Lawyer practicing real estate, construction and land law.
Privatization of state property
Privatization is based on the alienation of property on a paid basis. After this procedure, property that is in state ownership passes into the ownership of legal entities or individuals. If you are interested in the issue of privatization, we will help you with this. One of the areas of activity of our law firm Prykhodko and Partners is the preparatory stage for auctions and support for the privatization of state property.
Since the introduction of martial law in Ukraine, auctions related to the privatization of the public sector have been suspended for some time. However, starting in September 2022, they have resumed their work in the Prozorro.Sales system. Thanks to the unlocking of this service, not only the state budget is replenished, but also the economy is restored and jobs are provided.
Privatization: What objects are subject to alienation?
The Law of Ukraine “On Privatization of State and Municipal Property” significantly simplified the national legislation related to privatization issues. In particular, the Law defines the following types of privatization: large and small. The type of privatization and the procedure for conducting it directly depend on the objects subject to alienation.
- Small privatization objects
This category includes enterprises and state property, the total value of which does not exceed a quarter of a million hryvnias. Privatization of state property is carried out exclusively through the Prozorro.Sales system.
- Large privatization objects
The cost of large privatization objects is from a quarter of a million hryvnias. In most cases, advisors are involved in this type of privatization. It is the advisors who ensure the process of preparing privatization objects and are engaged in the search for potential investors who can be trained in the process of holding auctions.
Real estate specialists of our law firm Prykhodko and Partners provide consulting, investment and privatization services.
Important: if you initiated the privatization process yourself, you will have to wait for the auction commission to develop the conditions for the sale of state property. In the future, these conditions are approved by the privatization authority. In conditions of martial law, the list of these conditions is significantly reduced.
Please note that the winner of the auction may receive additional obligations:
- Preservation of the profile of the activities of social or cultural facilities that are subject to the privatization procedure (healthcare, education, art facilities, etc.).
- Provision of social guarantees to employees of the above-mentioned facilities.
- Repayment of debts to the state budget and the wage fund.
According to Article 4 of the Law “On Privatization of State and Communal Property”, not all property may be subject to privatization. For example, the following objects are not subject to privatization:
- Objects that ensure the defense capability of the state.
- Property that forms the basis of the national sovereignty of Ukraine.
- Subsoil.
- Minerals, etc.
- Military property, property of healthcare institutions.
Before including an object in the list of objects of privatization, state bodies must necessarily check the prohibitions that may be established by current legislation.
Participation in the auction: what to consider?
We would like to draw your attention once again: privatization of state property is carried out exclusively through ProZorro.Sales. This resource presents all the objects and detailed information about them.
The next stage is submitting an application. Please note: during the period of martial law, the commission responsible for conducting the auction approves the features of privatization only after the potential participant provides a letter of intent to privatize the selected object. This letter will be the basis for participation in the auction.
Article 14 of the Law clearly states the list of documents that must be submitted to participate in privatization. However, today, in addition to the general package of documents, two additional ones must be submitted:
- Application for familiarization with the object.
- Certificate of the absence of restrictions on the participation of a potential participant in privatization.
The next stage is the verification of the submitted documents. The platform (ProZorro.Sales, etc.) through which the participant was registered for the auction is responsible for this direction. Until the moment of approval of the protocol, the compliance and content of the documents are additionally checked by the privatization authority.
A qualified electronic signature (QES) is used to sign the protocol. The term for signing the protocol is no more than 7 business days.
How is the price of a state-owned object determined? The starting price is announced by the auction commission (the value is formed based on the book value, i.e., the assets of the object).
It is quite difficult to independently go through all the stages of privatization of state property. A more rational solution is to delegate this process to specialized organizations. Our law firm Prykhodko & Partners has all the necessary tools to participate in auctions for the privatization of state property.
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