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THE LAW OF THE REPUBLIC OF ARMENIA

ON THE 2001-2003 PROGRAM FOR STATE PROPERTY PRIVATIZATION

27.07.2001
Non official translation
Article 1. Objectives of the 2001-2003 ROA State Property Privatization

The main objectives of the 2001-2003 Privatization Program (hereinafter referred to as the Program) for the ROA State Property (hereinafter the “State Property”) are as follows:
- Enhance efficiency of commercial organizations through the privatization of their state stake;
- Develop the methods of the state property privatization giving priority to those promoting investments in commercial organizations and providing for social guarantees;
- Provide for consistent and continuous privatization policy and completion of the state property privatization within the time this Program is in force;
- Create the prerequisites for a stable economic growth through promoting competition;
- Increase the number of non-state commercial organizations in economy;
- Increase the state revenues through the funds received from the state property privatization.

Article 2. Key Concepts Used in the Law

The key concepts used in this Law shall have the following meaning:
“The companies with state stake” - the commercial organizations with 100% state participation, non-state companies and those with the state participation in the sense of the ROA Law on State Property Privatization.
“The previous privatization programs” - the ROA Supreme Soviet Resolution on the 1994 Privatization and Denationalization Program for the ROA State Enterprises and Unfinished Construction Objects, the ROA National Assembly Resolution on the 1995 Privatization and Denationalization Program for the ROA State Enterprises and Unfinished Construction Objects, The ROA Laws on the 1996-1997 Privatization and Denationalization Program for the ROA State Enterprises and Unfinished Construction Objects and the 1998-2000 Program for the ROA State Property Privatization.
This Law also uses the main concepts defined by the ROA Law on State Property Privatization.

Article 3. Selection Criteria for the State Property Subject to Privatization

The criteria for selection of the State Property subject to privatization are as follows:
- Complete privatization of the companies and objects with state stake serving agriculture or relevant sectors;
- Complete privatization of the companies with state stake producing consumer goods and having the greatest influence upon the consumer market of the Republic;
- Complete privatization of “small” objects and unfinished construction sites with industrial or social profile;
- Undertake privatization of the companies with state stake engaged in scientific-industrial and research activities.

Article 4. Branches and Sectors of Economy Where Privatization is not Intended

1. The following are not subject to privatization under this Program:
- Objects of civil defense and mobilization, military structures;
- Companies with state stake involved in printing money, striking state badges of honor, seals, and stamps;
- Institutions engaged in fundamental investigations;
- Companies with state stake involved in geology, cartography, land-surveying, hydro-meteorology sectors as well as those monitoring the environmental situation, natural resources, and their preservation;
- The objects and refrigerators of the state reserves’ and mobilization stocks’ reserve;
- Companies with state stake delivering sanitary-epidemiological inspection services;
- Companies with state stake delivering standardization and metrology services;
- Motor highways and railways of interstate and republican importance, the Yerevan Subway, security services for railway and air traffic, army motorcades;
- Companies with state stake producing radioactive and decaying materials (equipment needed for them) as well as those conducting researches and experiment-design works;
- Penitentiary institutions;
- The ROA secondary educational institutions.
2. Areas under the objects subject to privatization shall not be privatized, if these objects are located:
a) In engineering-technical constructions, on communications (bridges, tunnels, dams, underground passages, and the like) and nearby sites regarded as their engineer-technical part, railway stations, motor-terminals, objects of social sector (schools, educational and cultural institutions);
b) In defense and security objects and related areas.
In the cases provided by Article 2, when privatization of a given site is prohibited, it may be used on lease basis according to the ROA laws.

Article 5. Companies with state stake, unfinished construction sites and “small” objects subject to privatization under the Program

The companies (enterprises) with state stake, privatization objects (including those listed in the previous privatization programs), and unfinished construction objects being offered for privatization (or liquidation) in 2001-2003, which are in the List #1 of this Law are considered to be a part of this program except the companies (enterprises) with state stake and privatization objects included in the previous privatization programs that are removed from the Program and are in the List #2 at this Law.
The companies with state stake, “small” and unfinished construction objects included in the previous privatization programs but not yet privatized shall be considered a part of this Program and subject to privatization by the methods provided for by the ROA State Property Privatization Law.
The objects of privatization transactions - privatization objects - declared invalid by the court are part of this Program. After the court declares invalid the privatization transaction with the objects included in the Program, the amount subject to reimbursement to the buyers shall be paid in compliance with the ROA laws from the funds raised by privatization.
In the lists of the companies with state stake included in the previous privatization programs but not yet privatized, the methods being suggested for privatization, such as “free subscription to shares” or “international tender,” shall be replaced by the word “privatization.”
The companies and some elements of detached property created in the process of preparation for privatization shall be considered a part of this Program.
It is intended to offer the companies with state stake included in the lists of the Program for privatization or liquidation, in compliance with the ROA State Property Privatization Law, in the following proportions:
in 2001 40% of the total number of companies with state stake included in the Program;
in 2002 30%
in 2003 30%
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Article 6. Use of Privatization Certificates

The privatization certificates shall not be issued under this Program.

Article 7. Payment by Installments for State Property Privatization

The scale of payment by installments for the state property privatization shall be applied to the bids for the State Property privatization submitted by the workers’ collectives, to the cases of “small” objects and leased property privatization, and to the companies having the right to installments by the previous programs.

