September 2020 – Yesterday, 22 September, the President of Ukraine signed the Law which amends the Law of Ukraine "On privatisation of state and communal property" (the "Law"), introduces parliamentary control over the privatisation of state property and "unfreezes" the preparatory procedures to privatise large-scale state-owned objects. The Law was adopted by the Ukrainian parliament on 8 September 2020 and will become effective after its official publication.
Although the Law introduces a temporary prohibition against holding auctions for large-scale privatisation objects during the period of quarantine as introduced by the Cabinet of Ministers of Ukraine (the "CMU"), it does not prohibit large-scale privatisations as such. This therefore allows for the preparation of large-scale privatisation objects to continue and for their sale to be resumed immediately following the revocation of quarantine restrictions.
Large-scale privatisation — According to the government's Priority Action Plan for 2020, the State Property Fund of Ukraine (the "SPFU") should sell JSC United Mining and Chemical Company no later than by December this year. Earlier it was also planned to privatise by the end of this year the following large-scale privatisation objects: PJSC "Odessa Port Plant", SE "Zavod Electrovazhmash", coal company "Krasnolimanska" and PJSC "President Hotel", however, these enterprises are not yet mentioned in the above government plan.
In August this year, the CMU (in addition to the previously transferred 530 state-owned enterprises) transferred approximately 200 enterprises in the energy, mining, machine-building, chemical, processing, hotel, pharmaceutical and agricultural industries to the SPFU's management for their further privatisation within the large- and small-scale privatisation schemes. The list of these enterprises can be accessed at the following link.
Small-scale privatisation — Please also note that small-scale privatisation has been launched in Ukraine and continues. It commenced with the successful sale of the Dnipro Hotel and continued with the announcement of an extensive program for the privatisation of state enterprises in the alcohol industry, which will abolish the state monopoly over alcohol production in Ukraine. For example, on 15 September 2020, an auction was announced for the sale of the first small-scale privatisation object, the production facility Nemyrivske Production and Storage Site (object of SE “Ukrspyrt”), which should take place on 15 October 2020 (the announcement is available at the following the link). In total the SPFU will put up for sale 41 distilling plants that are part of SE “Ukrspyrt” and 37 additional plants that are the part of the “Ukrspyrt” concern. The full list of the objects transferred for sale within the small-scale privatisation scheme can be accessed at the following the link.
In view of the renewal of the privatisation processes in Ukraine, this alert is the first in a series of alerts to inform you of the most important privatisation news and investment opportunities related to privatisation.
Please refer to this short presentation for more information on the peculiarities of the privatisation procedure in Ukraine and the state property objects that are subject to privatisation.
Kinstellar has extensive experience supporting privatisation projects in Ukraine. Our lawyers supported the landmark privatisation of PJSC "Odesa Port Plant" in 2015–16 and have represented the State Property Fund of Ukraine in this project since 2018. In July of this year, we represented a foreign investor in preparation for the small-scale privatisation of the Dnipro Hotel. We have also been involved in the development of Ukrainian privatisation legislation and are therefore well acquainted with regulatory, corporate, commercial, compliance and other related issues accompanying the privatisation process in Ukraine. We also have extensive experience in competition law and in obtaining merger control approvals for clients when acquiring assets in Ukraine, which is an important step in the privatisation process.
For further information please contact Olena Kuchynska, Managing Partner, at , and Iryna Nikolayevska, Partner, at .
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