ORDER OF THE PRESIDENT OF UKRAINE No. 194/96 OF 19 MARCH 1996

ON TASKS AND PECULIARITIES OF PRIVATIZATION OF STATE-OWNED PROPERTY
IN 1996

With the aim of determining tasks and priorities of privatization
of state-owned property in 1996, ensuring a uniform legal policy in
regulating privatization processes, eliminating gaps in the
legislation on these matters, creating conditions for structural
reconstruction of economy during privatization of state-owned
property and pursuant to article 25 of the Constitutional Agreement
between the President of Ukraine and the Supreme Council of Ukraine
"On major principles of organization and operation of state power
and local self-administration in Ukraine for the period before
adoption of the new Constitution of Ukraine" and article 3 of the
Law of Ukraine "On privatization of property of state-owned
enterprises"
I HEREBY ORDER:
1. To establish that objects of privatization, including integral
property complexes of state-owned enterprises and their structural
subdivisions transferred for lease, shall be classified in groups
depending upon the original (balance sheet) value of capital assets
specified in balance sheet reports for the quarters that precede
the dates of making the decisions by privatization bodies
concerning privatization of the objects (hereinafter referred to as
the value of capital assets), and in corresponding cases - other
features, viz.:
- group A - objects value of capital assets of which in prices as
of 1 January 1995 does not exceed 33.000 mln. karbovanets (except
objects of group Ă ), including structural subdivisions of the
enterprises which have not brought their status to conformity with
the legislation, enterprises that are parts of associations legal
status of which has not been earlier brought to conformity with the
legislation, structural subdivisions (units) of other enterprises
which can be separated as independent enterprises, including those
which sell similar or mutually substitutable types of goods (works,
services) as well as independent individually identified property
- buildings, constructions and non-residential premises -
irrespective of their value;
- group Á - objects value of capital assets of which in prices as
of 1 January 1995 is from 33.000 to 2.150.000 mln. karbovanets and
share of the value of capital assets per employee does not exceed
nominal value of privatization property certificate by more than
1.5 times (except objects of group Ă);
- group B - objects value of capital assets of which in prices as
of 1 January 1995 is from 33.000 to 2.150.000 mln. karbovanets and
share of the value of capital assets per employee exceeds nominal
value of privatization property certificate by more than 1.5 times
(except objects of group Ă);
- group Ă - objects value of capital assets of which in prices as
of 1 January 1995 exceeds 2.150.000 mln. karbovanets as well as
enterprises (irrespective of the value of capital assets) that
occupy monopoly position and have been recognized as such in
compliance with the established procedure; objects of military and
industrial complex that are subject to conversion pursuant to
corresponding programs; objects privatization of which is carried
out with involvement of foreign investors upon decisions of the
Government of Ukraine;
- group Ä - objects of unfinished construction, property of
liquidated and bankrupt enterprises;
- group E - blocks of shares of open joint-stock companies that
remain after privatization plans have been implemented; state-owned
shares of property of subjects of business activity of mixed form
of ownership; securities, shares, other property of objects of
privatization in other enterprises, economic companies, banks that
have not been included into authorized funds or have not been taken
into account during assessment of values of such objects of
privatization.
When indexation of balance sheet values of capital assets is
carried out, the values under which objects of privatization are
classified as well as nominal values of privatization property
certificates shall be subject to indexation.
2. To approve the amounts of privatization of state-owned property
in 1996 for the Autonomous Republic of Crimea, regions, cities of
Kyiv and Sevastopol (annexes No.No. 1 - 5).
3. The following shall be subject to priority privatization:
- objects of groups A, Ä, E (except shares of banks);
- objects irrespective of their belonging to the groups specified
in article 1 of this Order;
- state-owned property transferred for lease;
- objects which can be separated from trusts, trade departments,
associations, monopoly entities as integral property complexes,
objects of trade, public catering, everyday services and objects
that are not associated with major activity of their enterprises
and are alienated from property complexes of branch belonging;
- enterprises with capital assets general depreciation of which
exceeds 70 per cent;
- unprofitable enterprises of all branches, if their
unprofitability is not caused by the use of state fixed and
controlled prices and tariffs.
4. To establish that privatization property certificates shall be
issued to citizens until 1 July 1996 with preservation of the
certificates' validity until 31 December 1996 as envisaged by the
Order of the President of Ukraine of 21 April 1994 No. 178 "On
introduction of privatization property certificates into cash
