LAW ON PRIVATIZATION PROGRAM (extended up to December 31, 2005) Parliament adopts the present Law

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1 LAW ON PRIVATIZATION PROGRAM (extended up to December 31, 2005) Parliament adopts the present Law Law on Privatization Program establishes the procedure, objectives, restrictions and methods of privatization of companies and of other priority objects of public property, determines the objects and subjects of privatization, methods and specific aspects of privatization in different industries, methods of financial support of the privatized companies and the development of real estate markets; it provides the legislative, informational and institutional basis of the privatization process. The present Law stipulates the diversification of privatization methods, synchronizing this process with process of the capital markets development and the restructuring of companies in order to attract the investments in the economy. With the implementation of this Law the privatization of public property and reforms of agricultural sector shall be in general completed. CHAPTER I General Provisions Article 1. Law on Privatization Program for (hereinafter, Privatization Program) is worked out on the basis of Law on Privatization N 627-XII from July 4,1991, Law on Property 459-XII from January 22,1991, the Law on Privatization of the Dwelling Fund XII from March 10,1993 and other regulatory acts, taking into consideration the social and economic situation in the country and the results achieved from privatization of public property and restructuring of the national economy. Article 2. The main objectives of the Privatization Program are completing privatization of public property, restructuring of privatized enterprises, revitalizing the economy and improving the living condition of population, modifying the Government role to fit the market requirements, cutting down the Government expenditures on managing the economy and termination of subsidies to the loss-making companies. Article 3. The main objectives of Privatization Program are: a) privatization of certain new objects of public property: state-owned shares (quotas) in companies with mixed capital, other companies of industry, agriculture, transport, utilities and other sectors, the Fund of uninhabitable buildings, including buildings which are leased out; plots of rural and urban land; b) opening the infrastructure sectors to the market competition with the private sector participation; setting up the legal and institutional framework for the Government to perform the regulatory role in these sectors; c) attracting and encouraging strategic investors to participate in privatization and restructuring of companies;

2 d) encouraging citizens of Moldova to participate in privatization of public property by selling shares through the public offering, the Stock Exchange, involving regional entities of broker/dealer companies; e) employing privatization marketing methods based on competition, transparency, dissemination of information among the investors and the public about the objects and results of privatization; f) implementation of the mechanisms of privatization, restructuring and financial support to the privatized companies in order to revitalize them; g) developing capital markets by selling the state-owned shares at the Stock Exchange, involving all its infrastructure entities; h) developing the real estate market by privatizing buildings, constructions and land plots, and introducing modern information systems for tracking supply and demand for the real estate; i) developing the legal and institutional framework to protect the rights and legal interests of new owners, including a registration system of ownership rights on real estate and transactions with it; j) improving the system of State Property Administration; k) completion of sale of the state-owned shares of companies subject for partial or integral privatization for the patrimonial bonds and unsold. Article 4. The specific aspects of privatization of the public property are: a) shifting from the mass privatization based on patrimonial bonds to cash privatization and other privatization methods and mechanisms; b) application of new specific methods and mechanisms of privatization, including public offering, sales of state-owned shares at the Stock Exchange, direct sales, investment and commercial tenders, collateral auctions, sales of the public property objects for settlement of the State debts; c) using the experienced local and foreign companies in the complex privatization projects and restructuring of companies capable to attract strategic investors; d) evaluation of financial and environmental condition of companies, inventory and evaluation of their property in order to fix the initial selling price. e) evaluation of the environmental influence of the companies activities. Article 5. The Ministry of Privatization and State Property Administration shall be the only body which conducts the Government policy in privatization sphere and coordinates along with the central specialized State authorities and local public administration the privatization activities. Chapter II Objects and Subjects of Privatization Article 6. Privatization shall be extended over the objects of public property from all sectors and branches of economy, except for the objects which are not subject for privatization in compliance with the Law.

