On January 18, 2017 Ukrainian Parliament has adopted the new Law of Ukraine “On privatization of state and communal property” (hereinafter – the Law). Although the Law is not effective yet, basic features of new way privatization proposed by the Law can be outlined and worth mentioning.
What is new?
The Law combines provisions of several existing laws which regulate privatization and implements amendments to procedure. In particular:
- Classification of the privatization subjects is greatly simplified. State and communal property subjects are divided in two groups: small privatization subjects and large privatization subjects (assets value of which 250 or more million UAH). Additionally, the list of subjects to privatization was expanded;
- New privatization rules stipulate two possible ways of privatization: auction (electronic auction) and repurchase of privatization subject:
- Privatization of large privatization subjects shall be performed through the auction or repurchase;
- Terms of privatization are halved. In relation to small privatization subjects the privatization term will constitute 6 months, in relation to large privatization subjects – 1 year.
- International financial organizations (e.g. EBRD, IFC etc.) will have a right to be a party to privatization of banks;
- Entity registered in jurisdiction included by FATF to the list of jurisdictions which do not cooperate in anti money laundering sphere or entity 50% or more shares of which is owned by a company from such jurisdiction is not able to be a buyer (party to privatization);
- Sale and purchase agreement of large privatization subjects may be governed by English law except the imperative provisions of Ukrainian law which regulate transfer of ownership rights;
- The Law implements possibility to refer a dispute between the parties of privatization to International Commercial Arbitration Court;
- Cadastral number of the land plot will not be an essential condition of sale and purchase agreement of the privatization subject. For the purpose of simplification of the process, privatization subjects will be sold without land plots;
- The Law implements prohibition of bankruptcy procedure initiation within one year after privatization on basis of reasons which occurred before the end of privatization process.
GOLAW will keep you informed on this matter.