The Verkhovna Rada adopted a generally updated law on privatization

New law will shift large privatizations to Prozorro auctions without advisors and speed up small privatizations

The Verkhovna Rada adopted an updated law on privatization No. 7451, called to transfer large-scale privatization to Prozorro auctions, to speed up small-scale privatization and to remove a number of problematic issues. The official portal of the Parliament informs about it.

233 deputies voted for the adoption of the bill, with the required minimum of 226.

“The relocation of Ukrainian business from dangerous places continues. And privatization can help enterprises find premises, restore it and develop it for the benefit of the Ukrainian economy. So, with the right approach of the new owners, old facilities can be turned into efficient production facilities through the privatization procedure,” noted the Head of the State Property Fund Olga Batova.

Among the important changes in the privatization of state and communal property, the following should be noted:

• auctions for the sale of objects of large-scale privatization and their redemption are not held;
• no privatization of objects in the war zone or close to it is carried out;
• The State Property Fund monthly submits to the Verkhovna Rada Committee information on designated electronic auctions, the results of the sale of state property and proposals for legislation;
• documents for participation in an electronic auction – in electronic form;
• information about each auction participant is anonymous;
• the size of the guarantee fee at electronic auctions of small-scale privatization objects is set by the auction commission in the amount of: 10 minimum wages – for objects whose starting price ranges from 1 to 500 thousand UAH; 10% of the starting price of the privatization object – for objects whose starting price is more than UAH 500,000;
• the starting price of the object is at the level of the book value.

Earlier in an interview for Interfax-Ukraine the acting head said that big privatization showed the inefficiency of advisers. Claims include lengthy preparation of the object for the procedure, duplication of transactions with potential buyers, corruption risks of being engaged by one of the potential buyers.

“The bill proposes that the Fund will make a virtual folder with all the information about the enterprise: all existing contracts, court cases, financial statements – we fully set out and give each potential buyer three months to do an audit on their own,” the acting head of the FGI noted.

The law also simplifies the procedures, in particular, the online signing of the auction protocol, shortens the process from the moment the auction is announced to the signing of the contract to two months, introduces the possibility in some cases to do without the AMCU, cancels the requirement for publication in the Vedomosti Privatization newspaper.

“In addition, we provided a very important change that will always be in effect: so that payment for the object should be made before the signing of the contract – after the auction and the signing the protocol, but before the signing of the contract. There are several cases, especially at auctions held at the end of February, that buyers do not want to pay, arguing that they are force majeure circumstances, ” said Olga Batova.

An important norm for the sale of objects with arrests has also been added, which will allow creditors to finally receive their funds. The ownership right will be re-registered to the winner, but all arrests will remain until the new owner repays the debt.

“There are more than 115 enterprises on the list for privatization today. These are those for whom decisions on privatization have already been made, and they are ready for privatization, but we cannot sell them, because they are under arrest. In general, there are much more such facilities in the management,” summed up the head of the State Property Fund.

As GMK Center informed earlier, on March 30, the Verkhovna Rada adopted a government bill No. 4543, called to unfreeze the process of big privatization.

Large privatization was suspended by law No. 540-IX of March 30, 2020. In connection with the quarantine, the document established restrictions on the privatization of large objects.

Earlier the government approved the list out of 420 state-owned enterprises that will be transferred to the management of the State Property Fund for further privatization and liquidation.