On 2 March 2018, President Poroshenko signed the Law “On Privatization of State Property,” which aims to revolutionize the outdated approach to privatization and establish competitive and transparent procedures for the sale of state and municipal property.
See below the main novelties of the Law:
- Privatization is now governed by a single law, instead of seven
- Objects of state property are divided into two categories—large and small objects of privatization—instead of six categories. Sale of each category is governed by separate rules
- To be categorized as a large object, the asset value must exceed UAH 250,000,000 (approx. €7.5 million)
- Large objects will be sold through “auction with conditions,” with the mandatory assistance of an investment counselor. Small objects of privatization will be sold exclusively through online auctions. Under previous rules, there used to be five privatization procedures, none of which required the services of an investment counselor
- The auction for sale of large objects must be held no later than within 60 days since the publication of notification; in case of small objects, the term must not exceed 35 days
- The amount of security deposit has been reduced from five-twenty percent to five percent of the opening price
- A foreign investor may demand to include arbitration clause in an SPA; if no specific arbitration forum was determined, any dispute arising out of the agreement must be delegated to the Arbitration Institute of the Stockholm Chamber of Commerce. In addition, potential buyers of large objects of privatization may require that an SPA is governed by English law, considering Ukrainian choice of law rules.