3 Article 7. Subject for privatization: property of enterprises, institutions, entities, state associations, their structural subdivisions complex production units, leased out public property, objects from the Fund of uninhabitable buildings, unfinished constructions, dwellings, state-owned shares in companies to be privatized, plots of land from inhabited localities, as well as adjacent land of privatized and to be privatized companies, land plots of the garden cooperatives. Article 8. (1) An integral part of the Privatization Program is as follows: a) List of companies to be privatized (Appendix N1) b) List of unfinished constructions to be privatized (Appendix N2). (2) The information on the objects to be privatized reflects the situation as of the date of lists development and will be subsequently specified as of the date of their privatization. Article 9. Companies and organizations not included in Appendixes N1, N2 and N3 of this Law, including the objects intended for keeping the State reserves values, mobilization reserves, wine factory deposits, which form the national patrimony, including the objects of creed are not subject to privatization. Article 10. (1) State companies on the privatization list in the Appendixes or their divisions may not be leased out, their fixed assets unused in production may be leased out only with the consent of the Department of Privatization. The lease term in this case may not exceed one year. (2) the Department of Privatization verifies the validity of the lease contracts and if the infringements of Law are revealed, takes measures for their elimination. Article 10/1. Transmission into trust management of objects with prevailing state capital included into the Appendixes lists is not admitted. Article 11. The seller of public property subject to privatization, except for the adjacent land of companies privatized or to be privatized, whose value is not included in their statutory capital, except for the adjacent land of private companies is the Department. Article 12. Under the Law the following persons and entities may participate in the privatization process: a) citizens of the Republic of Moldova and their associations; b) legal entities of the Republic of Moldova, except the state-owned companies; c) foreign individuals and legal entities, those without citizenship. Article 13. Property of companies, included in the Appendixes lists, subsequently declared bankrupt is to be sold in order established by the legislation. Article 14. Privatized company shall be a successor of the property rights and obligations of the state company, including those of the adjacent land, on which it is located. CHAPTER III Privatization Methods. Preparation of Objects for Privatization.

4 Article 15. (1) State companies may be privatized through their sale as complex production units or as reorganized open end joint stock companies with the subsequent sale of their shares. (2) For the privatization of public property leased to the company employees, the leased company is liquidated, but the public property may not be used for compensation of this company debts. An open end joint stock company may be organized on the basis of public property and lessees quotas. (3) From the date of state registration of the joint stock company the state company shall be deemed reorganized and its property shall be transferred to the balance of joint stock company. Article 16. (1) Privatization of public property is carried out through: a) open outcry auctions with lowering or raising the initial price; b) commercial or investment tenders; c) direct negotiations; d) sale of shares at the auction as a single packet or separate packets through the domestic or international public offer; e) compensation to the persons indicated in Article 12 of the unconditional state debts with the property (shares) of companies to be privatized. f) according to the individual projects approved by the Government. g) transferring into the private property of apartments in the unfinished dwelling houses according to the Law on privatization of dwellings (2) Privatization methods according to the provisions of the part (1) shall be established by the Government. Article 17. (1) Value of the object to be privatized, regardless of privatization methods, is to be paid by individuals and legal entities of the Republic of Moldova by a lump sum or by installments in term of up to ten years for plots of land and up to 5 years for other objects to be privatized. (2) By installments may be paid: unfinished constructions, objects from the Fund of uninhabitable building (including those leased out, inclusively to non-commercial organizations), adjacent land of companies privatized or to be privatized, adjacent land of private companies, objects purchased at the investment or commercial tenders. (3) With the payment by installment the initial amount paid at the moment of concluding the contract shall be not less than 25% of the value of object. Payments shall be effected quarterly in equal amounts or ahead of time with their indexation depending on the inflation rate for the date of payment. (4) The sale of privatized object or its usage as a collateral may be effected only after the full payment has been made. In case of delay with payments in term set up by the contract the buyer shall pay a penalty of 0.1% of the amount due for every day of delay. (5) Foreign individuals and legal entities, as well as those without citizenship shall pay for the object with a lump sum.

