Privatization of state and municipal property: procedure, conditions and stages

Last modified: January 2020

At the final stage of perestroika, a new phenomenon appeared, involving the transfer of state property into private hands. The transfer of state-owned enterprises to private ownership began in 1990, and the new regulations came into full force two years later. Privatization of state and municipal property includes a much broader application than simply transferring housing into personal ownership.

Both individuals and organizations privatize, and non-residential facilities and other types of property are transferred into ownership, with the exception of situations where no other owner is provided (for example, weapons, military equipment, etc.)

Types of privatization by objects and original owners

Depending on the type of property, the following types of privatization are distinguished:

residential real estate for citizens registered in it;
land (on a paid or gratuitous basis) with the right to perpetual ownership or inheritance for life;
enterprises and property with payment upon re-registration of a certain amount (sometimes very small) by individuals and organizations (open and closed joint stock companies, other enterprises arising from state farms and industrial production.

The property was re-registered from a municipal or state fund, with the only main difference being who previously owned it - the state or the local municipality. In the latter case, in addition to general federal legislation, the process of alienation and transfer to private ownership is regulated by regulations adopted in the region. Due to the fact that such acts did not contain fundamental differences, the procedure for privatizing such property was generally similar. See Law on Privatization of State and Municipal Property.

Privatization concept

Economic relations on issues of appropriation are of a fluid nature.
This means that there can be a transition from one form of ownership to another. Such processes are carried out by various methods, one of which is privatization. Definition 1

Privatization (from Latin - private) is the process of transferring state or municipal property for a fee or free of charge to private individuals.

Privatization is the direction of denationalization of existing property, which consists of transferring it into private ownership by individual citizens or legal entities.

Privatization of state and municipal property in Russia is its acquisition by individual citizens, partnerships from the state and local authorities.

The following types of property were transferred into ownership:

Enterprises and their divisions, separated into independent enterprises;
Tangible and intangible assets of enterprises;
Shares (shares, shares) of the state in the capital of partnerships;
Owned shares of privatized enterprises in the capital of other companies.

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Privatization could be of a hidden nature, for example, the lease of state property to private individuals or organizations for a long period of time; could be partial, in this form only part of the shares were sold; privatization could also be carried out through denationalization and reprivatization methods.

The scale of the privatization process in a particular country depended on the breadth of the use of methods of nationalization of the private sector in the previous time.

The basics of privatization in the Russian Federation were as follows.

Three privatization forms were distinguished: sale of property through an auction, on a competitive basis, through the sale of shares;

Two state structures were identified: a committee dealing with the management of state (municipal) property and property funds. The functions of the first were to prepare privatization plans and implement measures to prepare enterprises for the privatization procedure. The second structure was engaged in the sale of enterprises at auctions and the sale of their shares.

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Privatization objects and their valuation were determined. The value of the property was of particular importance. It was decided to evaluate enterprises based on the residual value of fixed assets.

Why is property privatization necessary?

Through the privatization of its property, the state resolved more important issues of regulating the share and degree of influence of the private sector in the economy of the entire country.

Privatization measures made it possible to change owners, wholly or partially owning property from the municipality or from the state. This helps solve more important issues in the development and strengthening of the competitiveness of the Russian economy, improving the indicators for the efficient use of the country's property resources.

The meaning of privatization is much broader than the simple transfer of state property into private hands. With its help the following issues are resolved:

improving the efficiency of operation or use of facilities;
reducing dependence on the country's budget;
increase in revenues to the budget of the municipality or state in the form of taxes and other deductions;
liquidation of debt obligations at the expense of buyers;
work to reduce the share of monopolies;
stimulating the lending market.

How to privatize an apartment for free: step-by-step algorithm

Thanks to the transfer of property to the private sector, new investment opportunities and an increase in the number of owners appear. In relation to the privatization of housing, citizens were given the opportunity to solve their housing problems on their own by taking personal ownership of real estate and disposing of it at their own discretion.

How state or municipal property is privatized

The privatization procedure is regulated by legislation, which provides various options for re-registration into private ownership:

By transforming a state-owned enterprise into a joint-stock enterprise (corporatization).
Through transformation into a limited liability company.
Through an auction sale of property or shares of an enterprise owned by municipal authorities or the state.
During the competitive sale of shares of such enterprises.
Sale of securities after the introduction of trust management.
Through trading on the stock exchange.
When selling an object with an unannounced price, if the auction sale was disrupted or did not take place due to certain reasons.
Through making your own property contribution to the strategically important companies being created.

The indicated options for carrying out privatization measures have been in effect since 2001, on the basis of a legislative act that has entered into force, canceling the previously valid vouchers, CHIFs and other types.

This is interesting: privatization of a room in a communal apartment.

Privatization of state and municipal property

CONTENTS:
• What is privatization and its types • The procedure for state privatization. property
• Methods of privatization • Features of privatization of municipalities. property

For the first time, privatization or transfer of state property into the hands of individuals and legal entities in Russia began to be carried out in the early 90s.
Most of the significant property owned by the Russian Federation was transferred immediately after the collapse of the USSR.

Now this process is still ongoing, but not on such a scale, since there are few objects left for this.

In the narrow sense, at that time, privatization affected all Russian citizens whose residential premises were municipal property. Everyone had the opportunity to privatize the housing in which they were registered and become owners.

