Corporate Governance Assessment of State Owned ...

A company is the most crucial/basic form of a business entity which plays significant role in the economy. Out of the existing business enterprises in the USA 16 percent is in the form of company that produce approximately 90 percent of the GDP. This was common in Mongolia as until recently the Erdenet Mining Corporation generated over 20 percent of the country’s total GDP and when the Oyu Tolgoi project reaches its full capacity, it can generate over 30 percent of the GDP. As such, in many countries the economy is generally rely on companies. Therefore enhancing corporate governance is not merely a matter of the company itself but also a matter to be considered as it affects the country at large.Since 1990s where companies started to emerge in Mongolia, the government has been making effort to establishing laws and norms to keep those companies operate in line with universal standards. The Law on the Business Entities, the first legal framework of company operation was introduced in 1991, followed by 1995 Law on Partnerships and Companies, and again 1999 Company Law. Though laws have been revised and renamed, they remain as the foundation of the current law on company operations. This law was most recently revised in 2013. Furthermore, the government and other competent authorities issue more detailed regulations and standards in conformity with this law. Although the aforementioned laws and regulations have been updated in compliance with universally accepted standards, enforcement has been unsatisfactory, resulting in poor improvement in corporate governance in the practice.The assessment presented here is the product of our assignment to develop recommendations for the enhancement of corporate governance practices in each of the target entities, i.e., major mining companies with a government stake, by analyzing the existing state of their corporate governance performance. The report consists of an introduction, a summary on corporate governance and its key elements, the consolidated outcomes of the corporate governance assessment on state-owned mining companies in Mongolia and recommendations for the enhancement of corporate governance practices along with appendices that illustrate the assessment method and some reference information.