By B.MYAGMARDORJ

Last week, a public opinion poll was launched to seek citizens’ views on how dividends from the Oyu Tolgoi project should be used. Citizens can participate in the poll by visiting e-zasag.mn and answering the following three questions: (1) “Is it appropriate for the Government to receive dividends from the Oyu Tolgoi project?”, with the option to select either “Yes” or “No”; (2) “If dividends from the Oyu Tolgoi project are to be used to finance development projects and programmes, which sectors should be prioritised for investment?”, with multiple answers available, including energy; industry; transport and logistics; and social infrastructure such as schools, kindergartens, hospitals, etc.; and (3) “How should dividend income received from the Oyu Tolgoi project be spent?”, for which citizens may select only one of the following answers: (i) to finance major projects and programmes; (ii) to be deposited into a savings fund; or (iii) to be allocated through a savings fund to support citizens’ healthcare, education and housing.

Many have criticised the poll, arguing that its questions are “leading questions”. They contend that, rather than constituting an open and impartial public consultation, the poll appears to have an underlying objective of steering public opinion towards a decision that the Government is already planning to make and obtaining responses that align with its intended position.

Of the three questions, the first has attracted the most attention: “Is it appropriate for the Government to receive dividends from the Oyu Tolgoi project?”

The reason is that, in an announcement made in July this year, the government stated: “We have reached an in-principle agreement to begin receiving dividends from the Oyu Tolgoi project starting this year.” Against this background, asking the public whether it is appropriate for the Government to receive dividends appears contradictory, both in principle and from a logical standpoint.

In fact, whether the Government is entitled to receive dividends, or whether Oyu Tolgoi LLC should distribute dividends, is a matter governed by Articles 46–48 of the Company Law of Mongolia and further regulated by the Shareholders’ Agreement.

Of course, given that the Oyu Tolgoi project involves a strategic mineral deposit, it is essential to take into account Section 6.2 of the Constitution of Mongolia.

The final paragraph of Section 6.2 of the Constitution, as amended on November 14, 2019, states: “...In exploiting mineral deposits of strategic importance, the legal basis shall be established by law to ensure that the majority of the benefits derived therefrom accrue to the people, in accordance with the principle that natural resources are under the authority of the people.”

However, it is important to note that this provision does not directly stipulate that the majority of the benefits must accrue to the people. Rather, it should be understood as imposing an obligation on the State Great Khural of Mongolia to establish, by law, the legal framework necessary to ensure that the majority of the benefits derived from strategic mineral deposits accrue to the people, in accordance with the principle that natural resources are under the authority of the people.

In other words, under this constitutional provision, citizens should not simply demand directly from Oyu Tolgoi LLC that they are entitled to receive the majority of the benefits. Instead, they should call upon Parliament to establish, through legislation, the legal framework necessary to ensure that the majority of such benefits accrue to the people and that the benefits are distributed accordingly.

Furthermore, as noted above, the distribution of dividends by a limited liability company (LLC) is regulated by Articles 46–48 of the Company Law. A company shall distribute dividends when the statutory conditions have been satisfied, including the following: (i) the company must remain solvent after payment of the dividends; (ii) following the payment of dividends, the company's equity must exceed the aggregate amount of its charter capital specified in Article 30.5 of the Company Law, any unpaid dividends on preferred shares, and the liquidation value of such shares; and (iii) the company must have fully repurchased any securities that it is obligated to repurchase.

In addition, Article 15.1 of the Shareholders’ Agreement provides that, in order to distribute dividends to its shareholders, the company (i.e., Oyu Tolgoi LLC) must have profits available for distribution in respect of the relevant Financial Year (e.g., the 2026 Financial Year).

Rather than objectively and reasonably addressing the relevant requirements under Section 6.2 of the Constitution and determining whether the statutory and corporate governance conditions for dividend distribution have been satisfied, the Government is asking citizens whether it is appropriate to receive dividends from the Oyu Tolgoi project. This approach appears to be a form of performative populism, intended more to create an impression of public participation than to facilitate a substantive and informed decision-making process.

Another important issue concerning the potential distribution of dividends by Oyu Tolgoi LLC is the dividend amount of 3 trillion MNT referred to in the Government's public statements.

On October 24, 2026, a press briefing of the decisions made at the Government's regular Cabinet meeting, Minister of Finance Z.Mendsaikhan stated: “The issue being discussed is whether the 3 trillion MNT has been confirmed or not. The Government is proceeding on the assumption that it will receive this amount. We will be the owners of our wealth.”

However, the Government has entirely omitted from its public communications is that, if the Government, as the holder of a 34 percent shareholding in the company, is to receive dividends, the other shareholder, which holds the remaining 66 percent, would likewise be entitled to receive dividends in proportion to its shareholding. In this regard, Section 46.4 of the Company Law of Mongolia provides: “The per share value of dividends with respect to shares of the same class shall be equal in amount.”

If the 34 percent shareholder receives 3 trillion MNT in dividends, the dividends attributable to the 66 percent shareholder, assuming proportional dividend distribution, would amount to approximately 5.82 trillion MNT. Accordingly, if the Government demands payment of 3 trillion MNT in dividends in 2026, it would have little choice but to accept that the 66 percent shareholder is also entitled to receive approximately 5.82 trillion MNT in dividends. It is important to point out that the Government has provided the public with no information whatsoever regarding this significant implication.

During and following the negotiations between the parties in the first half of this year, representatives of Rio Tinto reportedly maintained the above position. They explicitly confirmed this position during a meeting with journalists on September 17. It is also quite evident that the officials representing the Mongolian side are fully aware of this position.

In particular, during a press briefing held on September 17, B.Dulamsuren, Managing Director of Rio Tinto's operations in Mongolia; B.Telmuun, Chief Executive Officer of Erdenes Oyu Tolgoi LLC; and S.Munkhsukh, Chief Executive Officer of Oyu Tolgoi LLC, provided journalists with information regarding the project and the negotiations between the parties. On that occasion, both B.Dulamsuren and S.Munkhsukh explicitly referred to the position maintained by the investor holding the 66 percent shareholding in Oyu Tolgoi LLC: if the Mongolian Government is to receive dividends, Rio Tinto must likewise receive dividends in respect of its shareholding.

On a related note, at the same meeting, representatives of both Rio Tinto and Oyu Tolgoi LLC also made it clear that the amount of dividends to be distributed (e.g., the 3 trillion MNT claimed by the Mongolian Government) had not yet been finally determined, as the current Financial Year had not yet ended. Rather, the figure represented an amount that the Government expected or believed it would receive.

After all, under Section 15.1(a) of the Shareholders’ Agreement, the Board of Directors of Oyu Tolgoi LLC, the majority of whose members represent Rio Tinto, is the body responsible for deciding whether dividends should be distributed.

All in all, while the Government's decision to conduct a public opinion poll may appear commendable as an effort to facilitate public participation in decisions concerning natural resources and the benefits derived from strategic mineral deposits, its approach raises serious concerns.

Rather than addressing the matter within the framework of the Constitution and other applicable legislation, the Government appears to be approaching the issue in an insufficiently objective manner, without providing citizens with complete and material information. Such an approach risks turning what should be a substantive public consultation into an exercise in populism.

As a consequence, citizens may develop an incomplete or distorted understanding of the matter and, based on insufficient or inaccurate information, unjustifiably direct their criticism towards the investor, potentially escalating tensions between the parties. A public consultation of this significance should be based on transparency, accurate disclosure of material information and a proper understanding of the applicable legal framework, rather than on questions that may mislead the public or oversimplify a complex issue.