реформування процедур приватизації

Reforming privatization procedure rules under “transparency” and “openness” principles

The Law of Ukraine “On amendments to laws of Ukraine concerning improvement of privatization” (the “Law”) that introduces some amendments to the Law of Ukraine “On privatization of state property” of 1992 entered into force March 6, 2016. This Law modernizes privatization procedures, introducing transparent rules of privatization, and invites fair national and foreign investors aiming at modernization of Ukrainian industry to participate in 2016 privatization.

A symbolic fact is that principles of “openness” and “transparency” are among principles of privatization now (Art. 2).
The list of persons that cannot act as buyers of entities subject to privatization was enlarged by the following categories:

 legal persons, where Ukraine acting as a state owns more than 25% of shares (parts, stocks), this requirement aims at transfer of state enterprises to truly “private hands”, and if any state’s influence remains, it will not affect considerably the management of the enterprise (Para. 3 Art. 8);

 legal persons or affiliated parties registered in the state recognized by Verkhovna Rada as a state-aggressor, or if sanctions were imposed upon such state under the legislation, and natural persons or affiliated parties who are citizens of the state recognized by Verkhovna Rada as a state-aggressor, or if sanctions were imposed upon such state under the legislation (Para. 3 Art. 8). This innovation claims to make impossible to privatize state enterprises by Russian natural and legal persons that traditionally had significant influence and connections with Ukrainian economy.

In the light of enactment of Laws of Ukraine “On prevention and counteraction to legalization (laundering) of proceeds received from crimes, terrorist financing and financing of proliferation of weapons of mass destruction” of 2014, “On Amendments to some laws of Ukraine regarding records of the ultimate beneficial owner (controller) of the legal person” of 2015 and some amendments introduced to Tax Cade of Ukraine, Law of Ukraine “On state registration of legal persons and natural persons – entrepreneurs” pointed at disclosure of information concerning natural and legal persons to comply with the requirements of principle of transparency, the Law provides as a requirement of participation in privatization to present information concerning potential buyers or persons in whose interests state entities are planned to be purchased, their founders, members, including natural persons – ultimate beneficial owners (controllers). Potential buyers who are natural persons shall present a certificate issued by tax authorities confirming submission of declaration on property and incomes (tax statement) and potential buyers who are legal persons shall present information on their financial and property state (Para. 4 Art. 9).

According to the Law the parties are granted the possibility to choice an arbitration tribunal to consider possible disputes: under the agreement of the parties’ disputes arising between the buyer and the seller in connection with or out of the purchase agreement of the object of privatization may be decided by international commercial arbitration court (Para. 10 Art. 27). This rule creates an alternative for the parties to apply to arbitration instead of state courts that nowadays are trusted by investors poorly.

The Law provides preparation for privatization and sale of integral property complex of state enterprises and shares of joint-stock companies that at the moment of decision of privatization have strategic importance for economy and security of state or are dominating in the national market as well as enterprises of defense-industrial sector may be accomplished with the involvement on competitive basis of advisors in order established by Cabinet Council of Ukraine (Para. 7 Art. 16). Such advisors are called to assess the object impartially, to promote it among possible investors and contribute to the best sale of it from the state’s point of view.

So, the Ukrainian legislator created fertile ground for privatization of the state sector. Now the task is to realize all these legislative amendments.