter referred to as "park"/ means a complex with production, service, and social infrastructure with a special territory to implement the functions determined by this Law for the purpose of developing the production of high-tech and innovation products;

3.1.15."park management" means a legal entity with functions to manage and organize park activities, and to provide with the environment and conditions for carrying out the normal activities;

3.1.16."park unit" means a business entity, academic institution operating in the territory of the park, and an organization that provides common services such as schools, hospitals, telecommunications, and energy;

3.1.17."innovation infrastructure" means organizational structures, buildings and facilities aimed at providing funds, resources and other support for innovation activities;

/This sub-paragraph was added by the law as of December 20, 2019/

3.1.18."consulting company" means a company established for the purpose of selling its own share of a start-up company to other parties that support the introduction of innovation products of an academic institution or start-up company established next to it into the market and putting them into the economic circulation.

/This sub-paragraph was added by the law as of December 20, 2019/

Article 4.Principles of innovation activity

4.1.The following principles shall be adhered to in the innovation activities:

4.1.1.not to carry out innovation activities that have a negative impact on national security, human health, and the environment;

4.1.2.the innovation project shall be consistent with the priorities of innovation activities and use the latest advanced achievements of science and technology;

4.1.3.innovation activity should have high economic and social efficiency;

4.1.4.state support for innovation activities should be transparent, fair and open;

4.1.5.citizens, business entities, and organizations shall have equal and free participation in innovation activities;

4.1.6.acceptance of reasonable risks of innovation activities by the state and other financing parties.

CHAPTER TWO

MANAGEMENT OF INNOVATION ACTIVITIES AND POWERS OF STATE BODIES

Article 5.Innovation activity management system

5.1.The management system of innovation activities shall consist of the Government, ministries, agencies, the National Council of Science and Technology, and local administrative bodies.

Article 6.Powers of the Government

6.1.The Government shall exercise the following powers regarding innovation activities:

6.1.1.to develop and submit to the State Great Khural the drafts of State policies and legislation on the innovation;

/This sub-paragraph was amended by the law as of December 20, 2019/

/This sub-paragraph was amended by the law as of December 17, 2021/

6.1.2.to approve the priorities of innovation activities;

/This sub-paragraph was modified by the law as of December 20, 2019/

6.1.3.to organize the implementation of innovation legislation;

6.1.4.to organize national innovation system and innovation development;

/This sub-paragraph was amended by the law as of December 17, 2021/

6.1.5.to approve the rules and procedures to be publicly complied with in connection with the development and support of innovation by the State in compliance with legislation;

/This sub-paragraph was modified by the law as of December 20, 2019/

6.1.6.to determine the amount of state budget investment and financing necessary for the implementation of innovation activities, and organize implementation;

6.1.7.to finance innovation projects from the state budget, and to establish procedures and conditions for granting grants to participants in innovation activities;

6.1.8.to make decisions to establish, reorganize, or liquidate a state-owned organization to exclusively conduct innovation activities;

6.1.9.to issue securities and provide capital guarantees for subsidized foreign loans in order to provide funding sources for the development of innovation infrastructure;

6.1.10.to be based on the opinions and conclusions of the National Council of Science and Technology when establishing the park;

6.1.11.to make a decision to establish the park upon determining the location of the park and the direction of its activities;

6.1.12.to appoint the management of the park, approve its structure, rules and procedures;

6.1.13.to determine the discounts and incentives, as well as their form and amount to be applied in the territory of the park and in the use of land and state-owned buildings and facilities issued in the territory of the park, and to approve and enforce rules and procedures related to the activities of the park.

6.1.14.other powers stipulated by law.

Article 7.Powers of the state central administrative body in charge of the development of high technology and national innovation

/The title of this article was amended by the laws as of August 17, 2012 and as of October 16, 2014/

7.1.The state central administrative body in charge of the development of high technology and national innovation shall exercise the following powers in relation to innovation activities:

/This paragraph was amended by the laws as of August 17, 2012 and as of October 16, 2014/

7.1.1.to take measures to implement the national innovation system development policy;

7.1.2.to develop and submit proposals to the Government regarding the priorities of innovation, programs and plans for the development of the national innovation system, and budget funding required for them;

7.1.3.to provide integrated methodological management of measures to be taken by state and local administrative bodies to develop innovation;

7.1.4.to implement the policy to ensure the coordination of the partnership and activities of the parties involved in the formation and development of the innovation system;

7.1.5.to prepare a proposal to establish a state-owned or partially state-owned legal entity to implement innovation activities and submit it to the Government;

