Georgy Malginov Took Part in the Discussion of Issues of Privatization of Companies with State Participation

The initiator of the meeting was Ilya Lomakin-Rumyantsev, Head of the Committee on Privatization of Large Companies with State Participation of the Rosimuschestvo’s Expert and Consulting Council.  

The experts discussed the following three issues:

1. Differences between the mass privatization and privatization of large companies with state participation.
2. State monitoring of the assets after privatization:  preservation, reduction or development? Possible methods of post-privatization monitoring.
3. Is there a need in guidelines for upgrading of deals on sale of subsidiaries and associated companies with a state participation and system monitoring of such companies?

Representatives of state authorities, expert and analytic centers, non-profit organizations, large companies with state participation and portfolio and strategic investors were invited to take part in the discussion.  

The round table was attended by Olga Dergunova, Deputy Minister of Economic Development of the Russian Federation and Head of the Rosimuschestvo and Oleg Feyodorov, Advisor to the Head of the Rosimuschestvo.  The moderator of the meeting was Alexander Auzan, Member of the Economic Council under the President of the Russian Federation, Member of the Government Commission on Administrative Reform and the Dean of the Economic Department of the Moscow State University.  

In the course of the discussion held in the format of  an exchange of opinions with a subsequent voting, experts expressed the following  ideas on the first issue:

• Additional objective criteria are needed for privatization of important state companies in accordance with a special procedure (on the basis of individual decisions of the government with engagement of investment banks);
• It is expedient to increase the rate and the extent of privatization;
• The initial price of the asset put up for auction should be set at the lower limit of the property’s market price determined by the appraiser.

It is to be noted that if the idea of introduction of additional criteria for privatization of important state companies received a decisive support, there were dispersed opinions regarding the idea of stepping up privatization process and determination of the starting price in selling of the property; those two ideas received only a relative majority of votes.

Discussion of the issue of establishment of the institute of post-privatization monitoring failed to identify a dominant opinion. However, experts stated that if such an institute is established it would be preferable if a monitoring function is carried out by the Rosimuschestvo or the executive authorities’ profile body which is in charge of supervision of the relevant sector. However, that position by analogy with the issue of stepping up the rates privatization received  just a relative support.

As regards the issue of special regulation and supervision over deals on sale of subsidiaries and associated companies of state-owned companies, an overwhelming majority of participants in the round table discussion supported such actions either by the major shareholder (the state) or the board of directors of the parent company in determination of the method and other main conditions of privatization of such assets.