NEW LAW ON LEASE OF STATE AND MUNICIPAL PROPERTY AND CANCELLATION OF THE LIST OF OBJECTS WHICH MAY NOT BE PRIVATISED

On 25 December 2019, the President of Ukraine signed the new Law of Ukraine “On Lease of State and Municipal Property” (“Law”). The Law will become effective and apply starting from 1 February 2020. The Law introduces a number of positive measures aimed at improving lease of state and municipal property, namely:

• revises categories of landlords and tenants, establishing restrictions for the latter
• abrogates pre-emptive rights of employees of state and municipal companies to lease it as a going concern
• sets general criteria for classifying property as one that must (“First List”) or may (“Second List”) be leased based on a competitive basis
• provides for the possibility of the relevant authority to allocate property to the First or Second List based on the above criteria
• prescribes that the auctions will be held exclusively in the electronic form
• establishes a shorter appeal period for the landlord’s refusal to conclude a lease agreement via an auction

The lease of state and municipal property will be performed according to the detailed Procedure of Transfer of the Property into Lease, which should be adopted by the Ukrainian Government by 1 May 2020.

On 20 October 2019, the Law of Ukraine “On the Annulment of the Law of Ukraine “On the List of State-run Property Objects that Are Not Subject to Privatisation” (“Law on Annulment”) became effective. The Law on Annulment cancels 20-year restrictions on privatisation of more than 500 state property objects (such as Boryspil International Airport, Joint Stock Company “Ukrposhta”, Joint Stock Company “Ukrainian Railway” etc.). State property located in temporarily occupied territories is still prohibited from privatisation until full restoration of the constitutional order of Ukraine within such territories.