circulation".
5. To ensure during privatization of state-owned property:
- obtaining by citizens of privatization property certificates
before 1 July 1996;
- complete use of privatization property certificates before 31
December 1996;
- general completion of privatization of objects of group A before
1 July 1996, except objects of the agro-industrial complex;
- creation of favorable conditions for involvement of foreign
investors in privatization.
6. Objects of group A with respect to which the legislation has
envisaged privatization by transforming into open joint-stock
companies as well as objects of groups Á, Â, Ă (except property of
state farms and other state-owned agricultural enterprises and
organizations) shall be transformed into open joint-stock companies
in compliance with the procedure envisaged by the Order of the
President of Ukraine of 26 November 1994 No. 699 "On measures to
secure citizens' rights to use privatization property
certificates".
In certain cases, upon decisions of directors of corresponding
state bodies of privatization the time-limit envisaged by part two
of article 7 of the Order of the President of Ukraine of 26
November 1994 No. 699 for submission of draft charters of open
joint-stock companies that are set up, statements of assessment of
property of objects of privatization, draft plans of allocation of
shares and lists of persons who have privileges while obtaining
shares of privatized objects pursuant to the legislation of Ukraine
to corresponding state bodies of privatization for approval may be
extended to two months.
7. To establish that fees for state registration of open
joint-stock companies that are set up pursuant to this Order shall
not be charged, state duty for registration of information about
issuance of shares of the companies shall not be paid.
8. To establish that privatization of property in the
agro-industrial complex shall be carried out in compliance with the
procedure established by the legislation of Ukraine for
privatization of such property, ensuring implementation of tasks
concerning amounts of privatization determined by this Order.
With respect to privatization of state-owned property, this Order
shall not be applied to property privatization that is carried out
with consideration of peculiarities determined by the legislation
for privatization of property in the agro-industrial complex,
except articles 13, 14, 22.
9. To establish that objects of privatization shall be sold at
auctions and contest sales, if two or more buyers are available. If
one buyer has been registered for participation in an auction or a
contest sale, privatization of a corresponding object shall be
carried out by repayment of the object by the buyer.
When state-owned property is repaid pursuant to part one of this
article, employees of enterprises (organizations of lessees) shall
have the right to a one-year installment of payment with
consideration of the discount rate of the National Bank of Ukraine
under condition that at least 30 per cent of the value of object of
privatization is paid during two months after signing contracts on
purchase.
10. Objects of privatization of group A shall be sold predominantly
with the use of ways that envisage competition among buyers.
Property of objects of group A and buildings (constructions,
premises) in which they are located shall constitute single objects
of small privatization, except cases when privatization of
corresponding buildings (constructions, premises) of national,
cultural, historical value that are under protection of the state
is prohibited by the legislation of Ukraine, or when corresponding
buildings (constructions, premises) have been transferred for
long-term lease in compliance with the procedure envisaged by the
Order of the President of Ukraine of 30 December 1994 No. 827 "On
measures to accelerate the process of small privatization in
Ukraine". Owners of objects of small privatization shall have the
right to repay, within the limits of the objects' areas, buildings
(constructions, premises) in which the objects of small
privatization are located at the moment of privatization of the
buildings (constructions, premises) under condition that they have
not used the right earlier. If owners of objects of small
privatization refuse to privatize corresponding buildings
(constructions, premises), they shall be privatized on the basis of
competition.
12. To establish that shares of open joint-stock companies that are
set up on the basis of objects of groups Á, Â, Ă , (including those
that were set up during corporatization), shall be sold with
observation of quotas envisaged by part one of article 15 of the
Order of the President of Ukraine of 26 November 1994 No. 699 by:
- privileged sale of shares, including for certificates issued for
the amounts of indexation of monetary savings of citizens of
Ukraine in the institutions of the Savings Bank of Ukraine and
former UkrDerzhStrakh (hereinafter referred to as the compensation
certificates) to employees of enterprises and persons of similar
authority in compliance with the legislation of Ukraine through the
share sale commissions;
- sale to citizens of Ukraine and financial mediators for
privatization papers through the certificate auction centers in
compliance with the procedure established by the Cabinet of
Ministers of Ukraine;
