Politics 2021-06-15T06:41:33+03:00
Ukrainian news
Rada Adopts New Version Of Law On Privatization Of State And Municipal Properties

Rada Adopts New Version Of Law On Privatization Of State And Municipal Properties

law, Verkhovna Rada, property, privatization

The parliament has adopted a new version of the law "On Privatization of State and Municipal Property."

The relevant draft law (No. 7066) was approved by 266 votes, compared with the minimum required 226, the Ukrainian News Agency reports.

The document provides for distribution of properties into two groups: objects of large-scale privatization and objects of small-scale privatization.

Objects of large-scale privatization include state and municipal enterprises and stakes in joint-stock companies in which the state owns more than 50% of the shares and with assets valued at more than UAH 250 million in the previous year.

All other assets are classified as objects of small-scale privatization.

The list of objects of large-scale privatization that are subject to privatization is to be approved by the Cabinet of Ministers based on proposals from the State Property Fund and the list of objects of small-scale privatization subject to privatization is to be approved by the State Property Fund independently.

The list of municipal properties that were added to the draft law before the second reading of the draft law will be approved by the relevant municipal councils.

According to the draft law, properties belonging to government agencies, particularly the Ministry of Defense and the Security Service of Ukraine, are subject to privatization if they do not ensure performance of the statutory functions of these agencies.

The draft law will significantly shorten the period of performance of privatization procedures compared with the current privatization procedures. In particular, the new version of the draft law abolishes pre-privatization preparation of properties and excludes the provisions on drafting and approval of privatization plans and creation of a privatization commission.

According to the explanatory note to the draft law, this will reduce the privatization period by about one year.

The draft law stipulates that objects of small-scale privatization are to be sold via electronic auctions.

To sell an object of small-scale privatization at an auction, the State Property Fund is to set up an auction commission to draft the privatization conditions.

In particular, social and cultural facilities are to be privatized on the condition that their operating profiles are preserved or that their operating profiles can be changed if they have not been out of operation for more than three years (or if they are in an unsafe condition).

The starting price of an object of small-scale privatization is to be set at the level of the book value of its assets (minus its liabilities, if such exist), but not less than UAH 1.

If the first auction is declared invalid, the draft law provides for a repeat auction with reduction of the starting price by 50%.

Objects of large-scale privatization are subject to sale at auctions, with the Cabinet setting the conditions.

The Cabinet of Ministers has the right to engage the services of an adviser to ensure that privatization is conducted in accordance with international standards and that the objects of privatization are offered to a wide range of potential buyers in Ukraine and abroad.

According to the draft law, the adviser is to assume the obligation of searching for potential buyers and determining the starting price of an object of large-scale privatization.

According to the draft law, an adviser cannot simultaneously be a buyer.

If the Cabinet of Ministers decides not to engage the services of an adviser, then the state privatization agency should determine the starting price.

The final starting price and the conditions of privatization of the property are to be approved by the Cabinet of Ministers.

If an object of large-scale privatization cannot be sold, the Cabinet of Ministers is to make the decision to sell the object at an auction, with the starting price reduced by 25%, followed by a 50% reduction, etc.

The draft law stipulates that buyers of objects of privatization cannot be a state that the parliament has declared as an aggressor state, legal entities in which an aggressor state owns a significant stake, legal entities with undisclosed beneficial owners, or individuals/legal entities under Ukrainian sanctions.

The draft law also stipulates that before January 1, 2021, the privatization agency must stipulate in contracts for sale of objects of large-scale privatization that the contracts are regulated by English law, in addition to provisions on transfer of ownership that are governed by the mandatory provisions of Ukrainian law and in accordance with the provisions of law "On International Private Law."

As Ukrainian News Agency earlier reported, the state budget for 2018 provides for generating UAH 21.3 billion from privatization of state properties in 2018.

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