In a broader sense, by privatization, legislators meant the transfer into private ownership of enterprises, non-residential assets, cultural objects, religious buildings, land plots, shares of enterprises, natural resources, and not just housing.

The law provided for the privatization of any property, except that which could be owned exclusively by the state, for example, military industry enterprises.

What is privatization and its types

Article 1 of Federal Law No. 178-FZ of December 21, 2001 gives the general concept of privatization of state and municipal property as its transfer on a paid basis to private individuals, and other articles of this law explain the ways in which it can be carried out.

The law clearly defines buyers and sellers of such property. Any individual or legal entity can buy it, with some exceptions, and the seller is the Government of the Russian Federation in alliance with the Federal Property Management Agencies.

The transfer of municipal property is carried out by local authorities independently in accordance with the law.

Property is called “state” and “municipal” depending on who owned it before the privatization procedure. The law determines the alienation of property of the state and municipalities only on a paid basis (in monetary terms or by transfer of shares of the OJSC to which the property is contributed).

And only the privatization of housing from the beginning of the law until now is free for citizens who live in it (from 03/01/2017 it will become paid).

Paid transfer of property includes:

1) Privatization of a land plot. It is carried out on a paid basis for all persons, with the exception of those who previously owned the plot as a result of inheritance or perpetual use.

2) Privatization of enterprises, non-residential properties, shares, and other property.

It is carried out only for a fee, sometimes purely symbolic. They can be obtained by individuals and organizations with private capital participation.

Privatization methods

Privatization of state or municipal property can only be done using the methods provided for in Article 13 of Federal Law No. 178 of 2001 (as some of its paragraphs were amended in 2011 and 2020).

According to this article, state or municipal property can be obtained into private ownership as a result of:

corporatization (reorganization) of unitary enterprises into OJSC (open joint-stock company);
reorganizing them without corporatization into an LLC;
sale of property, shares of the state or municipality at auction;
making such property as a contribution to the authorized capital of the JSC;
sales as a result of exchange trading;
auction sale of JSC shares on a specialized market trading in securities;
selling property without announcing a price (this method is used in the event of a failed or disrupted auction);
sale of state and municipal property on a competitive basis;
property contribution to strategic JSCs being created (for example, VGTRK, factories producing military products);
sale of shares of a joint-stock company based on the results of trust management;
selling property through public offerings.

Since the entry into force of Federal Law No. 178 in 2001, all of the listed methods of privatization began to be actively used. The authorities may choose any of them depending on specific circumstances.

Procedure for privatization of state and municipal property

According to legislative norms, the property of federal and local governments is privatized in the following order:

1) A privatization plan is being developed.

This is the most difficult stage, which requires drawing up an action program or forecast plan. Its development is entrusted to the Federal Agency for Property Management. A program is being drawn up taking into account the proposals of the state bodies and municipal authorities that own this property.

The program provides a list of all property (enterprises, shares, etc.), characteristics of objects scheduled for privatization, and the timing of their transfer to private ownership. The property of municipalities is transferred by decision of local authorities in accordance with the rules in force in a given district.

2) A decision is made on property privatization.

The final decision on objects planned for transfer to private ownership is made by the Government after reviewing the forecast plan. This is done for each upcoming financial year.

The decision must indicate the following information about the property being privatized:

its name and characteristics:
the chosen method of privatization;
the initial cost of the property (unless there is another decision of the Government of the Russian Federation);
installment payment period (if it is provided to the buyer);
other information required for privatization.

3) Privatization is carried out in accordance with Russian legislation.

Features of privatization of municipal property

There are some features in the transfer of municipal property.
Its most common type is the privatization of housing, which is carried out by municipal authorities. There are also residential premises (apartments, rooms) that belong to state enterprises, but their number is insignificant, and it is difficult for private individuals to obtain them.

First of all, many of them are not subject to privatization by law. In particular, officers living in military camps cannot apply for them. In some cases specified by law, they (due to disability, illness during service) or family members (in the event of their death) can continue to live there, but without the right to own housing.

Municipal property, unlike state property, has a much lower price for the privatized property. Therefore, it is usually sold at auction. Land plots intended for agricultural work are usually owned by the local executive authority.

The procedure for privatization of such land is carried out on the basis of regulations adopted by the municipality.
But basically, the privatization of state and municipal property is carried out according to the same rules prescribed in the Federal Law No. 178. Previous article: Privatization of official housing Next article: How to find out whether an apartment is privatized or not?

Procedure

In the process of transferring state and municipal property into private hands, all stages are strictly regulated.

To become the owner of municipal or state fund property, you must go through the following steps:

Planning stage for future events.
Development of an act that will serve as the basis for privatization with the transfer of property to private individuals.
Stage of registration of privatization actions. Having accepted the application, the official authority determines the ownership of the property specified in the application and considers the admissibility of privatization, specifying the conditions under which the property can be transferred to the applicant.
The opinion of the municipality must be agreed upon at the level of the Russian government, which makes the final decision on the transfer of property to the applicant.

The privatization process does not involve the proposal of several objects for the applicant to choose from. For example, when transferring land, the municipality does not offer several options for plots to interested parties, and there is no point in insisting on a different procedure for re-registration.