- sale to physical persons and legal entities who/that can be
buyers pursuant to the laws of Ukraine for the compensation
certificates through the certificate auction centers in compliance
with the procedure which shall be established by the Cabinet of
Ministers of Ukraine;
- sale of shares at stock markets, including at the Ukrainian Stock
Exchange and its affiliates in compliance with the procedure
envisaged by the Order of the President of Ukraine of 27 February
1995 No. 146 "On participation of the Ukrainian Stock Exchange in
privatization processes";
- sale of blocks of shares for money and the compensation
certificates at non-commercial contest sales under investment
obligations in compliance with the procedure which shall be
established by the Cabinet of Ministers of Ukraine. Lists of
enterprises blocks of shares of which are subject to sale at such
contest sales shall be determined: by the Cabinet of Ministers of
Ukraine - with respect to objects of group Ă , the State Property
Fund of Ukraine - with respect to objects of group B.
13. While privatizing property of open joint-stock companies that
were set up with observation of the time-limits envisaged by the
Order of the President of Ukraine of 26 November 1994 No. 699,
directors of objects of privatization, their assistant directors,
directors of the objects' structural subdivisions and, upon
decisions of the objects' directors, chief experts shall have the
right, after the objects' employees have acquired the shares, to
additional privileged money-based acquisition of the companies'
shares at their nominal values for a total amount of up to 5 per
cent of the companies' authorized funds with a one-year installment
of payment taking into account the discount rate of the National
Bank of Ukraine. The installment of payment shall be granted under
condition that at least 30 per cent of the acquired shares' value
is paid.
14. If time-limits of privileged sales of shares, determined by the
plans of allocation of shares of open joint-stock companies, are
observed, the persons specified in article 13 of this Order shall
have the right to additional acquisition, during privatization, of
the companies' shares at their nominal values for the compensation
certificates for a total amount of up to 5 per cent of the
companies authorized funds, after privileged sales and sales of the
open joint-stock companies' shares at certificate auctions for
privatization property certificates, in compliance with the
procedure which shall be determined by the State Property Fund of
Ukraine.
15. To establish that conditions of privatization of objects of
group Ă shall be coordinated with the Cabinet of Ministers of
Ukraine in compliance with the procedure which shall be established
by it.
To grant the Cabinet of Ministers of Ukraine the right to determine
the lists of objects, irrespective of their belonging to the groups
specified in article 1 of this Order, privatization conditions of
which are coordinated with the Cabinet of Ministers of Ukraine.
16. Privatization of state-owned enterprises - debtors against
which bankruptcy cases have been initiated as well as sale of
state-owned property of the enterprises which were recognized as
bankrupts in compliance with the established procedure shall be
carried out with consideration of the provisions of the Law of
Ukraine "On bankruptcy".
17. To establish that, as a partial amendment to the Order of the
President of Ukraine of 27 February 1995 No. 146, objects of group
E shall be sold, unless otherwise envisaged by foundation documents
of corresponding enterprises, economic companies, banks and there
are relevant approvals of other co-owners, by selling state-owned
shares at auctions or stock exchanges, including at the Ukrainian
Stock Exchange and its affiliates in compliance with
plans-schedules which shall be approved by the State Property Fund
of Ukraine.
If approvals of non-state founders (parties) concerning
transformation of enterprises of mixed form of ownership into open
joint-stock companies are not available, state-owned shares of
these enterprises shall be privatized by selling them at auctions
and contest sales.
18. State-owned enterprises and leased state-owned property shall
be privatized with consideration of the requirements of the
antimonopoly legislation, maximally ensuring creation of a
competition environment, prevention of monopolization of commodity
markets and taking into account available economic, technological
and other conditions. State-owned enterprises that occupy monopoly
position at regional commodity markets shall be privatized upon
coordination with corresponding bodies of the Antimonopoly
Committee of Ukraine.
19. To establish that objects located in the zone of guaranteed
free-will removal of population from the territory affected by
radioactive pollution as a result of Chernobyl disaster shall be
privatized with consideration of the requirements of the Law of
Ukraine "On legal status of the territory affected by radioactive
pollution as a result of Chernobyl disaster". Values of such
objects shall be assessed on the basis of balance sheet information
without consideration of potential profitability and expert
evaluation.
To establish that employees of the objects specified in part one of
this article and persons of similar authority may acquire any block
of shares (for objects of group A - any part of enterprises'
