Privatization process in Ukraine

Privatization process in Ukraine

I. Classification of privatization objects 

1. The objects of small-scale privatization shall include:

  • single property complexes of state and municipal enterprises and their structural subdivisions, including single property complexes and their structural subdivisions leased out, except for single property complexes of state and municipal enterprises that are objects of large-scale privatization;
  • individual property;
  • objects of unfinished construction (buildings, structures, transmission devices that have not been put into operation), conserved objects;
  • objects of social and cultural purpose.
  • blocks of shares of a joint-stock company formed in the process of privatization or corporatization, shares (stakes) owned by the state in the authorized capital of business entities, other business organizations and enterprises based on the combination of property of different forms of ownership and located in Ukraine or abroad, except for blocks of shares of joint-stock companies that are objects of large-scale privatization;
  • pools and other objects that do not belong to the objects of large-scale privatization.

2. Large-scale privatization objects include objects of state or 

municipal ownership (single property complexes of state-owned 

enterprises and blocks of shares (stakes) in business entities in the

authorized capital of which more than 50 percent of the shares 

(stakes) are owned by the state) and pools whose asset value 

(for a pool - the total value of the assets of privatization objects from

which the pool is formed), according to the financial statements for 

the last reporting year, exceeds UAH 250 million.

Who may not be buyers within the framework of privatization:

  • state authorities;
  • state-owned enterprises owned by the state of Ukraine;
  • state economic associations, state holding companies, state joint stock companies (companies), their subsidiaries and enterprises;
  • employees of state privatization bodies;
  • buyers registered in offshore zones (according to the list determined by the Cabinet of Ministers of Ukraine) with a non-transparent ownership structure (whose beneficial owners are not disclosed by 100 percent), as well as buyers originating from the aggressor state;
  • the state recognized by the Verkhovna Rada of Ukraine as the aggressor state, as well as legal entities in which such state has participation and persons controlled by such legal entities;
  • legal entities whose beneficial owners of 10 percent or more of the shares (stakes) are residents of a state recognized by the Verkhovna Rada of Ukraine as an aggressor state. This provision does not apply to legal entities whose shares are admitted to trading on foreign stock exchanges according to the list of the Cabinet of Ministers of Ukraine, except for legal entities that are residents of the aggressor state;
  • individuals - citizens and/or residents of the state recognized by the Verkhovna Rada of Ukraine as the aggressor state;
  • legal entities registered in accordance with the laws of the countries included by the FATF in the list of countries that do not cooperate in the field of combating money laundering, as well as legal entities with 50 percent or more of the authorized capital owned directly or indirectly by such persons;
  • legal entities whose information on beneficial owners has not been disclosed in violation of the Law of Ukraine "On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations";
  • individuals and legal entities subject to special economic and other restrictive measures (sanctions) in accordance with the Law of Ukraine "On Sanctions", as well as their related parties;
  • persons who were a party to the sale of a privatization object in Ukraine and with whom the sale   and purchase agreement for the privatization object was terminated due to a breach by such  persons, as well as persons related to them;
  • persons included in the Register of persons having significant economic and political influence in public life (oligarchs) in accordance with the Law of Ukraine "On Prevention of Threats to National Security Related to Excessive Influence of Persons Having Significant Economic and Political Influence in Public Life (Oligarchs)".


II. Sale process

1. Sale of small-scale privatization objects:

  • Small-scale privatization objects are sold exclusively at electronic auctions.
  • An electronic auction shall be held in accordance with an agreement concluded between the auction organizer and the operators of electronic platforms.
  • The standard agreement between the auction organizer and operators of electronic platforms shall be approved by the State Property Fund of Ukraine.
  • Information about the auction participants and information about potential buyers shall be treated as confidential information and shall not be disclosed until the auction is completed.

2. Sale of large-scale privatization objects:

  • The terms of sale and starting prices of large-scale privatization objects of state ownership at auctions shall be approved by the Cabinet of Ministers of Ukraine.
  • Prior to the first auction for the sale of a large-scale privatization object, the Cabinet of Ministers of Ukraine simultaneously approves the starting prices and conditions for the sale of a large-scale privatization object at auctions.
  • The procedure for conducting electronic auctions for the sale of large-scale privatization objects, the amount and procedure for payment of the fee for participation in an electronic auction, and determination of the winner based on the results of an electronic auction shall be approved by the Cabinet of Ministers of Ukraine.
  • The specifics of the sale of large-scale privatization objects in municipal ownership may be established by a decision of the relevant representative body of local self-government.

Completion of the auction

The winner of the auction who refuses to sign the auction protocol or the sale and purchase agreement or fails to pay the sale price of the privatization object within the established time limit, is deprived of the right to participate in subsequent auctions for the sale of the same object.

Upon completion of the auction, the guaranteed deposit paid by potential buyers shall be refunded to potential buyers who did not win the auction within a period not exceeding 10 business days from the date of approval of the auction protocol by the privatization body.

In case the winner of the auction refuses to sign the auction protocol or to conclude the sale and purchase agreement, or in case he fails to pay the sale price of the privatization object within the established time limit, the guaranteed fee shall not be refunded and shall be transferred to the relevant budget.

The winner of the auction shall be credited with the guaranteed fee, minus the fee for participation in the electronic auction, when paying for the privatization object.

Execution of privatization transactions

The contract of sale of the privatization object shall be concluded between the privatization body and the winner of the electronic auction after payment in full of the sale price of the privatization object and within 25 working days - for small-scale privatization objects, 35 working days - for large-scale privatization objects from the date of formation of the protocol on the results of the electronic auction.

If it is necessary to prepare documents for the notarization of the sale and purchase agreement for a privatization object by decision of the state privatization body, the state privatization body and the winner of the electronic auction shall conclude a preliminary sale and purchase agreement for the privatization object.

The costs associated with the preparation of documents for notarization of the sale and purchase agreement for the privatization object shall be borne by the winner of the electronic auction. In this case, the sale and purchase agreement for the privatization object shall be concluded within 60 business days from the date of conclusion of the preliminary agreement.

The ownership of the privatization object is transferred to the buyer after the conclusion of the contract for the sale and purchase of the privatization object and the signing of the act of acceptance and transfer of the privatization object, except in cases of transfer of ownership of a block of shares.

The ownership of the acquired block of shares is transferred to the buyer after the conclusion of the contract of sale of the privatization object and from the moment the block of shares is credited to the buyer's securities account in a depository institution.