7.1.6.to develop rules, procedures and drafts related to the Science Park specified in sub-paragraphs 6.1.10-6.1.13 of this Law, to discuss them with the National Council of Science and Technology, and submit them to the Government;

7.1.7.to organize the implementation of national-level and strategically important innovation projects to be commissioned by the Government with state budget funds;

7.1.8.to provide funds for the implementation of innovation projects with the condition of repayment, and to take measures to repay the allocated funds;

7.1.9.to keep an integrated record of innovation projects in cooperation with relevant organizations, create a database, and provide services to users in this regard;

7.1.10.to develop a methodology for evaluating the level of development of the national innovation system and to create an innovation database;

7.1.11.to develop and implement programs and projects in cooperation with relevant organizations on the development of human resources of stakeholders in innovation activities;

/This sub-paragraph was amended by the law as of December 20, 2019/

7.1.12.to cooperate with foreign countries and international organizations on the development of innovation;

7.1.13.to encourage, promote and disseminate innovation activities;

7.1.14.to draw conclusions about innovation products, approve working procedures of professional experts, and organize its implementation;

7.1.15.to coordinate and implement the State policies on science, technology, and higher education in line with innovation priorities;

/This sub-paragraph was added by the law as of October 16, 2014/

7.1.16.to organize the activities on the development, financing and implementation of programs and projects for the development of innovation in the field of science and technology;

/This sub-paragraph was added by the law as of October 16, 2014/

7.1.17.to plan the creation of innovation infrastructure in the field of science and technology, to formulate proposals for its implementation, and submit it to the Government for decision;

/This sub-paragraph was added by the law as of October 16, 2014/

7.1.18.to create an integrated database on the results of research, testing, and design work aimed at innovation;

/This sub-paragraph was added by the law as of October 16, 2014/

7.1.19.to provide innovation grants for technological testing and orientation;

/This sub-paragraph was added by the law as of October 16, 2014/

7.1.20.to train and empower human resources in the field of innovation;

/This sub-paragraph was added by the law as of October 16, 2014/

7.1.21.to support the dissemination of innovation culture;

/This sub-paragraph was added by the law as of October 16, 2014/

7.1.22.other powers stipulated by law.

/The numbering of this sub-paragraph was amended by the law as of October 16, 2014/

Article 8.Powers of the state central administrative body in charge of science, technology and higher education affairs

/This article was invalidated by the law as of October 16, 2014/

8.1.The state central administrative body in charge of science, technology, and higher education affairs shall exercise the following powers regarding innovation activities:

8.1.1.to coordinate and implement the State policies on science, technology, and higher education in line with innovation priorities;

8.1.2.to organize the activities on development, financing and implementation of programs and projects for the development of innovation in the field of science and technology;

8.1.3.to plan for the creation of innovation infrastructure in the field of science and technology, to formulate proposals for its implementation, and submit it to the Government for decision;

8.1.4.to create a common database on the results of research, testing, and design work aimed at innovation;

8.1.5.to provide innovation grants for technological testing and orientation;

8.1.6.to train and empower human resources in the field of innovation;

8.1.7.to support the dissemination of innovation culture;

8.1.8.other powers stipulated by law.

Article 9.Powers of the Financial Regulatory Commission

/This article was invalidated by the law as of October 3, 2013/

9.1.The Financial Regulatory Commission shall exercise the following powers regarding innovation activities:

9.1.1.to establish conditions and requirements for the establishment of a venture capital company, and a management company, as well as setting the minimum amount of share capital and equity capital;

9.1.2.to issue, extend, suspend, or revoke special permits  for venture capital companies and management companies;

9.1.3.to develop, approve, and enforce rules and procedures related to regulating and monitoring the activities of venture capital companies and management companies;

9.1.4.to establish common rules and procedures governing the management and operation of the venture capital company;

9.1.5.to review applications and requests submitted by citizens, business entities, and organizations regarding the venture capital company and management company, resolve them within the scope of their powers, and assign duties and tasks with a deadline to eliminate violations;

9.1.6.to monitor whether the information provided by the venture capital company and the management company complies with the rules and procedures, and is accurate;

9.1.7.to go to court on liquidation of venture capital company;

9.1.8.other powers stipulated by law.

Article 10.Common powers of ministries and agencies

10.1.Ministries and agencies shall exercise the following powers regarding innovation in the fields under their jurisdiction:

10.1.1.to develop, implement, finance, and support innovation plans and projects, either alone or in cooperation with the state central administrative body in charge of the development of high technology and national innovation;

/This sub-paragraph was amended by the laws as of August 17, 2012 and as of October 16, 2014/

/This sub-paragraph was amended by the law as of December 17, 2021/

10.1.2.to determine the priorities of the innovation activity of their sector, and ensure its implementation;

/This sub-paragraph was invalidated by the law as of December 20, 2019/

10.1.3.the state central administrative body shall solve the funds required to support innovation activities in the sector under its jurisdiction within the budget;

/This sub-paragraph was modified by the law as of December 20, 2019/

10.1.4.other powers stipulated by law.