Payment by installments rates for privatization of the State Property
by the bids submitted by the workers’ collective as well as privatization of “small”
objects and leased property

 
Assessed value
(in drams)
The first installment rate (% against assessed value)
Period of payment (years)
Number of installments (times)
up to 500,000
100 
-
500,001-1,000,000 
50
2
1,000,001-1,500,000 
40 
3
1,500,001-2,000,000 
35 
4
2,000,001-3,000,000 
30 
5
3,000,001-4,000,000 
25 
6
4,000,001-5,000,000 
25 
7
5,000,001-6,000,000
25
7
8
6,000,001-7,000,000
20
8
9
7,000,001-8,000,000
20
9
10
8,000,001-9,000,000
20
10
11
9,000,001-10,000,000
20
11
12
10,000,001-11,000,000
20
12
13
11,000,001-12,000,000
20
13
14
12,000,001-13,000,000
20
14
15
13,000,001-14,000,000
20
15
16
14,000,001-15,000,000
20
16
17
15,000,001-16,000,000
20
17
18
16,000,001-18,000,000
20
18
19
18,000,001-20,000,000
20
19
20
more than 20,000,000
20
20
21

Under the payment by installments for the State Property privatization, after each regular payment the remaining portion of an object’s value shall be paid evenly once a year. The buyer may pay in full the remaining sum at any time. While making a regular payment, the ratio of the USD to AMD exchange rates at the moment of assessment and the day of payment shall be taken into account, in accordance with the rules defined by the Government of the Republic of Armenia.
In cases when, after making a regular payment of an object’s assessed value, the remaining installments subject to payment are paid in a lamp, a discount shall be applied by the following scale:
 
Amount subject to payment
Discounted amount (in drams)
up to 1,000,000 
10% of subject to payment amount
1,000,000-2,000,000
14% of the amount above 100,000 +1 million 
2,000,001-4,000,000
16% of the amount above 240,000 +2 million
4,000,001-6,000,000
20% of the amount above 560,000 +4 million 
6,000,001-8,000,000
24% of the amount above 960,000 +6 million 
8,000,001-10,000,000
28% of the amount above 1,440,000 +8 million 
10,000,001-12,000,000
44% of the amount above 2,000,000 +10 million 
12,000,001-14,000,000
52% of the amount above 2,880,000 +12 million
14,000,001-16,000,000
60% of the amount above 3,920,000 +14 million 
16,000,001-18,000,000
68% of the amount above 5,120,000 +16 million 
18,000,001-20,000,000
76% of the amount above 6,480,000 +18 million 
more than 20,000,001
50% of subject to payment amount

The buyer of the object privatized through payment by installments who pays 50% and more can be recognized as the owner in part of the paid amount, provided there is a buyer for the remaining portion who agrees to conclude the contract and make further payments in compliance with this Law.

Article 8. Measures of Preparation for Privatization Per Sectors of Economy and Companies With a Separate State Stake

To prepare the companies with state stake, “small” objects and unfinished construction sites involved in privatization process, a state governing body authorized by the Government of the Republic of Armenia carrying out privatization may submit for the GOA approval subprograms on privatization of certain sectors of economy.
The authorized state governing body carrying out privatization shall design a plan of the overall organizational-technical measures for preparation of the State Property for privatization. It shall be implemented by the GOA Resolution or the persons appointed by the above-mentioned body or the state and territorial administration bodies, with
- the ROA ministries, other state governing and territorial administration bodies providing information, in accordance with the rules defined by the authorized state governing body carrying out privatization, on financial situation of their sector’s companies with state stake involved in privatization process and suggestions on its settlement or a company’s liquidation;
- specialized auditing organizations may also be invited primarily to reveal the reasons for losses incurred by the companies with state stake subject to liquidation;
- and hoc groups of experts being established or independent experts and consultants being invited if necessary to develop instructions for structural changes in one or another sector of economy, reorganization of the companies with state stake (merger, amalgamation, detachment, separation, transformation) and change in the employment structure at the companies with state stake.

Article 9. Restrictions of the ROA State, Territorial Administration, and Local Self-Governing Bodies’ Jurisdiction Over the Companies With State Stake Involved in Privatization Process

After the Program comes into force, the ROA state, territorial administration, and local self-governing bodies have no right to liquidate or reorganize (merge, amalgamate, detach, separate, transform) the companies with state stake included in the Program, expect the cases provided for by the ROA laws.
After the GOA Resolution on privatization and/or preparation for privatization of the companies with state stake included in the Program comes into force, in compliance with the rules and within the time stipulated by the GOA Resolution, the authority to administer the company’s shares owned by the state shall be given to the state governing body authorized by the Government of the Republic of Armenia carrying out privatization, unless stipulated otherwise by the GOA Resolution.
Other restrictions on the State Property included in the Program may be defined by amending this Law.

Article 10. Organizational Measures for the Program Implementation

The organizational measures for the implementation of the Program are as follows:
- Organizing campaign to raise awareness among large sections of the public on the ROA State Property Privatization Law, the GOA appropriate resolutions, and other normative legal acts;
- Organizing methodological and practical training for the staff engaged in privatization process;
- Carrying out subscription to shares through the territorial subdivisions of the state governing bodies authorized by the Government of the Republic of Armenia executing privatization;
- Floating new shares through the stock exchanges;
- Involving consulting companies and experts in privatization and liquidation activities through the state governing bodies authorized by the Government of the Republic of Armenia carrying out privatization.

Article 11. Coming Into Effect and Period of Validity of the Law

This Law comes into effect from the day of official publication.

President of the Republic of Armenia
Robert Kocharyan

7 August 2001
AL-201




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