-How many state-owned companies’ privatization will go through Mongolian Stock Exchange?

-Mongolian Parliament affirmed the Resolution No.: 70 to privatize or reorganize some stated-owned companies in year 2015-2016. The Resolution stated privatization of 9 out of 15 companies will privatize through Mongolian Stock Exchange including 5 thermal power stations, Baganuur, Shivee-Ovoo, Mongol Post and Telecom Mongolia. Also, the Resolution No.: 330 of Mongolian Government which states the specific timeline and person who is responsible for this action were affirmed. According to the Order of Minister of Finance, the working team for privatization and reorganization of state-owned companies were established. Ministry of Finance will be lead the working group and representatives of Mongolian Stock Exchange, Mongolian Securities Clearing House and Central Depository, Development Bank of Mongolia, Financial Regulatory Commission, State Property Committee and Cabinet Secretariat of Government of Mongolia will be participated.

 

-How many companies will be privatized in this year?
-30% of 7 state-owned companies will be traded at Mongolian Stock Exchange in fourth quarter of the year.

 

-For example?
5 thermal power stations, Mongol Post, and Telecom Mongolia.

-Does Mongolian Stock Exchange have ability to do privatization of these companies? There is a doubt that privatization can’t be done in fourth quarter of this year.
-Since the Government resolution has been approved, the work must be done with no doubt. If the privatization get postponed or voided, trust of public and foreign investors will be discouraged. We shall implement this state order with no doubt. Other countries and public will be observing how the privatization will process. If the work get delayed for longer amount of time, Mongolian capital market will never develop. In addition, investment of foreign countries will stop. No one want to invest in a country where the government rule can be ignored, therefore, we must be responsible.

 

-The Resolution of Mongolian Parliament and Government cannot be delayed, does it?
-If we ignore the government Resolution, the capital market would never develop. Most importantly, as we go by rule, trust will be built. No one can delay government’s resolution and regulation; therefore, we must launch privatization of state-owned companies and trade its stocks to the public in the time frame. I also want to note that all related organizations have to be responsible for this job.

 

-You mentioned about organizing the trading in the public. How preparatory work is going on?
-First of all, these companies should have audited their past year’s balance sheet. And, the valuation of assets should be done. In addition, the legal assessment report for conduct trading through Mongolian Stock Exchange which shall meet rules and regulations.  

-How much money will be used for the process?
Basically, there are three fundamental job should be done for one company. MNT50.0 million for each; therefore, MNT150.0 million will be used in one company for privatization. Total of MNT1.0 billion will be circulated into economy. Certainly, this will be concerned with State Property Committee, Ministry of Finance and other related organizations. Then, make a contract with Underwriter Company which has high amount of cost. Stock trading of State-owned companies will conduct legally. In other words, issued shares of company should be sold 100% and we suggesting that the underwriter company that fully responsible for this matter should work with them.

-Where does the public can get information about the privatization and reorganization of the companies?
-Underwriting companies will work on advertising the stock and provide information to the public.

-70% of the above mentioned companies will be owned by state, when will the shareholders start to claim dividends?
-That is obligation of the companies. The government will work on to protect shareholder’s right, claiming dividends and increase the value of stocks. Before, the companies were 100% owned by state, now the companies will be monitored by the public and become more transparent. The dead expenses will be decreased, revenue and profits will be main purpose of the company to exist and there will be significant value to the capital market. If companies still report loss after privatization, it will be considered as theft from the public.

 

Source: Oyunchimeg.D, Zuunii Medee Sonin, 2015.09.18

 

 Marketing and Public Relations Department
MONGOLIAN STOCK EXCHANGE