property) of these objects at the nominal values.
20. To suspend, until the Cabinet of Ministers of Ukraine solves
the issue of the procedure of privatization of state-owned property
located in the zone of unconditional (compulsory) removal of
population from the territory affected by radioactive pollution as
a result of Chernobyl disaster, privatization of state-owned
property located in this zone.
21. To introduce a national regime concerning participation of
foreign investors in privatization of property of the objects
specified in article 1 of this Order.
22. To establish that compulsory audits during privatization of
state-owned enterprises envisaged by the Law of Ukraine "On
auditing activity" may be carried out after plans of privatization
of corresponding objects have been implemented.
To recommend the Audit Chamber of Ukraine to determine fixed fees
for auditors' services when compulsory audits of state-owned
enterprises are carried out during privatization.
23. To approve the standards of distribution of money obtained from
privatization of property of objects of groups Ŕ, Á, Â, Ă, Ĺ
(annexes No.No. 6, 7).
24. To establish that the money of the extra-budgetary State fund
of privatization shall be used upon decisions of the State Property
Fund of Ukraine for purpose-oriented crediting of technical
re-equipment of privatized enterprises, creation of new employment
and objects of market infra-structure through the banking system of
Ukraine in compliance with the procedure which shall be determined
by the State Property Fund of Ukraine together with the National
Bank of Ukraine upon coordination with the Cabinet of Ministers of
Ukraine.
25. To establish that the money, obtained from privatization of
objects of unfinished construction that remain on the accounts of
the extra-budgetary State fund of privatization, extra-budgetary
funds of privatization of the Autonomous Republic of Crimea,
administrative and territorial units after reimbursement of
expenses associated with privatization and deductions determined by
this article to state-owned enterprises, shall be placed to the
budget of the Autonomous Republic of Crimea, corresponding local
budgets and subsequently directed to finance start-up and most
important construction of regional significance of state form of
ownership.
Money, obtained from privatization of objects of unfinished
construction under the Chernobyl construction program, shall be
used in compliance with the established procedure.
Money, obtained from sale of state-owned enterprises - debtors
against which bankruptcy cases have been initiated as well as that
obtained from sale of state-owned property of enterprises which
have been recognized as bankrupts in compliance with the
established procedure, shall be distributed pursuant to the Law of
Ukraine "On bankruptcy".
26. The Cabinet of Ministers of Ukraine shall:
- determine within one month the list of enterprises of food
industry that process agricultural raw materials, flour and cereal
as well as feed-mix industries, service, construction, firm trading
and other non-agricultural enterprises and organizations of the
agro-industrial complex which are privatized with consideration of
peculiarities determined by the legislation for privatization of
property in the agro-industrial complex;
- accelerate preparation of the draft Order of the President of
Ukraine concerning privatization of enterprises that are of special
importance for the economy and security of the state, envisaging in
it, in particular, clear-cut criteria of defining such enterprises
and a mechanism of their privatization;
- consider the question of the procedure of privatization of
state-owned property located in the zone of unconditional
(compulsory) removal of population from the territory affected by
radioactive pollution as a result of Chernobyl disaster, and, if
necessary, submit a corresponding draft legislative act in
compliance with the established procedure;
- submit in compliance with the established procedure a draft
legislative act to ensure participation of deported persons who
return to Ukraine in privatization of state-owned property;
- draw up draft legislative acts concerning introduction of
amendments and addenda to the legislative acts directed at
acceleration and improvement of privatization process.
27. The State Property Fund of Ukraine shall:
- approve quarterly schedules of holding certificate auctions,
ensuring implementation of the privatization amount tasks
determined by this Order;
- monthly report on implementation of the privatization amount
tasks determined by this Order.
28. Personal responsibility for implementation of tasks determined
by this Order shall be born by:
- with respect to privatization of state-owned property - the
Chairman of the State Property Fund of Ukraine, directors of
central bodies of state executive power authorized to manage
corresponding property;
- with respect to privatization of communal property - heads of
state administrations and directors of corresponding state bodies
of privatization;
- with respect to privatization of property owned by the Autonomous
Republic of Crimea - the Prime-Minister of the Government of the
Autonomous Republic of Crimea.
29. This Order shall enter into force from the day of signature,
and be valid until 31 December 1996 inclusively.