5 Article 18. (1) For privatization of companies and objects through the commercial tenders the buyers shall have to meet certain requirements of the sellers. (2) The Government may set certain requirements for the tender participants related to the specific character of certain companies subject to privatization. Article 19. (1) Privatization of objects from the Fund of uninhabitable building (buildings, constructions, premises, including uninhabitable appendixes to apartments) leased and not included in the appendixes lists shall be effected upon the lessee application. In case the lessee didn t submit an application for the purchase of object in term of 45 days from the date of written proposal of the Department of Privatization or didn t pay the price of the object in term set by the Law, this object shall be sold through the auction on general terms. Methods of valuation and sale of the object shall be established by the Government. (2) Not subject for privatization are: premises of the Fund of uninhabitable buildings located in the buildings of public authorities (except the ground floors of these buildings, in case these floors are intended in the projects as social objects), in building of state companies, organizations and institutions which are not included in the lists envisaged in appendixes, as well objects, whose value and area had been included in the value and area of other objects and privatized dwellings. (3) For privatization of garages leased by war veterans and persons equated to them, labor veterans with seniority of at least 30 years in the Republic of Moldova, as well as disabled people of I and II category, the payment shall be effected in the amount of 50% of their price. Article 20. (1) The Dwelling Fund shall be privatized for cash or free of charge in procedure established by the Law. (2) Unfinished apartment buildings, where construction is effected at the state account, may not be sold or their beneficiary changed without the consent of the Department of Privatization. Article 21. The Department of Privatization along with the branch ministries and specialized departments provides for preparation of the companies and objects for reorganization and privatization. This process may include: a) formation of the privatization commissions; b) reorganization of companies through their division, separation or transformation; c) inventory and valuation of the public property; d) liquidation of insolvent state companies and sale of their assets. Article 22. (1) Preparation of companies for privatization and reorganization into the joint stock companies shall be carried out by the Privatization Commissions set up by the Department of Privatization or its territorial agencies on the procedure established by the Government. (2) In case of privatization of companies which do not work (state shares in companies which do not work), as well as unfinished constructions, the preparation for privatization shall be carried out by the Department of Privatization.

6 Article 23. For reorganization of a company into a joint stock company (companies) the Commission designs and submits for the approval of the Ministry of Privatization and State Property Administration the following documents: a) copy of registration certificate of company and copy of its Statutes; b) property evaluation and inventory documents; c) draft contract or declaration of incorporation and Statutes of the joint stock company; d) act on the right of use of land; e) copies of registration documents for buildings, constructions and other real estate; f) as the case may be, a notification on the environmental conditions of the company and the restriction set by the environmental institutions, including those related to the use of land. Article 24. For privatization of companies and other objects the Commission in each case prepares and submits to the Ministry of Privatization and State Property Administration or its territorial agency the privatization plan, which determines the methods and terms of privatization, data on the technical and economic conditions of an object and other information. Article 25. Methods of valuation of the company property, unfinished constructions and other objects subject to privatization shall be established by the Government. Article (1) Sale of adjacent land of the objects privatized or to be privatized and adjacent land of private companies shall be effected for the price calculated on the basis of Law on Normative Land Price and Purchase-Sale Procedures established for of the respective area, considering its location and its engineer arrangement. (2) Regulations on purchase-sale of adjacent land of the objects privatized or to be privatized and adjacent land of private companies shall be approved by the Government. Article (1) For sales of shares and other property through the tenders which provide for the investments (investment tenders) the buyer shall provide the guarantees of solvency and a detailed investment plan, and the purchase and sale contract shall contain the following: (a) main provisions of the tender and mutual obligations of their observance; (b) amount, type and timing of investments and their use for certain purposes; (c) mutual responsibility for non-observance of the conditions of tender and contract. (2) Benefits offered to the buyer by the conditions of tender may not be re-negotiated and changed upon conclusion of the purchase and sale contract. Otherwise the contract shall be deemed null and void. At the same time the results of tender shall be canceled by the body which approved them. (3) In case of privatization through investment tender at the discretion of the privatization commission the initial selling price could be made public. The selling price is established considering the volume of investments and other commitments taken by the buyer. Article 28. Upon preparation for privatization of the objects previously leased the Ministry of Privatization and State Property Administration shall check the validity of lease contracts and

