Small Shareholders’ Right is Violated
The stock market couldn’t develop earlier in Mongolia because the interests and rights of the small shareholders are not protected and they are the majority of the market, said D.Erdenetsogt, Member of the Core consul of small shareholders of the State Department Store.
The stock market couldn’t develop earlier in Mongolia because the interests and rights of the small shareholders are not protected and they are the majority of the market, said D.Erdenetsogt, Member of the Core consul of small shareholders of the State Department Store. The story is started when the public share company, the State department Store, changed its status to a Limited Liability Company.
“Nomin company demanded that if shareholders refused to be a shareholder of the limited liability company they should sell their share at a cheaper price. This demand broke the Law on Company. According to the law, all small shareholders have the right to be shareholders except if the small shareholders didn’t demand from public share company that the company should recover payment. The company violated the law” said Erdenetsogt. According to the Law on Company article 56 says: “The market value of securities listed for trading on the Stock Exchange shall be the average price of the relevant securities for the preceding six (6) months as recorded in the official records of the Exchange” But administrative office of the State Department Store also demands to buy their share at a cheaper price than the price on the market. Because the company has calculated the average price of the share by the last 52 days. “In other articles of the law: “In the case of a mandatory redemption as of a date specified in the terms of the preferred shares when they were issued, if the company lacks sufficient funds to redeem such shares as of such date, the company may agree with the holders of such shares to postpone the redemption until sufficient funds are available. If the company and the preferred shareholders fail to agree with respect to postponing the redemption, the company shall offer to transfer its obligation to purchase the shares to the persons specified in Article 53”.
But the price in the account document of the “Erdenet Khivs” Company is Tg3000 per each share and the Nomin Holding Company demanded that they re-buy their share at Tg 300 per one. The State Department store also demanded from small shareholders that all small shareholders should fill out an application for private registration of the company and if any shareholders didn’t fill the application they canceled the shareholder’s name from the list. It also violated the shareholders right due to law.
State Department Store shareholders have requested from the Financial Regulation Committee that control the accounting documents of the State Department Store and examine the organization to be finished on December 25 and the shareholders’ right to take court also finished under the law. The core committee is working to constitute 30 percent of the share of State department Store in order to take a right to make a decision.
Nomin Holding Company and Erdenet Khivs Company rent the counters in State Department Store.
Most of the income to the State Department Store enters the Nomin Holding’s account and a small percent of income is entered to State department store because the two companies signed a rent contract.
Written by B.Bulgamaa
The UB Post