Article 11.Powers of governors of aimags and the Capital city

11.1.Governors of aimags and the Capital city shall exercise the following powers regarding innovation:

11.1.1.to ensure the participation of the private sector in the development of innovation in the local area, to implement joint-financed innovation projects;

11.1.2.to solve the work of building social infrastructure and providing basic services required for the normal operation of parks established in the territory of aimags and the Capital city with state and local budget funds and other sources, and support and cooperate with the park administration;

11.1.3.to organize an open competition for innovation projects aimed at solving local problems, and to provide innovation grants;

/This sub-paragraph was modified by the law as of December 20, 2019/

11.1.4.to implement the provisions stated in sub-paragraphs 11.1.3 of this Law in the local budget, to issue securities and to issue capital guarantees for subsidized foreign loans for the purpose of forming the necessary financing sources;

11.1.5.to establish and operate a locally-owned or partially locally-owned legal entity responsible for exclusively conducting innovation activities;

11.1.6.other powers stipulated by law.

Article 12.Sources and forms of financing for innovation activities

12.1. Financing of innovation activities shall consist of the following sources:

12.1.1 state and local budget funds;

12.1.2.Assets of Development Bank of Mongolia;

12.1.3.Assets of the Innovation Fund;

/This sub-paragraph was invalidated by the law as of January 23, 2015/

12.1.4.Assets of other special government funds;

12.1.5.capital of the investment company;

/This sub-paragraph was amended by the law as of October 3, 2013/

12.1.6.the capital of the start-up company from the primary capital market;

12.1.7.equity capital of the organization participating in innovation activities;

12.1.8.loans, aid and donations from foreign countries and international organizations;

12.1.9.other sources not prohibited by law.

12.2.Innovation projects to be financed from the sources specified in sub-paragraphs 12.1.1, 12.1.3, and 12.1.4 of this Law shall be selected according to the procedures approved by the Government.

12.3.Innovation activity shall be financed in the following form:

12.3.1.financing with repayment terms;

12.3.2.providing non-refundable financing;

12.3.3.granting innovation grants.

Article 121.Offering shares of a start-up company to the public

/This article was added by the law as of December 20, 2019/

121.1.The start-up company may offer its shares to the public on the non-exchange market through the competent organization specified in paragraph 41.2 of the Law on Securities Market.

121.2.The procedure for offering shares to the public of a start-up company shall be approved by the Financial Regulatory Commission.

121.3.The upper limit of the total amount of shares to be offered to the public by a start-up company and the amount of shares to be purchased by one investor shall be set by the Financial Regulatory Commission.

CHAPTER THREE

INNOVATION ACTIVITIES AND STATE SUPPORT

Article 13.Priority areas of innovation activities

/This article was amended by the law as of December 20, 2019/

13.1.Innovation priorities shall be established in order to direct scientific and technological achievements to stimulate economic growth, produce and export high-tech and competitive products, create types and forms of highly efficient services, and to optimize the capacity and resources of innovation activities, and increase the efficiency of state support.

/This paragraph was amended by the law as of December 20, 2019/

13.2.Innovation priorities shall be classified as strategic and medium-term.

/This paragraph was invalidated by the law as of December 20, 2019/

13.3.The strategic priorities shall be for a period of 10 years and shall be approved by the State Great Khural.

/This paragraph was invalidated by the law as of December 20, 2019/

13.4.The project of the priority directives of innovation activities shall be developed by the state central administrative body in charge of the development of high technology and national innovation, and discussed by the Government 12 months before the expiration of the previous priority directives.

/This paragraph was amended by the law as of August 17, 2012/

/This paragraph was amended by the law as of October 16, 2014/

/This paragraph was amended by the law as of December 20, 2019/

13.5.The draft of the project for the strategic priorities which discussed and supported by the Government shall be submitted to the State Great Khural 10 months before the expiration of the previous priorities.

/This paragraph was invalidated by the law as of December 20, 2019/

13.6.The priorities of innovation activities shall be developed to be implemented at the national, sectoral, regional, and local levels based on the state of the country's economic and social development, science and technology development trends, and others.

/This paragraph was modified by the law as of December 20, 2019/

13.7.The priority directive of innovation activity shall be for five years.

