Small-scale privatisation refers to the sale of state and municipal property with a value not exceeding 250 million UAH: non-residential premises, buildings, integral property complexes, construction projects under development, and individual items of property. The procedure is governed by Law of Ukraine No. 2269-VIII ‘On the Privatisation of State and Municipal Property’, and its main rule is simple: the sale of small-scale privatisation assets takes place exclusively via electronic auctions on the ‘Prozorro.Sales’ system. There are no ‘arrangements’ outside the system — all property up for sale is published on the electronic trading platform, and anyone who meets the legal requirements can take part.
The transparency of the procedure does not mean it is straightforward. In practice, participants lose money and time due to common mistakes: failing to inspect the property and purchasing premises with encumbrances or debts; missing the deadlines for submitting documents; miscalculating the security deposit; failing to pay attention to the terms of sale (for example, the obligation to maintain the business profile); and, after winning, were unable to conclude and pay for the contract on time — thereby forfeiting their deposit. Another area of risk is the restrictions on participants: the law bars from the auction individuals linked to the aggressor state, persons subject to sanctions, and entities with opaque offshore ownership.
We provide comprehensive support for participation in small-scale privatisation auctions, from due diligence on the asset to the registration of ownership: we verify the legal soundness of the lot and the terms of sale, prepare the documentation, guide the client through the registration and bidding processes, draw up the sale and purchase agreement and, where necessary, challenge procedural violations.
Call us on: +38 095 554-54-24. We will inspect the asset and support your participation in the auction.
How small-scale privatisation works: the legal framework
In addition to the basic Law No. 2269-VIII, the procedure is set out in detail in CMU Resolution No. 432 of 10 May 2018 (Procedure for conducting electronic auctions for the sale of small-scale privatisation assets) and CMU Resolution No. 433 of 10 May 2018 (selection of electronic trading platform operators and the system administrator). Sales are conducted using two auction models: the classic (English) model — with a step-by-step increase in price — and the Dutch model — with a step-by-step reduction in the starting price if there were no bidders at the first auction. The starting price is based on the asset’s book value or appraised value.
The sellers are state privatisation bodies and local authorities, whilst the buyers are individuals and legal entities registered in Ukraine or abroad, with the exception of those expressly prohibited from participating by law.
Before bidding on a lot, it is advisable to carry out a legal check on the property – in effect, due diligence – to ensure you do not purchase property with hidden encumbrances.
Stages of participation in a small-scale privatisation auction
The procedure can be broken down into several steps:
- selecting an asset in the system and reviewing the terms of sale (profile, encumbrances, deadlines);
- registration on an accredited electronic platform of the ‘Prozorro.Sales’ system;
- payment of the guarantee and registration fees (registration fee — approximately 1,200 UAH);
- submitting a bid and participating in the auction (English or Dutch style);
- if successful — signing the auction results protocol;
- concluding a sale and purchase agreement with the privatisation authority and paying the price of the asset;
- completing the transfer of ownership.
The deposit is credited towards the payment for the lot if you are the successful bidder, and is refunded to unsuccessful bidders. However, if you are the successful bidder but fail to sign or pay for the contract, you forfeit the deposit — this is one of the most costly mistakes.
When you need a solicitor — and when you can manage on your own
If you are buying a small, straightforward property free of encumbrances, are confident in navigating the system and have carefully read the terms of sale — it is entirely feasible to complete the registration and participation process yourself, and we honestly acknowledge this. A solicitor is not essential here.
It’s a different matter, however, when the property is ‘ambiguous’: there’s a risk of encumbrances, a disputed history of the property, terms of sale involving additional obligations, or the stakes are high and the cost of a mistake is significant. In such cases, having the property checked and the transaction handled by a professional more than pays for itself.
It’s the same logic as with a standard property purchase: for more details, see the pages of a property solicitor and drawing up a sale and purchase agreement. If the property in question is a plot of land or a complex including land, we draw on our expertise in land matters.
How we handle small-scale privatisation
- we verify the property: the seller’s title, encumbrances, debts, registry details and terms of sale;
- we assess the risks associated with the terms of sale (business profile, obligations of the successful bidder);
- we prepare the documentation package for participation and monitor compliance with deadlines;
- we support registration on the platform and the calculation of fees;
- we draw up the sale and purchase agreement with the privatisation authority and monitor payment and transfer;
- in the event of procedural irregularities — we challenge the auction results.
