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Ukraine simplifies privatization rules
Avellum, Kyiv, Ukraine,
Fri, March 9, 2018
On 7 March 2018, Law of Ukraine “On the Privatisation of State and Municipal Property” No. 2269-VIII, dated 18 January 2018 (“Law”) became effective. AVELLUM’s lawyers contributed to the drafting process of the Law.
The Law seeks to simplify and increase the attractiveness of the privatisation process. It radically changes the privatisation procedure and introduces additional safeguards to protect rights of the participating buyers.
Instead of 7 legislative acts and 6 categories of privatisation objects, the privatisation will be governed by just one Law (except for the privatisation of state-owned housing stocks and state and municipal lands), which provides for:
· 2 categories of privatisation objects: large privatisation objects – with the value of assets exceeding UAH250 million, and small privatisation objects – all other objects
· 2 unified and clearly structured privatisation procedures – open electronic auction (for small privatisation), and conditional auction with the involvement of professional advisor (for large privatisation)
The Law establishes additional guarantees for buyers’ rights. In particular, it will now be possible to:
· submit disputes arising out of privatisations’ sale and purchase agreements to the international arbitration
· govern large privatisation objects’ sale and purchase agreements by English law (until 1 January 2021)
· envisage state’s responsibility for the completeness and reliability of the information disclosed regarding the privatisation object
The Law also prohibits the following persons to participate in the privatisation:
· a state declared as an aggressor (the Russian Federation) by the Verkhovna Rada of Ukraine, as well as legal entities, whose ultimate beneficiary is the aggressor state or its resident
· individuals, who are citizens or residents of the aggressor state
· entities and individuals that were sanctioned under the Law of Ukraine “On Sanctions” and persons related to them
We believe that the Law creates effective tools enabling the launch and implementation of large-scale privatisation in Ukraine.