7 in case of violations revealed shall take measures for their cancellation. Participants of the auction or tender shall be informed on the main terms and conditions of the lease contract. Article 29 -(1). For the sale of companies and other objects the buyer shall be provided with the following information: a) privatization plan, if needed; b) main data on the economical condition for last two years, as well as technical and environmental characteristics of an object; c) documents on financial condition relating to the situation for the date of auction or tender; d) list of main products (goods, services); e) number of employees; f) terms of ownership and use of adjacent land; g) initial selling price, if needed; h) other data related to the specific characteristic of an object. (2) Upon the sale of state shares at the Stock Exchange the buyer shall be provided with the information stipulated by the Law on Securities and the Stock Exchanges. Article 29/1. The sale to investors of insolvent companies (state shares in insolvent companies), as well as unfinished constructions, is admitted through tender procedure for the symbolic price of 1 lei, stipulating social and investment conditions. Such kinds of conditions could be: a) maintaining the number of employees or creating of new work places; b) maintaining the main type of activity (production) or respecting of a moratorium on the liquidation of the company for a period of not less than 5 years; c) implementation of a environmental protection program at the privatized company; d) paying off the company s debts; e) making the investments necessary for ensuring the company s production activity and for its financial rehabilitation; f) finishing the unfinished constructions, manufacturing of certain products or practicing certain activities. (2) Before the fulfilling of the stipulated conditions the buyer has no right to alienate the company (state shares) or to give it up in other ways. (3) The buyer fulfills its obligations taken according to the provisions of the paragraph 1, (d) at his own expenses according to the provisions of the purchase-sale agreement. The buyer s breach of the assumed obligations serves as a reason for cancellation of the purchase-sale agreement, without compensation of its expenses. (4) The list of companies (state shares) to be privatized for the symbolic price is approved by the Government. Article 29/2. The sequestered fixed assets shall be alienated by the Department of Privatization in conformity with the legislation. Article 29/3. (1) In case the buyer of the privatization object does not pay its full price stipulated in the purchase-sale agreement or does not fulfill other contractual conditions within the stipulated terms, the agreement could be canceled by mutual consent of the parties

8 or by court s decision. The price paid for the object is restituted to the buyer, less the damages caused to the object. (2) In case the buyer s breach of the conditions of the purchase-sale agreement leads to deterioration of the privatization object and it runs the risk of loosing its functional capacity the Department of Privatization shall cancel the agreement unilaterally and shall take the object from the buyer in the 15-days period. The price paid for the object is restituted to the buyer, less the damages caused to the object. Such a decision taken by the department and the amount of damages calculated could be contested by the buyer by bringing a suit. CHAPTER IV Specific Aspects of Privatization by Sectors Part 1 Agriculture Article 30. In agriculture the object of privatization is the property of kolkhoses, sovkhoses, sovkhoz factories, inter-farm enterprises and associations, other types of farms regardless of the type of ownership and legal forms of business activities (hereinafter, agricultural companies ). Article 31. (1) Assets on the balance of agricultural companies on the date of Privatization Law coming into force (August 7, 1991), as well as assets produced or purchased later before the change of legal status, compose their property and shall be transferred into the private property of persons who are entitled to the ownership right according to the Law. (2) Objects built at the expense of agricultural companies and later transferred free of charge to the balances of other companies and state organizations not privatized, may be restored to the initial owners upon request. The decision for restoring shall be approved within 30 days from the date of request, by the power body which made the decision on the free transfer (or by its successor), and in case of its liquidation - by the Government. Disputes occurring as a result of restoration request shall be settled by the court according to the provisions of the Civil Code regarding the prescription terms. Article (1) Privatization of property and land of the agricultural companies shall be carried out by the Privatization Commission and the Land Commission respectively, which are formed according to the Law. (2) The assets of agricultural companies (fixed assets, working capital, securities, etc.) may be divided only on the basis of quotas - parts of value of those participating in their privatization. The procedure of distribution in kind of these assets shall be designed by the Privatization Commission and shall be approved by the general meeting of employees and pensioners of agricultural company on the basis of procedure recommendations of the Ministry of Privatization and State Property Administration.

