OECD / IFC Fact-Sheet on Joint Stock Companies in Mongolia.
According to the OECD, the privatization of formerly state-owned assets has been one of the most important aspects of the Mongolian Government’s economic policy during the transition period. From 1991 to 1994, citizens of Mongolia were issued vouchers that could be exchanged for shares of some 4,500 state-owned enterprises and state-owned farms and livestock. Each citizen of Mongolia was given a set of pink and blue vouchers (with a total value of 10,000 Tugrik or USD 10) that could be used to buy shares in small and large enterprises that were selected for privatization by the Mongolian Government. By the end of 1992, almost all state-owned agricultural assets were transferred to private ownership.
The Mongolian Stock Exchange was established in January 1991 to facilitate the first round of voucher privatization in Mongolia. It was used to distribute and collect vouchers and to sell state assets. Secondary trading of shares did not begin until August 1995, following the adoption of the Securities Law and the establishment of the Securities and Exchange Commission in 1994.
The shares of companies that were privatized under the voucher program were intended to be widely disbursed among workers and managers of the privatized enterprises. This program continued till the end of 1995. Although the privatization program stalled, the Mongolian Government made an inventory of state-owned assets in 1996. In the beginning of November 1996, the State Property Committee responsible for the privatization program began privatization through the auction of the remaining state-owned assets. Since then, sealed bid auctions are used to privatize enterprise with more than 50 employees and the “most valued companies” are being privatized through competitive international tenders.
As of 2001, the Government approved the sale of controlling packages of the Trade and Development Bank (70% of total shares), Gobi Cashmere JSC (70% of the total shares) and Neft Import Concern JSC2 (NIC), a distributor of gasoline and other oil products (80% of the total shares). These companies have not yet been privatized successfully as of December 21, 2001.
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