IIn accordance with the Charter of the Financial Regulatory Commission (approved by the Parliament of Mongolia in 2006) the Commission is obliged to implement the introduction of internationally-recognized corporate governance practices and principles. Accordingly, the Commission revised the Corporate Governance Code (the ‘Code’) and this has been approved by the Commission’s Resolution No. 145 of 2022.
Based on lessons learned from the shortcomings of the previous Code, the FRC is focusing on effective implementation of the updated version by means of the internationally accepted ‘comply or explain’ reporting principle. The ne Code includes appendices such as: samples of a company's internal policy documents, rules, and regulations.
To introduce regulated entities to international principles of corporate governance, and establish internal rules and regulation standards, advanced comprehensive trainings was organized by the FRC. Participants included high level officials of open joint stock companies, and staff of insurers, trust service providers, non-bank financial institutions and investment management companies.
To implement the revised Code, the Commission has specified the powers and functions of: stock exchanges, professional associations, and training institutions of governance as corporate governance organizations. Companies must report at least once a year (to the securities trading organization) on their implementation of the principles of governance stated in the Code. Companies must also include such information in their annual reports, and on their websites. If companies implementation of these requirements is insufficient, their classification of securities would be downgraded. There will be qualitative indicators for the evaluation of governance and decision-making of the investor.
As a result of the latest developments, the internal regulation of companies will be improved. In particular, clear division of powers and accountability (between the Board and CEO) should lead to improved transparency, risk management, reporting, and a reduction of losses among stakeholders.
Introduction of the Code in an accessible way, and regular training for high level officials within companies are all very important for successful iimplementation of the Code.