/This paragraph was modified by the law as of December 20, 2019/

13.8.Within 10 months after the approval of the strategic priorities, the state central administrative body in charge of the development of high technology and national innovation shall prepare and submit to the Government the draft of medium-term national priorities in cooperation with relevant state administrative bodies.

/This paragraph was amended by the law as of August 17, 2012/

/This paragraph was amended by the law as of October 16, 2014/

/This paragraph was invalidated by the law as of December 20, 2019/

13.9.The medium-term national priorities shall be aimed at the development of inter-sectoral and inter-regional innovations based on the long-term and medium-term state of the country's economic and social development, scientific and technological trends.

/This paragraph was invalidated by the law as of December 20, 2019/

13.10.Medium-term sector priorities shall be approved and implemented by the state central administrative body in charge of the respective sector based on strategic priorities and medium-term national priorities and sector development projections.

/This paragraph was invalidated by the law as of December 20, 2019/

13.11.Medium-term national and industry priorities shall be reflected in State and sectoral programs and plans, and shall be implemented as independent projects.

/This paragraph was invalidated by the law as of December 20, 2019/

13.12.Regional and local medium-term priorities shall be developed by the Regional Board, and Governor of aimag and Capital city in coordination with the strategic, medium-term national and sectoral priorities, and approved by the Citizens' Representative Khural.

/This paragraph was invalidated by the law as of December 20, 2019/

13.13.The priority areas of innovation activities shall be scientifically and economically justified and meet the requirements of this Law.

/This paragraph was amended by the law as of December 20, 2019/

13.14.The priorities of innovation activities shall be developed in accordance with the procedures approved by the Government, including representatives of state bodies, non-governmental organizations, science and industry.

/This paragraph was amended by the law as of December 20, 2019/

13.15.The matters on monitoring, analysis, evaluation, and reporting on the implementation of the priority areas of innovation activities shall be carried out by the state central administrative body in charge of the development of high technology and national innovation in accordance with the procedures approved by the Government.

/This paragraph was amended by the law as of August 17, 2012/

/This paragraph was amended by the law as of October 16, 2014/

/This paragraph was amended by the law as of December 20, 2019/

Article 14.Innovation projects to be supported by the State, and their requirements

/The title of this article was amended by the law as of December 20, 2019/

14.1.The innovation project shall meet the following requirements:

14.1.1.to contain proposals with a common goal of creating innovation;

14.1.2.proof of non-repetition of products and services of the project to be implemented, or verification of industrial intellectual property rights;

/This sub-paragraph was modified by the law as of December 20, 2019/

14.1.3.the feasibility study and efficiency of the innovation project must have been done.

14.1.4.to comply with the priorities of innovation activities specified in sub-paragraph 6.1.2 of this Law;

/This sub-paragraph was added by the law as of December 20, 2019/

14.1.5.the innovation project must be registered in accordance with paragraph 14.3 of this Law.

/This sub-paragraph was added by the law as of December 20, 2019/

14.2.The State shall not support innovation projects in the following cases:

/This paragraph was amended by the law as of December 20, 2019/

14.2.1.if the requirements specified in paragraph 15.1 of this Law are not fully met;

14.2.2.if the activities to be implemented within the project are not compatible with the innovation activities and the principles to be followed in accordance with this Law;

14.2.3.if the person applying for financing of innovation activities is registered in a country other than Mongolia;

14.2.4.if the person applying for financing of innovation activities has overdue debts to the budget, and banks and financial institutions;

14.2.5.other grounds prescribed by law.

14.3.The innovation project shall be registered by the state central administrative body in charge of the development of high technology and national innovation in accordance with the procedures approved by the Government.

/This paragraph was amended by the laws as of August 17, 2012 and as of October 16, 2014/

Article 15.Innovation products

15.1.Innovation products shall meet the following requirements:

15.1.1.to be superior in terms of competitiveness, technical and economic indicators compared to products, technologies and services newly produced in Mongolia or similar products on the market;

15.1.2.to be aimed at replacing imports or increasing export resources;

15.1.3.the product manufacturer shall be the possessor of the intellectual property or has signed a license agreement with the possessor.

15.2.The state central administrative body in charge of the development of high technology and national innovation shall make a decision on whether innovation products meet the requirements of this Law based on expert opinions.

/This paragraph was amended by the laws as of August 17, 2012 and as of October 16, 2014/

Article 16.Innovation infrastructure

16.1.The innovation infrastructure shall consist of a science park, an industrial and technology park, a Technopolis, a technology transfer center, a technology incubator, a business incubator, a special government fund, and a venture capital company.

