Legal framework
The Privatisation Law envisages cancellation of the privatisation contract if the buyer does not meet certain conditions of the contract. If the buyer is declared to be the negligent party, he loses the right to the purchased shares and the payments already made for those shares.

The Law on Privatisation

Article 41a

A contract of sale of capital and/or property shall be deemed cancelled because of defaulting by the buyer in the following cases:

1) If the buyer fails to pay the contract price or any installment due;

2) If the buyer fails to make an investment in the enterprise undergoing privatization in the way, form and term stipulated by the contract, within the set term;

3) If the buyer manages the assets of the enterprise undergoing privatization contrary to the provisions of the contract of sale;

4) If the buyer fails to provide for continuity of the registered business for the purpose of which the enterprise undergoing privatization was established;

5) If the buyer fails to present the guarantee for investment as stipulated by the contract;

6) If the buyer fails to execute the provisions on employee issues within the term set;

7) In other cases stipulated by the contract.

In the event of cancellation of a contract pursuant to paragraph 1 of this Article ... the capital that was the subject matter of sale shall be transferred to the Share Fund.

In the event of cancellation of the contract of sale of capital or assets because of the buyer defaulting on his obligations, the buyer of capital, being a party acting in bad faith, shall not have the right to recover the amount paid on account of the contract price, for the sake of protection of the public interest.


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