fbpx

New Ukrainian approach to privatization

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 small privatization subjects shall be performed through the electronic auction;
– 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.

It should be noted that currently the Law has passed the second stage of the law adoption procedure; therefore it is not effective yet till the moment of signing of the Law by the President.

 

GOLAW will keep you informed on this matter.

Max Lebedev

Max Lebedev

Partner, Head of Corporate Law and M&A practice, Attorney at law

  • Recognitions
  • The Legal 500 EMEA 2020
  • Best Lawyers in Ukraine 2020
  • Ukrainian Law firms. A Handbook for Foreign Clients 2019

Related insights

GOLAW has been recognised as the best Ukrainian law firm in the field of Corporate law

06 July 2020 News

GOLAW has been recognised as the best Ukrainian law firm in the field of Corpora...

Read
GOLAW is recommended by IFLR1000 2021 – one of the leading international law firm rankings

02 July 2020 News

GOLAW is recommended by IFLR1000 2021 – one of the leading international law fir...

Read
GOLAW helps register over three miillion UAH in tax invoices for agricultural company

19 June 2020 News

GOLAW helps register over three miillion UAH in tax invoices for agricultural co...

Read
View all

We use cookies to improve performance of our website and your user experience.
Cookies policy