Law on privatization of state property in Ukraine to become effective on 7 March

Law on privatization of state property in Ukraine to become effective on 7 March

The new Ukrainian law on privatization, which effectively bans Russian enterprises from acquiring the nation’s state-owned corporations, will enter into legal force on 7 March, reports.

The law, earlier signed by the President Poroshenko, was published in the official newspaper of the Ukrainian parliament Holos Ukrainy on 6 March and is expected to be enforced on the following day after its publication.
The law provides for the sale of large state-owned enterprises (with a book value exceeding $9.5 million) via auctions involving reputable advisers, as well as the sale of smaller corporations through Prozorro-based electronic auctions. Companies with at least 10% of Russian beneficiaries will not be invited to participate.

At the same time, the law considerably simplifies the privatization procedure, squeezing all existing regulations into a single law, as opposed to the seven earlier. The law also allows buyers to challenge bidding results in international courts of arbitration.
In early March, the President of Ukraine Petro Poroshenko signed the bill on privatization. The Prime Minister Volodymyr Groysman expressed hope that the law will attract investors to state-owned enterprises, which are currently unprofitable, as well as reduce the corruption risks.

The adoption of the new law on privatization, introducing modern and effective mechanisms for the sale of state assets, is a prerequisite for continuing cooperation with the IMF. The state budget for 2018 provides $800 million of revenues from privatization. In 2017, gains from the sale of state assets were planned at $640 million, but actual revenues amounted to $127 million. In total, the government plans to privatize over 900 state-owned companies.
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