9 (3) The Primaria determines which plots shall be distributed in kind to holders of quotas of equivalent land plots at their request, and concludes a contract with the Project Institute on Land, or other legal entity which has the license for this type of activity, for preparation of the regulation projects for the land property regime. Expenses for preparation of the regulation projects for the land property regime shall be paid by the local and State budgets. Design of maps, geodesy, preparation and registration of the ownership certificates for the equivalent land quotas shall be effected at the expense of the State budget. (4) Requests for distribution of the land plots shall be examined by Primaria in term of 30 days from the date of their submission. Article 33. (1) The Privatization Commission of the property of agricultural companies: a) carries out inventories and evaluation of assets of agricultural companies which are to be privatized in compliance with the legislation; b) presents the results of inventories and evaluation to the general meeting of employees and pensioners; c) designs the methods of determination and distribution in kind of the property quota for employees and pensioners; d) calculates the property quota of every employee and pensioner and registers the results in a report, copies of which shall be sent to Primaria, company management and the Territorial Agency of the Ministry of Privatization and State Property Administration; e) fills out the ownership certificates according to the standard, which shall be approved by the Director of Territorial Agency of the Ministry of Privatization and State Property Administration and registers them in the respective Register of the ownership certificates on value quotas/parts. (2) In case the Privatization Commission of the property of agricultural companies ended its activity or the company itself ended its activity without being liquidated in conformity with the legislation, Primaria set up a commission for reorganization or liquidation of the agricultural company which is entitled also with the rights and obligations of the Privatization Commission of the property of agricultural companies. (3) Value quotas/parts shall be transferred to persons entitled to this right in term of 30 days from the registration date. For the distribution of value quotas/parts in kind in Appendix to the Owner Certificate the data shall be introduced on the property distributed in kind, which serves as a document for registration with the State bodies of the property and the ownership right for it. (4) Before December 1, 1997 the determination of value quotas-parts of all members of agricultural companies shall be completed. Non-fulfillment of this procedure in the established term would result with responsibility according to the legislation. Article 34. The general meeting of employees and pensioners of a company: a) approves the results of inventories and evaluation of company; b) establishes the procedure of subsequent use of social and cultural objects; c) approves the value of assets to be privatized;

10 d) approves the procedure of determination of the value quotas/parts and distribution in kind of the property; e) approves the list and value of objects intended for the payment of debts; f) determines the quota/part (in percentage) that belongs to the employees and pensioners; g) determines the quota/part (in percentage) to be distributed to the former employees of the company and to the employees of the social sector units located on its territory; h) makes the decision on reorganization of company. (2) In the list mentioned in the paragraph 1, (e) shall not be included irrigation installations and perennial plantations located on the land plots to be privatized, tractors, combines, other agricultural machinery and equipment, transport units used for agricultural production, seeds fund, production and productive animals and unfinished agricultural products included in the company s balance sheet. These assets are distributed in kind to the title-holders within the established period of time regardless of the financial condition of the agricultural company and the payments settlement with creditors. The current provision is applied also for agricultural companies which concluded with the Council of Creditors a restructuring agreement-memorandum. Article 35. (1) Entitled to a property quota are the employees of a company, including those who were hired from January 1,1992 and remained so until the reorganization of company, as well as the pensioners of company regardless of the time of retirement. (2) Entitled to a certain property quota, which was determined by the general meeting of employees and pensioners, are: the former employees of company, school teachers, doctors and employees of the social sector, who reside on the territory of company. The former employees of company shall be considered individuals released from their duties from January 1, Individuals released after this date shall be considered as employees. (3) Upon decision of the general meeting of employees and pensioners, objects of social sector, as well as dwellings on the balance of the company may be transferred in whole or partially to the balance of local public administration body. These assets, inclusively those transferred before are taken into account against the offset of agricultural company s debts to the State and local budgets and the State social insurance budget. (4) For administration of objects of social sector Primaria forms the municipal institutions, if needed. (5) In case the dwellings (houses) are not transferred to the balance of local public administration body, their value shall be included in Privatization Fund and may be privatized by persons to whom it had been distributed in the established procedure and who dwell there. If the persons mentioned above have the value quotas in agricultural company, the payment of the dwelling cost may be effected at their expense without approval of the general meeting at value for which it was included in Privatization Fund at the moment of calculation of value quotas. Otherwise, these persons may privatize the dwellings (houses) for the estimated, commercial price or free of charge according to decision of the general meeting of employees and pensioners of an agricultural company.

