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4.1 Entrepreneurship and Property
4.1.4 New Approaches to Small Business
Privatisation
Appendix
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(1) Sample regulations for open non-commercial
tenders for the sale of state and municipal property
I. General regulations
1. A decision on the tender sale of an object
of state property
shall be taken by the oblast, municipal, or regional state
property management committee, with the consent of the work
collective of the enterprise to be privatized, the local
council of peop le's deputies, and the state
agencies for
anti-monopoly policy and support to new economic structures
(if
applicable).
2. Enterprises (associations), organisations,
departments,
other subdivisions of enterprises and organiszations, and
single property production complexes shall be deemed objects
of
state property which may be sold by tender.
3. Tender sales shall apply as a rule for
small municipally
owned assets, as well as in the case of a monopoly or special
social significance, for given objects within the economy
of a
corresponding region.
4. Citizens and non-state legal entities
may participate as
bidders at tenders for objects of state property, held in
accordance with these Regulations.
5. Priority shall be given to individual
citizens and work
collectives in the tender sale of objects of state property.
6. People's deputies at all levels, and
employees of the state
property management committees property funds (personally
or
via other individuals) and their close relatives, shall
be prohibited from participating as bidders in tenders for
state
and munici pal property. This regulation shall also apply
to
these individuals for one year after they leave those
positions.
II. Preparation for tenders
7. A tendering shall be carried out on behalf
of the property
fund by a tender commission, formed from representatives
of the
corresponding property fund and/or committee, the local
Council
of People's Deputies, the state agency for anti-monopoly
policy
and support for new economic structures, and specialists
invited for the purpose.
8. The tender commission shall in general
comprise 5 to 9
members.
9. The chairman of the tender commission
shall be elected by
the members of the commission and approved by the corresponding
property fund.
10. The tender commission shall determine
the terms, procedure,
and timeframe for holding tenders.
11. The tender commission shall compile
reports on objects of
state property to be tendered, and shall arrange for the
publication of the reports in the local press and special
information bulletins no later than 30 calendar days before
the
announced date of the tenders.
12. The reports must include the following
information on the
entities of state property to be offered for tender:
- the tender terms;
- the name and address of the object and
the organisation which
has the right of economic management;
- the volume and basic list of products
(or services), and the
numbers and composition of staff of the state property;
- a list of the assets and liabilities of
the enterprise;
- the date, time, and place of holding of
the tenders;
- the method of payment, and terms for granting
the right to
pay by instalments, if such is stipulated;
- information on the premises occupied and/or
the plot of land,
and the terms of use and disposal of such by the property
owner;
- the amount of the deposit and the required
information about
the account to which it must be transferred;
- the address and deadline for acceptance
of applications for
participation in the tenders;
- the date, time, and procedure for obtaining
information about
the entity;
- the telephone number for clarification
or receipt of
additional information; as well as other information at
the
discretion of the tender committee.
13. The following may be included in the
tender terms:
- the obligation to produce or perform certain
types of
products or services, principally consumer goods and services;
- restriction of retail prices and service
fees;
- protection of the ecological environment;
- retention or creation of jobs;
- the bid for the entity;
- restrictions on the resale of the entity
to other legal
entities and private individuals for the duration of a certain
period of time; and other terms at the discretion of the
tender
commission.
14. If the conditions set forth in points
11-13 of these
Regulations are not met, the tender sale of the object of
state
property shall be prohibited by a higher authority of the
property fund, subsequent to the filing of a claim by any
of
the participants, the local council of people's deputies,
or
the work collective of the enterprise. Failure to observe
the
conditions could serve as grounds to render the tender null
and
void.
III. Tender terms for participants
15. To participate in a tender, a potential
bidder must submit
to the tender commission an application, and a certificate
of
transfer of the amount of the deposit to the settlement
account
indicated in the report.
16. The deposit shall be made by way of
a non-cash transfer of
funds to the account of the appropriate committee. The amount
of the transfer shall be equivalent to 10% of the starting
price of the object of state property.
17. The tender application shall include
proposals in
accordance with the terms set forth by the tender commission.
18. The deadline for accepting tender applications
shall be
three working days prior to the first meeting of the tender
commission.
19. A bidder shall be granted the status
of participant in the
tender at the time of receipt of written notice of such
from
the tender commission.
IV. Procedure for holding the tenders
20. Information on individuals who have
submitted tender
applications, and the content of their proposals, shall
be
deemed confidential from the start of the first sitting
of the
tender commission.
21. The meetings of the tender commission
shall be held behind
closed doors.
22. The sale price shall be determined during
the examination
of the tenders. It may not be less than 30% below the starting
price.
23. The decision on the choice of winner
of the tenders shall
be taken by the tender commission by majority vote, based
on
the consideration of all proposals of the participants,
according to the tender terms.
24. After the meeting of the tender commission,
when the winner
is chosen, a report shall be compiled, indicating:
- the composition of the tender commission;
- the tender terms;
- the proposals of the tender participants;
- the rationale for the choice of the tender
winner; and
- information on the tender participants.
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25. The report shall be signed by all members
of the tenders
commission and sent to the organisations forming the tenders
commission and all tender participants. The tender results
may
be appealed within 30 calendar days of the date of receipt
of
the rep ort.
26. The decision of the final meeting of
the tender commission
when the winner of the tenders was declared shall be approved
by the appropriate property fund.
27. In the case of flagrant violations of
the tender procedure,
the property fund may, within two months from the time that
the
tenders commission chooses the winner, revoke that decision.
28. In the case of rejection of the tender
results, a lack of
tenders for the proposed object, or the tender committee's
decision not to declare a winner, the property committee
may
adopt one of the following decisions:
- to declare new tenders, recommending that
the appropriate
tender commission change the tender terms; or
- to sell the object of state or municipal
property at an
auction or via transformation into a joint stock company.
V. Settlements Procedure
29. Within 30 calendar days of the date
of receipt by the
tender winner of a report on the tender results, the buyer
shall transfer to the settlement account the monetary sum
indicated in the report. The deadline for payment shall
be
extended for another
30 calendar days if the buyer makes a payment
of no less than
50% of the cost of the object. If the buyer fails to transfer
the established sum before the indicated deadline, he or
she
shall be deprived of the right of ownership of the acquired
object; th e deposit shall not be refunded.
30. The sum of the deposit shall be returned
to all tender
participants within 10 calendar days.
VI. The buyer's assumption of the rights
of ownership
31. The individual who acquires the object
of state or
municipal property by tender shall assume the rights of
ownership, as of the signing by the members of the tender
commission, of the report on the tender results. A copy
shall
be deemed a provisional certificate of the buyer's rights
of
ownership.
After payment by the buyer of the full cost
of the acquired
object, he or she shall sign with the seller a contract
of sale
of the state property, determining the obligations of the
parties in strict accordance with the tender results.
33. In the case of a substantial discrepancy
between the actual
state of the object of state property at the time of the
buyer's assumption of the rights of ownership, and the
information submitted to the tender commission, the property
fund shall bear pr operty liability according to the decision
of a court of law or arbitration tribunal.
34. If an individual acquires the object
of state property by
tender and does not pay for it by the established deadline
and
damage is caused to the entity by his or her actions, the
sum
of such damage shall be exacted from that person according
to
the de cision of a court of law or arbitration tribunal.
35. Information on the tender results shall
be published within
15 calendar days in the local press, and shall contain the
following:
- information on the person acquiring the
ownership of the
object of state or municipal property;
- the terms, approved by the tender commission,
of the sale of
the object of state or municipal property;
- the final purchase price;
and other information at the discretion
of the tender
commission or property fund.
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