Securities Instruments and Issuance
Instruments
Mongolian issuers use common shares, preferred shares, corporate bonds, government securities and investment fund units; asset-backed structures are possible where the legal regime permits. Key features to distinguish are claim priority, maturity, coupon, security, convertibility, voting rights and transfer restrictions.
Issuance
A public offer needs an FRC-registered prospectus. The prospectus should cover business, risk factors, audited IFRS financials, governance, use of proceeds, related-party transactions and dilution. MSE listing adds eligibility criteria such as free float, market capitalization, governance and disclosure undertakings. Underwriting can be firm-commitment or best-efforts; the agreement allocates unsold securities and liability.
Worked example
An issuer plans MNT 20 billion of 3-year bonds through a broad retail roadshow at 14%, using proceeds to refinance debt. Analysis: retail solicitation points to a public offering, so FRC prospectus registration is required unless an exemption applies; MSE listing is optional but adds disclosure. The terms must disclose security, covenants, redemption, tax and use of proceeds. If the bonds are secured, the collateral and priority must be described.
Traps
- Confusing par value with issue price or market price.
- Ignoring accrued interest and yield versus coupon.
- Assuming a private placement is freely resalable.
- Missing dilution from options or convertibles.
- Describing use of proceeds vaguely when the rule requires specificity.