What risks does a participant face if they proceed without due diligence?
The first risk is purchasing a property with encumbrances, debts or a contentious history, which only ‘come to light’ after the contract has been signed. The second is failing to notice obligations in the terms of sale (such as maintaining the property’s profile or settling the company’s debts), the non-fulfilment of which provides grounds for terminating the contract and repossessing the property. The third is missing deadlines for submitting documents or making payments and losing the security deposit. The fourth is failing to take note of restrictions on participants and being disqualified after the auction. And the fifth is failing to appeal in time against a procedural breach that caused you to lose the auction. Each of these risks can be mitigated by carrying out a due diligence check in good time.
Cost of services (small-scale privatisation)
| Service | Cost |
|---|---|
| Advice on participating in the auction | from 1,500 UAH |
| Legal due diligence of the asset with a report | from 5,000 UAH |
| Preparation of documents and support for participation in the auction | from 5,000 UAH |
| Drafting and support for the sale and purchase agreement | from 5,000 UAH |
| Challenging auction results in court | from 10,000 UAH |
| Comprehensive ‘turnkey’ support | from 30,000 UAH |
In addition to the fee, there are payments to be made as part of the procedure itself: a registration fee (approximately 1,200 UAH), a deposit (which is either refunded or applied towards the purchase price), notarisation of the contract where required, payment of the property’s purchase price following the auction results, and fees for registering ownership.
Questions and Answers (small-scale privatisation)
What falls under small-scale privatisation?
State- and municipally-owned assets valued at up to 250 million UAH: individual items of property, non-residential premises and buildings, complete property complexes, and unfinished construction projects. These are sold exclusively via ‘Prozorro.Sales’ electronic auctions.
Who can take part in the auction?
Individuals and legal entities registered in Ukraine or abroad. Persons associated with the aggressor state, individuals subject to sanctions, and entities with non-transparent offshore ownership are not permitted to participate.
How does an English auction differ from a Dutch auction?
An English auction involves a step-by-step increase in price from the starting price. A Dutch auction is used if there are no bidders: the price is reduced in stages until a buyer emerges.
What is a deposit, and is it refundable?
This is the sum paid to take part. For the successful bidder, it is credited towards the payment for the lot; for unsuccessful bidders, it is refunded. However, a successful bidder who fails to sign or pay for the contract forfeits the deposit.
Why check the property before the auction?
To avoid buying property with encumbrances, debts or a disputed history, and to avoid taking on unnoticed obligations under the terms of sale. Due diligence is the cheapest way to avoid the most costly problems.
What happens if the terms of sale are not fulfilled?
If the terms include obligations (such as maintaining the business profile or settling the company’s debts), failure to fulfil them may constitute grounds for terminating the contract and returning the property to the state. It is therefore essential to assess the terms before participating.
Can the auction results be challenged?
Yes, if there have been procedural breaches, the auction results and the organiser’s actions can be challenged, including through the courts. It is important not to miss the deadlines.
How long does the whole procedure take?
From the publication of the lot to the signing of the contract — usually a few weeks, depending on the terms of the specific auction and the deadlines set by the organiser.
Does the contract need to be notarised?
It depends on the property. For real estate, notarisation and state registration of ownership are usually required. We handle this as part of our support services.
How much do your services cost?
From 1,500 UAH per consultation. The cost of our support services depends on the complexity of the property and the scope of work; we will quote an exact amount once we have reviewed the lot.
Contact a lawyer specialising in small-scale privatisation at Svarog
During the consultation, we will assess the property you are interested in, explain the risks and terms of sale, and support your participation in the auction — from verifying the lot to registering ownership. If the property is straightforward and you can manage it yourself, we’ll tell you so. If there are disputes regarding the property or the contract, we’ll involve our commercial litigation practice.
Telephone: +38 095 554-54-24, +38 096 554-54-25 (Telegram, Viber, WhatsApp). Address: 7 Khoriva Street, Office 2, Kyiv (Podil). Opening hours: Mon–Fri, 9.00–18.00.