Earlier this autumn the Cabinet of Ministers of Ukraine set the list of 17 state-owned coal-extracting enterprises to be corporatized, i.e., transformed into a public joint-stock companies, by 2014.

Most of these enterprises are located in the Donetsk and Lugansk Regions in the Donetsk coal basin, one of the biggest coal basins in the world.

The list is laid down in Decree No. 728-p “On Approval of the Schedule for Corporatization of State Coal-Extracting Enterprises in the Period up to 2014”. This decree was adopted to implement Order No. 270 of the Ministry of the Coal Industry of Ukraine (currently the Ministry of the Fuel and Coal Industry of Ukraine) “On Approval and Implementation of the Plan for Reform of the Coal Industry”” of 22 July 2010. This plan envisages extensive reform of the coal industry in the period 2010-2014. In particular it is aimed at liberalization of the market, including through privatization of state-owned coal-extracting enterprises. Corporatization of state-owned coal-extracting enterprises and increasing the transparency of their financial reporting is the first step to their further privatization.

On 6 May 2012, the Law of Ukraine “On Peculiarities of the Privatization of Coal-Extracting Enterprises” came into force and introduced a number of legal and regulatory incentives available to coal-extracting enterprises as soon as they are privatized.

Although these steps by the Ukrainian government do not lead to immediate liberalization of the whole market, if viewed from broader perspective they are definitely positive indicators of movement along the path set out in the plan for reform of the Ukrainian coal industry.

Additional notes
This LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.