/This paragraph was invalidated by the law as of October 3, 2013/

16.2.Relations arising in connection with the Industrial and Technology Park shall be governed by the Law on the Legal Status of Industrial Technology Park.

16.3.Activities of science park and venture capital company shall be regulated by this Law and other relevant laws.

/This paragraph was invalidated by the law as of October 3, 2013/

16.4.The innovation infrastructure shall consist of a science park, an industrial and technology park, a technology transfer center, a technology incubator, a business incubator, a joint office, and a management company. The joint office shall create a favorable environment for several unrelated individuals and legal entities to operate, and shall organize consulting, mediation, promotion, investment attraction, innovation product development, and start-up company growth for its members:

16.4.1.support by the state through tax policy to start-up companies registered as members of technology transfer centers or joint offices and business entities operating in the field of software production and development;

16.4.2.The Government shall approve the procedure for providing support to business entities specified in sub-paragraph 16.4.1 of this Law.

/This paragraph was added by the law as of December 20, 2019/

Article 17.State support for innovation activities

17.1.The state shall support innovation activities in the following ways:

17.1.1.to finance a certain percentage of the loan interest for the implementation of innovation projects;

/This sub-paragraph was amended by the law as of January 23, 2015/

17.1.2.to finance the cost of patenting innovation products to relevant domestic and foreign organizations;

/This sub-paragraph was amended by the law as of January 23, 2015/

17.1.3.to calculate accelerated depreciation of property for a start-up company engaged exclusively in innovation activities;

17.1.4. to regulate the issue of providing services under favorable conditions to the company that exclusively engages in innovation activities with the laboratory equipment of the state-owned academic institution in accordance with the procedure approved by the Government;

17.1.5.If 60% or more of the total cost of the project is financed with own funds, the remaining part shall be financed irrevocably from the innovation financing organization and the local budget;

17.1.6.to support participation in international trade fairs and presentation events for innovation products with high technology;

/This sub-paragraph was modified by the law as of December 20, 2019/

17.1.7.to fully or partially finance the cost of certification of international quality standards for export-oriented innovation products;

/This sub-paragraph was amended by the law as of December 20, 2019/

17.1.8.to support domestically produced innovation products through government procurement;

17.1.9.to organize exhibitions, conferences, seminars, to organize and finance measures to promote innovation knowledge and culture in cooperation with mass organizations;

/This sub-paragraph was amended by the law as of January 23, 2015/

17.1.10.to provide monetary incentives to patent holders who engaged in innovation activities and created production and services of highly efficient social and economic products;

/This sub-paragraph was amended by the law as of January 23, 2015/

17.1.11.to issue national innovation awards to innovation products and services that have made a significant contribution to social and economic development;

17.1.12.The Government shall approve the amount of the national innovation award and the award procedure.

17.2.The forms of state support for innovation activities other than those specified in sub-paragraphs 17.1.6, 17.1.8, 17.1.9, and 17.1.10 of this Law shall be regulated by the procedure approved by the Government.

/This paragraph was amended by the law as of December 20, 2019/

17.3.The forms of state support for innovation activities, other than those specified in paragraphs 17.1.1, 17.1.3, 17.1.8, 17.1.11, and 17.1.12 of this Law, shall be regulated by the procedure approved by the state central administrative body in charge of high technology and innovation.

/This paragraph was added by the law as of December 20, 2019/

CHAPTER FOUR

SCIENCE PARK

Article 18.Establishment of a park

18.1.The park shall be established for the following purposes:

18.1.1.creation of an environment and infrastructure for the efficient implementation of innovation activities by academic institutions and business entities;

18.1.2.to provide diverse financial resources, highly skilled human resources and infrastructure required for the production of high-tech and innovation products aimed at import substitution and export, and to increase the competitiveness of national production;

18.1.3.to intensify social and economic development of regions and localities and create economic diversification based on innovation activities.

18.2.The word science park must be used in the proper name of the park, and it shall prohibited to use this word in the name of other legal entities.

Article 19.Principles to be adhered to in park operation

19.1.In addition to the provisions specified in paragraph 4.1 of this Law, the following principles shall be adhered to in the operation of the park:

19.1.1.the investment required to establish the park and ensure its normal operation shall be based on budget investment, and public and private partnership;

19.1.2.to carry out activities of the priority areas specified in Article 13 of this Law in the territory of the park;

19.1.3.to encourage branches and units of domestic and foreign companies to invest in the park and carry out activities compatible with the park's activities;

19.1.4.to use renewable energy and environmentally friendly technologies and create an environment with green buildings in the park.

Article 20.Functions of park management

20.1.Park management shall consist of the board of directors and executive management.

