In Official Letter 10791 issued in August 2016, the Ministry of Finance (MOF) has proposed to the Prime Minister detailed steps for selling State shares in an unlisted joint stock company (including those not registered for trading on Upcom) as follows:
- Step 1: The Share shares should first be put on sale via a retail public auction where any participating investor can register for bidding and bid for any number of State shares (subject to a minimum bidding requirement);
- Step 2: Unsold State shares in Step 1 will be put on a “block sale” public auction where a participating investor must bid for all (but not less than all) of the number of State shares put on sale; and
- Step 3: If there is only one participating investor then the State shares can be sold via direct negotiation between the State seller and the participating investor.
It remains unclear whether the Prime Minister will accept the MOF’s proposal. However, the view taken the MOF has several implication:
- The MOF’s proposal will consolidate the process to conduct a block sale with State shares under Decision 41/2015 and sale of State shares in general under Decree 91/2015. In particular the MOF objected a proposal from the Ministry of Transport (MOT) to skip Step 1 (public retail auction) and to State shares under the MOF’s management from Step 2;
- The MOF explains the term competitive offer used in Decree 91/2015 to mean the block sale public auction; and
- By implication, the MOF seems to take the view that the Prime Minister may not be able to skip Step 1 and Step 2 when deciding to sell State shares in an unlisted JSC.