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| Law on Privatization of State and Municipal Enterprises (1991) | |
|---|---|
| Title | Law on Privatization of State and Municipal Enterprises (1991) |
| Enacted | 1991 |
| Jurisdiction | Russia |
| Status | amended |
Law on Privatization of State and Municipal Enterprises (1991)
The Law on Privatization of State and Municipal Enterprises (1991) was a foundational statute enacted during the collapse of the Soviet Union and the rise of the Russian Federation that redefined ownership of industrial, commercial, and service enterprises formerly controlled by the Council of Ministers of the USSR and republican administrations. The statute interacted with reform programs promoted by figures such as Boris Yeltsin, institutions like the Supreme Soviet of Russia (1990–1993), and policy packages including the Shock Therapy (economic policy) initiatives advocated by Yegor Gaidar and advisors linked to the International Monetary Fund. The law served as a legal pivot connecting earlier decrees like the Law on State Enterprises (1990) and later initiatives such as the Voucher Privatization campaigns and the formation of entities tied to the Russian Ministry of Property Relations.
The 1991 statute emerged amid political turmoil involving the August Coup (1991) and the dissolution of the Soviet Union, reflecting debates among deputies in the Congress of People's Deputies of the Russian Federation, advisers from the World Bank, and economic reformers associated with the Berezovsky group and the Gaidar team. It responded to precedents set by the Law on Cooperatives (1988), the Law on Enterprises and Entrepreneurship (1990), and executive orders by Boris Yeltsin and the Presidential Administration of Russia. Legislative drafting drew upon comparative models from the United Kingdom, Czechoslovakia, and Poland, while negotiating interests represented by the Luzhniki faction and regional authorities such as the Moscow City Duma and the Saint Petersburg Legislative Assembly.
The statute established principles for transfer of ownership, codifying procedures for conversion of enterprises using mechanisms like open subscription, auction, and voucher distribution referenced in debates involving Anatoly Chubais, Viktor Chernomyrdin, and Yegor Gaidar. It defined property categories influenced by earlier norms from the RSFSR legal framework and international norms promoted by the International Monetary Fund, the European Bank for Reconstruction and Development, and the Organization for Security and Co-operation in Europe. The law specified protection for minority shareholders in line with standards advocated by legal experts from Harvard University, London School of Economics, and the University of Pennsylvania, while recognizing rights of municipalities represented by the Association of Russian Cities and republican bodies such as the Tatarstan State Council.
Implementation required administrative acts issued by the Ministry of Finance (Russia), the State Property Committee of the Russian Federation (GKI), and regional offices like the Governor of Moscow Oblast and the Saint Petersburg City Hall. Procedures incorporated valuation methods developed with assistance from consultants associated with McKinsey & Company and auditing firms such as Arthur Andersen and KPMG, and used competitive mechanisms similar to auctions run in line with practice in Austria and Germany. The law allowed privatization via share issuance overseen by securities authorities connected to the Moscow Interbank Currency Exchange and regulatory frameworks comparable to the Securities and Exchange Commission (United States) in reform proposals.
Administration relied on a network of bodies including the State Property Committee of the Russian Federation (GKI), the Ministry of Property Relations, regional property commissions, and municipal councils like the Moscow City Duma. The institutional design intersected with fiscal organs such as the Ministry of Finance (Russia), regulatory agencies like the Federal Commission for Securities Market (Russia), and oversight from parliamentary committees within the State Duma. Interaction occurred with commercial courts modeled after reforms proposed by jurists from the International Bar Association and arbitration institutions linked to the Supreme Court of Russia and regional courts in Sverdlovsk Oblast and Kemerovo Oblast.
Privatization influenced sectors including energy conglomerates such as Gazprom, metallurgical firms in Magnitogorsk Iron and Steel Works, and financial institutions like Sberbank of Russia, while affecting employment patterns in industrial centers like Nizhny Tagil and Chelyabinsk. The transfer of assets contributed to creation of oligarchic structures associated with figures such as Boris Berezovsky and Roman Abramovich, and sparked social responses from labor collectives represented by the Federation of Independent Trade Unions of Russia and civic movements like Russia Without Communism. Macro effects were debated by economists at the Russian Academy of Sciences, the Higher School of Economics, and the Institute of Transitional Economy, and measured against inflation episodes of the early 1990s and fiscal adjustments overseen by the Central Bank of Russia.
The law faced litigation in commercial and constitutional venues including the Constitutional Court of Russia and disputes adjudicated in the Supreme Court of the Russian Federation, with challenges brought by regional governments such as Tatarstan and corporate litigants including privatized enterprises. Subsequent amendments were enacted by sessions of the State Duma and signed by presidents like Boris Yeltsin and later modified during presidencies of Vladimir Putin to address issues raised by rulings involving property rights, corporate governance, and privatization of strategic assets such as stakes in Rosneft and RAO UES.
Comparative analyses referenced privatization experiences in United Kingdom, Czechoslovakia, Poland, and Chile, and drew on policy advice from the World Bank and the International Monetary Fund; scholars at Columbia University and University of Cambridge assessed Russian outcomes against models applied in Latin America and Central Europe. The 1991 statute influenced privatization frameworks in post-Soviet republics including Ukraine, Belarus, and Kazakhstan, and informed international legal scholarship appearing in journals associated with Oxford University Press and Cambridge University Press.
Category:Law of Russia Category:Privatization