20.2.The Board of Directors shall consist of representatives of the Government, localities, and park units, and at least one-third of the total members shall be elected from the park units.

20.3.The Board of Directors shall perform the following functions regarding the park:

20.3.1.to support the activities of the state central administrative body in charge of the development of high technology and national innovation regarding the development of the park within its powers;

/This sub-paragraph was amended by the laws as of August 17, 2012 and as of October 16, 2014/

20.3.2.to propose and resolve issues of foreign cooperation and investment policy related to the development of the park, if necessary, to the state central administrative body in charge of the development of high technology and national innovation;

/This sub-paragraph was amended by the laws as of August 17, 2012 and as of October 16, 2014/

20.3.3.other powers stipulated by law.

20.4.The executive management of the park shall perform the following functions regarding the park:

20.4.1.to organize the implementation of park development policies, programs and plans;

20.4.2.to organize the implementation of the investment project;

20.4.3.to enter into a contract with the park unit based on the feasibility study, technological level assessment, environmental impact assessment made by the relevant organization;

20.4.4.to create an environment and infrastructure for the normal operation of the park unit, and provide with relevant instructions and guidelines;

20.4.5.to obtain consulting services necessary for the implementation of the functions specified in sub-paragraphs 20.4.1-20.4.4 of this Law based on a contract;

20.4.6.other powers stipulated by law.

Article 21.Park activities

21.1.The following activities shall be carried out in the territory of the park:

21.1.1.to carry out scientific analysis, testing, design work, and to transfer advanced techniques and technologies;

21.1.2.production of innovation products;

21.1.3.to create a training-research-production network;

21.1.4.complex establishment of basic social services, urban planning and land management based on the potential of the region and locality;

21.1.5.to provide storage, transportation and logistics services;

21.1.6.to create an environment and conditions for normal activities in the territory of the park.

21.2.The activities of the park shall be financed from the income of the park's own activities in addition to the sources specified in paragraph 12.1 of this Law.

21.3.It shall be prohibited to engage in activities specified in paragraph 17.1 of the Law on the Legal Status of Industrial and Technological Parks.

/This paragraph was amended by the law as of July 5, 2022/

CHAPTER FIVE

VENTURE INVESTMENT COMPANY

Article 22.Activities of Venture Investment Company

/This article was invalidated by the law as of October 3, 2013/

22.1.The venture investment company shall have an investment policy that includes investment objectives, terms and conditions for spending its own assets, and measures to reduce risks.

22.2.The venture investment company shall finance the following activities related to innovation activities specified in this Law:

22.2.1.to conduct applied research, technological testing, orientation aimed at creating new and updated products and technologies;

22.2.2.to conduct intellectual property and market research;

22.2.3.to update and replace production technology;

22.2.4.to test new technologies, methods and products;

22.2.5.to create innovation infrastructure;

22.2.6.to protect intellectual property rights, possession and transfer thereof.

22.3.Venture investment companies shall be prohibited from investing in the following sectors and legal entities and financing their activities:

22.3.1.military and defense sector;

22.3.2.extraction of mining raw materials;

22.3.3.construction;

22.3.4.banks and financial institutions;

22.3.5.professional stock market participant;

22.3.6.audit and appraisal company;

22.3.7.production of alcoholic beverages and tobacco;

22.3.8.lottery and gambling.

Article 23.Establishment and registration of a venture investment company

/This article was invalidated by the law as of October 3, 2013/

23.1.Citizens and legal entities may jointly establish a venture investment company for the purpose of financing innovation activities.

23.2.The designation "venture investment company" must be used in the proper name of  the venture investment company.

23.3.The founding document of a venture investment company shall consist of an investment policy, charter and management agreement.

23.4.The charter of the venture investment company shall include the followings:

23.4.1.procedures for evaluating net assets, issuing shares of venture investment companies, and buying back issued shares;

23.4.2.appropriate structure of net assets of the venture investment company;

23.4.3.the maximum amount of the contract that can be concluded in one transaction;

23.4.4.determining the fee for the services of an independent appraiser and auditor, and paying the costs of communication;

23.4.5.procedure for accounting of fixed assets and invested assets of the venture investment company;

23.4.6.dividend policy;

23.4.7.the minimum amount of the contract approved by the board of directors of the venture investment company;

23.4.8.main direction of investment.

23.5.Venture investment company shall be in the form of a limited liability company.

23.6.It may be a venture investment company that does not advertise to the public and is organized in a closed manner.

23.7.The term of operation of the venture investment company shall be not less than three and not more than eight years.

23.8.After registration in accordance with this Law, the association of investors shall be considered a venture investment company.