L. Kuchma
President of Ukraine

ANNEX No. 1
to the Order of the President of Ukraine
of 19 March 1996 No. 194/96

AMOUNTS OF PRIVATIZATION OF STATE-OWNED OBJECTS OF GROUP A, AND
ESTIMATED MONEY PROCEEDS


RegionNumber of integral property complexes (without objects of the
agro-industrial complex)Number of individually defined property,
constructions, premisesNumber of objects of the agro-industrial
complexthe Autonomous Republic of
Crimea522Regions:Vinnytsya29225Volyn33337Dnipropetrovsk903225Done
tsk1082110Zhytomyr7152Transcarpathian1080Zaporizhya353220Ivano-Fr
ankivsk151814Kyiv142614Kirovograd6016101Lugansk24210Lviv2102Mykol
ayiv2160Odesa2719Poltava161835Rivne102954Sumy2865Ternopil1020Khar
kiv1023817Kherson191126Khmelnytsky171025Cherkasy5104Chernivtsi181
254Chernigiv12815City of Kyiv99265City of
Sevastopol940Total799629482Head of the Administration of the
President of UkraineD. TabachnikANNEX No. 2to the Order of the
President of Ukraineof 19 March 1996 No. 194/96AMOUNTS OF
PRIVATIZATIONof objects of group A which are in the ownership of
the AutONOMOUS REPUBLIC OF CRIMEA AND COMMUNAL OWNERSHIP OF THE
REGIONS, AND ESTIMATED MONEY PROCEEDS


RegionNumber of integral property complexes (without objects of the
agro-industrial complex)Number of individually defined property,
constructions, premisesNumber of objects of the agro-industrial
complexthe Autonomous Republic of
Crimea63923Regions:Vinnytsya266977Volyn1858416Dnipropetrovsk50221
00Donetsk2833590Zhytomyr1298940Transcarpathian105270Zaporizhya267
1647
Ivano-Frankivsk18713312Kyiv2171270Kirovograd325570Lugansk5121330L
viv4771205Mykolayiv95175Odesa21321045Poltava384566Rivne1079213Sum
y210439Ternopil243820Kharkiv35018257Kherson307358Khmelnytsky15245
5Cherkasy1187421Chernivtsi197742Chernigiv1644626City of
Kyiv5462770City of Sevastopol23200Total69262914475Head of the
Administration of the President of UkraineD. TabachnikANNEX No. 3to
the Order of the President of Ukraine
of 19 March 1996 No. 194/96

