Ukraine resumes and simplifies privatisation procedures
On 28 July 2022, the Parliament of Ukraine adopted a set of simplification measures aimed at resuming and simplifying auction sales of state-owned companies and assets. The re-launched privatisation processes is expected to attract investments necessary to sustain Ukraine’s wartime economy and assist with the relocation of businesses to safer regions.
The new legislation includes the following:
- unblocking privatisation of state-owned enterprises where property is mortgaged, arrested or otherwise encumbered while preserving the creditors’ rights;
- transferring all valid licences and permits to a new business owner after acquiring a privatisation object (i.e. simplifying the transitioning post-privatisation period), instead of obliging the new owner to obtain these regulatory authorisations as previously required;
- for auction items with a value exceeding UAH 250 million, introducing the requirement to hold large-scale privatisation auctions using the Prozzoro.Sale electronic procurement system, which is more transparent and competitive than the previous procedure (note that privatisation auctions in relation to the above items will become possible only after martial law has been lifted);
- switching to online announcements of privatisation auctions;
- significantly reducing the preparation time for privatisation: particularly, reducing the period from the auction announcement date to the signing of a respective sale and ensuring that the purchase agreement with a private investor does not exceed two months; and
- introducing the martial law-driven obligation to pay the purchase price in advance (i.e. before signing a sale and purchase agreement) after winning an auction.
The new law awaits the President’s signature and will enter into force on the day of its promulgation. The final text of the law is not yet available and further CMS updates will follow if the legislation regulates the above-mentioned procedures differently.
Legislation: Law of Ukraine On Amendments to Certain Legislative Acts of Ukraine to Simplify Processes of Business Relocation during the Martial Law and to Promote Economic Revival of the State, adopted on 28 July 2022.
Maria Orlyk, managing partner, Kyiv CMS RRH
Tetyana Dovgan, partner, Kyiv CMS CMNO