23.9.A shareholder of a venture investment company can be the state, citizen or legal entity.

23.10.A person who provides property appraisal and auditor services to a venture investment company shall be prohibited from being a shareholder of the venture investment company or a person affiliated with it.

23.11.Foreign citizens and legal entities may be shareholders of venture investment companies, unless prohibited by law.

Article 24.Management of Venture Investment Company

/This article was invalidated by the law as of October 3, 2013/

24.1.The venture investment company can be managed by the venture investment company itself or by the management company with which the management contract has been signed.

24.2.The activities of the management company shall be regulated by this Law and the Law on the Securities Market and the Law on Companies.

24.3.Except for the provisions specified in sub-paragraphs 23.4.3 and 23.4.6 of this Law, the management company may manage the assets of the venture investment company on its behalf and make investment decisions independently.

24.4."Investment decision" means the decision to buy and sell investment instruments made in accordance with the investment policy of the venture investment company in the course of the management of the venture investment company.

24.5.The management company shall engage in private investment activities only.

24.6.The management company shall be prohibited from engaging in the following activities:

24.6.1.activities other than venture investment;

24.6.2.establishment of special and reserve funds;

24.6.3.issuing securities other than stocks and bonds;

24.6.4.distribution of dividends before the end of the operation period of the venture investment company.

24.7.The management company shall be obliged to enter into an audit agreement with an audit company recognized by the Financial Regulatory Commission.

24.8.The auditor shall check whether the accounting of the venture investment company, including the registration report, is in accordance with this law, other legislation, and procedures approved by the Financial Regulatory Commission, and make a conclusion.

24.9.It shall be prohibited for the auditor to be a person with a joint interest with the venture investment company, its management company or the appraiser.

Article 25.Venture investment company's assets and its valuation

/This article was invalidated by the law as of October 3, 2013/

25.1.Venture investment company's own capital shall consist of monetary assets collected from members of the investment company on the basis of a trust management agreement.

25.2.The minimum equity capital of the venture investment company shall be one billion MNT.

25.3."Venture Investment Company Assets" means the amount of the investment company's total assets excluding the portion for management expenses, or investment funds.

25.4.It shall be prohibited to include the following items in the assets of a venture investment company:

25.4.1.special permits and all kinds of certificates for the possession and use of land, animals, plants, unfinished buildings, inventories, mineral deposits;

25.4.2.borrowed funds and loan guarantees;

25.4.3.securities issued by other collective financing organizations.

25.5.The share of securities issued by foreign issuers shall not exceed 20 percent of the total assets of the investment company.

25.6.The cost of net assets of the venture investment company shall be calculated according to the procedure approved by the Financial Regulatory Commission.

25.7.Assets included in the assets of the venture investment company shall be evaluated by an appraiser with a special permit.

25.8.Assets specified in paragraph 25.7 of this Law shall be evaluated when they are received by the venture investment company or transferred to others in any form, as well as in other times, they shall be e-evaluated once a year.

25.9.It shall be prohibited to the person to perform the evaluation to be a person with a joint interest of a venture investment company, its management company, or an audit company.

Article 26.Termination of Venture Investment Company

/This article was invalidated by the law as of October 3, 2013/

26.1.Venture Investment Company may be liquidated in accordance with the Law on Companies and on the following grounds:

26.1.1.the term of operation of the venture investment company has expired;

26.1.2.failed to collect the capital assets of the venture investment company within the time specified in the charter;

26.1.3.if continuing the venture investment company's activities is contrary to the rights and legal interests of the participants.

26.2.The venture investment company shall be deemed liquidated upon removal from the state register.

26.3.When the venture investment company is liquidated, the assets of the venture investment company shall be sold.

26.4.The proceeds from the sale of the assets of the venture investment company and the funds of the venture investment company shall be distributed in the following form:

26.4.1.in the first instance, the liabilities to be settled from the capital of the venture investment company and expenses related to liquidation;

26.4.2.fee for the services of the management company in the next shift;

26.4.3.After paying the above compensations, the remaining funds will be distributed to the members of the venture investment company in proportion to their unit rights.

CHAPTER SIX

POSSESSION AND USE OF INTELLECTUAL PROPERTY CREATED AS A RESULT OF ACADEMIC WORK CARRIED OUT WITH STATE BUDGET FUNDING

Article 27.Possession and use of intellectual property created as a result of academic work carried out with state budget funding

27.1.The intellectual property created in the course of scientific research, experiments and inventions carried out with the funding of the state budget may be possessed by the citizen or legal entity who performed the work, unless otherwise specified in the science and technology project financing agreement, and the procedure for ownership and possession shall be approved by the Government.