AMOUNTS OF PRIVATIZATION
OF STATE-OWNED OBJECTS OF GROUPS Á, Â, Ă, AND ESTIMATED MONEY
PROCEEDS


RegionNumber of objectsNumber of open joint-stock companies plans
of allocation of shares of which were approved but the shares have
not been offered for salethe Autonomous Republic of
Crimea150Regions:Vinnytsya19416Volyn4610Dnipropetrovsk9048Donetsk
20680Zhytomyr1090Transcarpathian5516Zaporizhya1020Ivano-Frankivsk
8716Kyiv660Kirovograd8314Lugansk12624Lviv6749Mykolayiv650Odesa119
16Poltava11531Rivne2328Sumy8617Ternopil720Kharkiv16612Kherson1322
2Khmelnytsky7723Cherkasy588Chernivtsi5220Chernigiv3524City of
Kyiv8810City of Sevastopol70Total2341484Head of the Administration
of the President of UkraineD. TabachnikANNEX No. 4to the Order of
the President of Ukraineof 19 March 1996 No. 194/96AMOUNTS OF
PRIVATIZATIONof objects of groups Á, Â, Ă which ARE IN THE
OWNERSHIP OF THE AUTONOMOUS REPUBLIC OF CRIMEA AND COMMUNAL
OWNERSHIP OF THE REGIONS, AND ESTIMATED MONEY PROCEEDS


RegionNumber of objectsNumber of open joint-stock companies plans
of allocation of shares of which were approved but the shares have
not been offered for salethe Autonomous Republic of
Crimea860Regions:Vinnytsya246Volyn4011Dnipropetrovsk21938Donetsk2
353Zhytomyr140Transcarpathian60Zaporizhya53Ivano-Frankivsk44Kyiv1
0Kirovograd50Lugansk230Lviv274Mykolayiv655Odesa3214Poltava1011Riv
ne61Sumy160Ternopil20Kharkiv950Kherson2221Khmelnytsky3227Cherkasy
381Chernivtsi00Chernigiv2835City of Kyiv164City of
Sevastopol30Total1042218Head of the Administration of the President
of UkraineD. TabachnikANNEX No. 5to the Order of the President of
Ukraineof 19 March 1996 No. 194/96AMOUNTS OF PRIVATIZATIONof
objects of groups Ä , ĹRegionNumber of objects of group Ä Number of
objects of group E the Autonomous Republic of
Crimea265Regions:Vinnytsya165Volyn227Dnipropetrovsk1918Donetsk241
2Zhytomyr178Transcarpathian513Zaporizhya1616Ivano-Frankivsk4831Ky
iv612Kirovograd2310Lugansk1918Lviv1243Mykolayiv1216Odesa4173Polta
va1247Rivne2014Sumy44Ternopil46Kharkiv6290Kherson118Khmelnytsky18
4Cherkasy176Chernivtsi148Chernigiv816City of Kyiv18140City of
Sevastopol624Total500654Head of the Administration of the President
of Ukraine
Tabachnik

ANNEX No. 6
to the Order of the President of Ukraine
of 19 March 1996 No. 194/96

STANDARDS
OF DISTRIBUTION OF MONEY OBTAINED FROM PRIVATIZATION OF PROPERTY OF
OBJECTS OF GROUPS Á, Â, Ă, Ĺ (IN PER CENTS)

Reimbursement of expenses associated with privatization,
information support of privatization process30Financial support of
implementation of the state program of privatization12,5Creation
and operation of a single computer-assisted information network of
state bodies of privatization22,7Purpose-oriented financing of
activity of social objects transferred to communal ownership of the
enterprises that are privatized11Crediting of technical
re-equipment of privatized enterprises8Development of
entrepreneurship and creation of new employment5Maintenance of
state-owned property which was not included into authorized funds
of joint-stock companies and remains in their balance
sheets0,6Reimbursement of expenses on actions and
claims0,2Maintenance of network of certificate auction
centers10Head of the Administration of the President of UkraineD.
Tabachnik
ANNEX No. 7to the Order of the President of Ukraineof 19 March 1996
No. 194/96STANDARDSof distribution of money obtained from
privatization of property of objects of group Ŕ (in per
cents)Reimbursement of expenses associated with
privatization19,4Reimbursement of expenses on actions and
claims0,2Maintenance of state-owned property which was not included
into authorized funds of joint-stock companies and remains in their
balance sheets0,4Deductions into local budgets80Head of the
Administration of the President of UkraineD. Tabachnik