Law of Ukraine on Privatization of State Property

Law of Ukraine on Privatization of State Property
Name	Law of Ukraine on Privatization of State Property
Enacted	1991–present
Jurisdiction	Ukraine
Status	active

Law of Ukraine on Privatization of State Property.

The Law of Ukraine on Privatization of State Property regulates transfer of ownership and management of state-owned enterprises within Ukraine and frames interactions among institutions such as the Verkhovna Rada, Cabinet of Ministers of Ukraine, State Property Fund of Ukraine, President of Ukraine. It establishes procedures rooted in post-Soviet reforms linked to events like the Dissolution of the Soviet Union, the Ukrainian independence referendum, 1991, and economic transitions influenced by actors such as the International Monetary Fund, the World Bank, and the European Bank for Reconstruction and Development.

Overview and Purpose

The statute aims to implement privatization policies to transform assets held by the State Property Fund of Ukraine and subordinate bodies, align with commitments to institutions including the European Union, the Organisation for Economic Co-operation and Development, and the World Trade Organization, and to attract investors such as Goldman Sachs, Deutsche Bank, and BlackRock. It defines objectives tied to fiscal policy debates in the Verkhovna Rada, property rights contested in cases before the Supreme Court of Ukraine, and structural reforms advocated by figures like Yulia Tymoshenko, Viktor Yushchenko, and Petro Poroshenko.

Historical Development and Legislative Background

The law evolved amid milestones including the Law of Ukraine "On Property", early 1990s privatization waves associated with the Voucher Privatization in the Soviet Union, and later amendments responding to crises such as the 2008–2009 global financial crisis, the 2014 Ukrainian revolution, and conflict after the Annexation of Crimea by the Russian Federation. Legislative amendments were debated in the Verkhovna Rada and shaped by coalitions linked to parties like Svoboda (political party), Petro Poroshenko Bloc, and Servant of the People (political party), while judicial interpretations emerged in proceedings involving the Constitutional Court of Ukraine and commercial disputes heard at the High Administrative Court of Ukraine.

Key Definitions and Scope

The law defines categories such as "state property," "state-owned enterprise," "corporatization," and "strategic enterprise," with criteria reflecting lists produced by the Cabinet of Ministers of Ukraine and reviews by the State Property Fund of Ukraine. Definitions intersect with international classifications applied by institutions like the International Monetary Fund and legal norms considered by the European Court of Human Rights in cases involving property rights. The scope covers enterprises previously part of ministries such as the Ministry of Energy and Coal Industry of Ukraine, holdings in sectors like Naftogaz, and assets tied to infrastructure overseen by authorities such as the Ministry of Infrastructure (Ukraine).

Privatization Procedures and Mechanisms

Privatization mechanisms include competitive auctions administered by the State Property Fund of Ukraine, public offerings on the Ukrainian Exchange (UX)],] tender procedures involving ProZorro, direct sales subject to approval by the Cabinet of Ministers of Ukraine, and investment tenders coordinated with multilateral lenders such as the European Investment Bank. Procedures reference due diligence standards similar to those used by Deloitte, KPMG, and Ernst & Young, and require disclosure norms connected to the Securities and Stock Market State Commission of Ukraine and the National Commission on Securities and Stock Market (Ukraine). Special regimes apply for "strategic enterprises" listed by the Verkhovna Rada and for assets with security implications involving the Security Service of Ukraine.

Roles and Responsibilities of State Bodies

Primary responsibility lies with the State Property Fund of Ukraine for valuation, sale, and monitoring, while the Cabinet of Ministers of Ukraine issues regulatory acts and the Ministry of Finance (Ukraine) oversees fiscal implications. Legislative oversight occurs in the Verkhovna Rada committees such as the Committee on Economic Development, with executive enforcement involving the Antimonopoly Committee of Ukraine and legal review by the Office of the Prosecutor General of Ukraine. International coordination is conducted with entities like the European Commission and International Finance Corporation when privatization is linked to loan conditionality or investment guarantees.

Restrictions, Safeguards, and Anti-Corruption Measures

The statute and subsequent reforms impose restrictions for enterprises deemed strategic by the Verkhovna Rada and introduce safeguards tied to transparency platforms like ProZorro.Sale and asset declarations compatible with standards from the Group of States against Corruption (GRECO), the United Nations Convention against Corruption, and anti-money laundering frameworks by the Financial Action Task Force. Oversight mechanisms involve the National Anti-Corruption Bureau of Ukraine, the Special Anti-Corruption Prosecutor's Office, auditing by the Accounting Chamber of Ukraine, and investigative journalism by outlets such as Bihus.Info and Slidstvo.Info that have exposed malpractices in privatization of assets related to figures like Dmytro Firtash and Ihor Kolomoisky.

Impact, Outcomes, and Criticisms

Outcomes include successful sales of assets like regional utilities and industrial plants, controversies over allocation of vouchers during the 1990s privatization era, and debates over effectiveness reflected in analyses by the World Bank, the International Monetary Fund, and Ukrainian think tanks such as the Razumkov Centre and the Institute for Economic Research and Policy Consulting. Criticisms focus on perceived asset undervaluation flagged by media such as The Kyiv Post and Ukrainska Pravda, legal challenges in courts including the High Court of Justice (Ukraine), and geopolitical concerns raised by the European Parliament regarding strategic sales. Ongoing reforms aim to reconcile fiscal goals promoted by the Ministry of Finance (Ukraine) with anti-corruption demands advocated by the Council of Europe and civic groups like Anti-Corruption Action Center.

Category:Law of Ukraine