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Law on Commodity Exchanges and
Exchange-Brokered Trade, adopted by Russian Parliament Feb 20, 1992 |
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Placed these new structures on a legal
foundation |
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Guaranteed considerable freedom in
areas of self-management, rules of exchange-brokered trade and free prices. |
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Banned exchanges from any type of
economic activity not specific to them |
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Banned from regular trade and middleman
trade activity |
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Capital investment only allowed in
organization and development of exchange-brokered trade and market
infrastructure |
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Stock purchases and subsidiaries
forbidden |
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Banks forbidden from participating in
commodity exchange activities |
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Law of Destatization &
Privatization, USSR Supreme Soviet, July 1, 1991 |
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Provided for conversion or
restructuring of state enterprises in variety of new property forms |
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Joint-stock companies |
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leased enterprises |
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Cooperatives |
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Redemption of leased property by the
lessees, |
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Outright sales of enterprises by
competitive bid or auction |
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Enterprise workers granted preferential
right to acquire shares & determine procedure for privatization |
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Privatization committees tasks
-catalog, assign, & register firms into categories of (initially) state
property |
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Attempted to assess market values for
housing |
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Voucher scheme(s) |
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YelÕtsin - Òmillions of owners, not a
small group of millionairesÓ |
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Each citizen got one voucher valued at
10,000 rubles |
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Vouchers for direct purchase of shares,
indirect via investment companies, or sell voucher for cash |
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August 31, 1992 Russian Deputy Prime
Minister Anatolii Chubais (400
rubles/$1 - Oct 22, 1992) claims vouchers would be worth 150,000 to 200,000
rubles |
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Instant secondary market - vouchers
discounted to 6100 rubles on first day of trading - October 1, 1992 |
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Oct. 9, 1992, Russian Parliament
guarantees face value of privatization vouchers and specified that vouchers
could be used to purchase apartments and land |
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If enterprise had fixed assets >50
million rubles & >1000 employees, then privatization plans were to be
completed by Oct. 1, 1992 |
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June 1992 ÒState Program for the
Privatization of State and Municipal Enterprises of the Russian Federation
for 1992Ó |
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Decree ÒOn Organizational Measures for
the Conversion of State Enterprises and Voluntary Associations of State
Enterprises into Joint-Stock CompaniesÓ & ÒStatute on the
Commercialization of State Enterprises and Their Simultaneous Conversion into
Open-Type Joint-Stock CompaniesÓ signed by YelÕstin July 1, 1992 |
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9 key objectives: |
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1) generate a social stratum of private
owners to facilitate the creation of a socially and consumer-oriented market
economy, |
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2) increase efficiency of enterprises
via privatization, |
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3) provide a social support &
protection net for the population, |
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4) develop a social infrastructure
using money obtained from the privatization sales, |
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5) promote ruble and general financial
stabilization, |
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6) create a competitive economic
atmosphere, |
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7) de-monopolize the economy, |
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8) attract foreign investment, & |
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9) create conditions needed to broaden
the scope of privatization in 1993-1994 |
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June 1992 ÒState Program for the
Privatization of State and Municipal Enterprises of the Russian Federation
for 1992Ó |
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5 property classes |
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Objects and enterprises prohibited from
being privatized -mineral and water resources, gold reserve, Central Bank,
telecommunication facilities, military property, objects of cultural &
historical heritage |
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Requires consent of Russian government
or one Federation republics, a Deputy Prime Minister, State Property
Committee, and appropriate ministry – weapons production & repair
facilities, fuel and energy complexes, commercial banks, news agencies,
nuclear power manufacturing facilities (why do you think added restrictions
were placed on these sorts of objects and firms?) |
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Enterprises having dominant or monopoly
position in national and local markets – education institutions,
breweries & distilleries, air, rail, and water transport enterprises,
firms having more than 10,000 enterprises – privatization requires
decision of Russian FederationÕs State Property Committee after consultation
with relevant ministries |
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Enterprises such as pharmacies, public
baths, urban mass transit system – require involvement of local
privatization programs and consent of local property management committees |
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Enterprises and facilities subject to
mandatory privatization |
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Consumer service enterprises, light
industry, food industry, public catering, wholesale and retail trade |
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Money-losing enterprises of all
sectors, moth-balled facilities, unfinished facilities |
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What is money-losing or money-making
under soft-budget constraints |
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3 property class missing: state
farms (sovkhozy), housing, & land |
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By Nov. 1, 1992, firms preparing
privatization plans were to be ÒcommercializedÓ or transformed into
joint-stock companies. |
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Option 1 - employees given free of
charge, non-voting shares worth 25% of equity, can buy up to additional 10%
of equity at a 30% discount from book value, totaling a maximum of 6 months minimum wages, top managers
can purchase up to 5% of equity at book value, up to 100% of employeesÕ and
managerÕs payments can be made in vouchers; |
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Option 2 - a group of employees
purchases 51% of equity at a price determined by the State Committee for the
Administration of State Property (GKI) and up to 50% of payment can be made
in vouchers; and |
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Option 3 - (limited to enterprises with
less than 200 employees and a book value of between 1 million and 50 million
rubles) one-year lease contract giving employees an option to buy 20% of
equity at a 30% discount of book value and up to 100% of payments can be made
in vouchers |
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