27.2.A academic institution may establish a unit in charge of technology transfer, start-up companies, and a consulting company with the purpose of supporting start-up companies, and operate them in the following areas:

27.2.1.to enter into an agreement with the start-up company by the consulting company to introduce innovation products to the market and mediate investors;

27.2.2.to prohibit the consulting company from carrying out activities other than those specified in sub-paragraph 27.2.1 and paragraph 27.11 of this Law;

27.2.3.to possess at least 11% of the share capital of the start-up company by the research institute which founded it;

27.2.4.the competent person of the academic institution shall sell the shares of the start-up company within five years based on the assessment made in accordance with the Law on Property Appraisal.

/This sub-paragraph was modified by the law as of December 20, 2019/

27.3.A academic institution may contribute its intellectual property to the share capital of a start-up company after being evaluated by a competent organization.

27.4.The income and expenditure of the start-up company affiliated to the academic institution shall be recorded in a special account, and at least 75% of the dividend per academic institution shall be used for training, research, technological testing and orientation.

27.5.If a legal entity other than the researcher or academic institution that created the intellectual property owns the original copyright under license, royalties shall be paid to them.

27.6.Without the permission of the state central administrative body in charge of the development of high technology and national innovation, it shall be prohibited to conduct production and services in foreign countries using the intellectual property created as a result of academic work carried out with the funding of the state budget.

/This paragraph was amended by the laws as of August 17, 2012 and as of October 16, 2014/

27.7.In case of production and service in a foreign country using the intellectual property executed with budget funding with the permission of the organization specified in paragraph 27.6 of this Law, measures shall be taken to ensure and protect the intellectual property rights in that country in accordance with international agreements and conventions.

27.8.In the event that the possessor of the results of academic work carried out with state budget funding violates the provisions specified in paragraph 27.6 of this Law, his/her right to possess the intellectual property shall be suspended, and the transfer and use of the intellectual property to the next possessor shall be regulated in accordance with the procedure provided for in paragraph 27.1 of this Law.

27.9.In the event of an emergency and in order to satisfy national interests, the Government shall have the full right to use the intellectual property created as a result of academic work carried out with budget funding under the following license conditions:

27.9.1.non-exclusive license;

27.9.2.non-transferable license;

27.9.3.non-revocable license;

27.9.4.paid license.

27.10.In the event that the possessor of the intellectual property created as a result of the academic work carried out with budget funding is an academic institution, the following obligations shall be undertaken:

27.10.1.distribution of royalties to authors and creators of intellectual property;

27.10.2.from the royalty income from the use of intellectual property, the remaining income after the distribution of the royalties paid to the authors and creators of the intellectual property shall be spent only on innovation research and training;

/This sub-paragraph was amended by the law as of December 20, 2019/

27.10.3.if the royalty income from the introduction of intellectual property in state-owned business entities exceeds five percent of the annual budget of the possessor of intellectual property rights, 75 percent of the excess income shall be collected in the state budget, and the possessor shall use 25 percent for training, research, scientific research, and technological development activities.

/This sub-paragraph was amended by the law as of January 23, 2015/

27.11.The consulting company can sell its share of the start-up company.

/This paragraph was added by the law as of December 20, 2019/

CHAPTER SEVEN

MISCELLANEOUS

Article 28.International cooperation of participants in innovation activities

28.1.International cooperation of participants in innovation activities shall be implemented within the framework of legislation, international treaties and agreements of Mongolia.

28.2.Unless otherwise specified in legislation and international treaties, international organizations, foreign countries, their organizations, legal entities, and citizens may establish joint ventures in order to implement innovation projects in the territory of Mongolia.

28.3.A participant in innovation activities shall have a right to become a member of international innovation organizations, to participate in international innovation projects, and to enter into contracts and transactions.

Article 29.Confidentiality and protection of innovation information

29.1.Relations in connection with the preservation and protection of information confidentiality of participants in innovation activities shall be regulated in accordance with the Laws on State and Official Secrets, Secrets of the Organization, and Personal Information Protection.

/This paragraph was amended by the law as of December 1, 2016/

/This paragraph was amended by the law as of December 17, 2021/

29.2.The parties implementing the innovation project shall determine the rights and obligations regarding the liability with respect to the keeping secrets and preventing illegal possession.

Article 30.Liabilities to be imposed on the violators of the Law

/This article was modified by the law as of December 4, 2015/

30.1.If the action of an official who violates this Law does not constitute a criminal nature, he/she shall be held liable as provided in the Law on Civil Service.

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

THE CHAIRMAN OF THE STATE GREAT KHURAL OF MONGOLIA DEMBEREL.D