Effective from 21 August 2012, amendments to the Land Code of Ukraine (“Land Code”) introduced by the Law of Ukraine On amendments to the Land Code of Ukraine concerning the procedure for public sale of land in the form of an auction No. 5077-VI dated 5 July 2012, will detail the procedure for public sale (auction) of ownership rights, lease, superficies or emphyteusis over public and municipal land in Ukraine.

Such amendments provide, inter alia, that:

• the main stages of the land auction of public or municipal land include:

(i)     execution by the entity which exercises the right of state ownership or municipal ownership (the Organizer ) of the contract engaging the entity which will conduct the land auction (the Auctioneer);

(ii)    approval by the Organizer of the resolution to conduct the land auction specifying, inter alia, the lots, starting price for each lot, term of land use and other applicable conditions;

(iii)   publication of the land auction announcement in print media and on the official website of the State Agency for Land Resources of Ukraine;

(iv)  registration of the bidders (not later than three business days prior to the date of the land auction);

(v)   land auction takes place on a date which shall not be earlier than 30 days and later than 90 days after the auction announcement publication date;

(vi)  execution of the sale, lease, superficies or emphyteusis agreement between the Organizer and the auction winner; and

(vii) publication of the auction results (in print media and on the official website of the State Agency for Land Resources of Ukraine);

• starting sale price for a land plot shall not be lower than its independent expert valuation, contrary to the statutory monetary land valuation required in the past;
• the only registered bidder for any particular land plot shall be entitled to acquire such land plot for the starting price at the re-auction, provided that it remains the only registered bidder at such re-auction;
• the Organizer shall be entitled to suspend the land auction only in the event that conducting such land auction is not feasible for the reasons beyond its control. 

Introduction of the explicit land auction rules into the Land Code will fill the legal gap which for many years has exposed those market players that purchased the right of ownership or the lease right over the public or municipal land to legal risks.

We recommend that  companies who are considering acquiring land rights at the land auction seek advice from their counsel as to the practical application of the respective provisions of the Land Code.