11 Article (1) Valuation of property of an agricultural company shall be effected on the basis of legislation in force according to the last balance sheet data, establishing its value and structure, which includes: a) fixed assets; b) current assets. c) other non-current assets, including shares; (2) For calculation of the value quota for every employee or pensioner of a company it is possible to use as a base value the value of assets corresponding to one year of service or one man-day or a leu earned, as well as a combination of these criteria. The value of goods corresponding to one year of service or one man-day or a leu earned is determined by dividing the value of assets to be distributed by the total number of years of service or by the total number of man-days, or by the amount earned (calculated). The result is respectively multiplied by the number of years or days worked by each person, or by the calculated wage, which would make the individual quota of assets. (3) In the ownership certificate of each person which quits the agricultural company the amount of assets distributed as well as their structure are indicated. The assets related to the property share are transferred according to a statement. In case the activity of the agricultural company ends because of its reorganization or liquidation, unsolicited property shares are transferred to the company s successor, or in case the company does not have a successor, to Primaria until their solicitation in conformity with the legislation. The responsibilities for the integrity of assets intended for paying back the debts according to the decision of the general meeting lie on manager, chief-accountant and respective decision-making persons of the agricultural company. (4) The holders of equivalent land quotas, regardless of the size of the value quota they hold, become the owners of the irrigation installations and perennial plantations placed on the land plots distributed to them in kind. In case the holders of the land quotas have no rights on the value quota or this quota is smaller than the value of the irrigation installations and perennial plantations, they pay for these goods in a lump sum or by installments according to the estimated value or, according to the decision of the agricultural company s general employees and pensioners meeting, receive them for free. The value of goods distributed for free shall be excluded from the value of the initial privatization fund. (5) Persons who received the value quotas are not successors of rights of the agricultural company and not responsible for its liabilities. (6) Production cooperatives, joint stock companies, liability companies and other economic entities, at the request of its participants holders of quotas of equivalent land, at the distribution in kind of the quotas of equivalent land, are obliged to distribute them in kind the value quotas as well. The value of these goods shall be excluded from the capital simultaneously with their respective reduction. (7) Persons whom have been distributed in kind the quotas of equivalent land and the value quotas are obliged within 3 months from the date of receiving the documents of authentication of the property rights to register the farm at Primaria or to submit the copy of the foundation contract (declaration) and the copy of the State registration certificate of a company of any other legal form of organization envisaged by the legislation or to submit the contract of lease or alienation of the land.

12 Article (1) Dwellings from sovkhoses, sovkhoz-factories and other state- owned agricultural companies, including those reorganized into collective companies after the Law on Privatization came into force, as well as dwellings built with the Government funds in other companies, are privatized on the procedure established for privatization of the State Dwelling Fund. (2) In the event of liquidation or segmentation of agricultural companies into individual farms in the process of privatization, if the general meeting has previously not decided on transferring objects of social sector to the balance of Primaria, these shall be transferred based on the decision of Liquidation (Privatization) Commission, and Primaria shall take these on its balance. Article (1) At privatization of agricultural companies, on whose balance there are subdivisions of grape processing units, the suppliers of raw materials before January 1,1992 shall participate in privatization, and 50% of assets value of these sub-divisions shall be distributed to them free of charge in the procedure established by the Government. The sub-division could not be distributed in kind. The holders of the property shares of these sub-divisions have a right, with the consent of at least 2/3 of all holders, to form with their property shares a part of the production unit, which is the successor of the former agricultural company or to create on the basis of these property shares an independent company in any legal form envisaged by the legislation. (2) At privatization of processing companies of agri-industrial sector the suppliers of raw agricultural material shall be given free of charge 50% of the state-owned shares. Article 39. In companies producing seeds, growing ether-oil plants, grapes and vegetables, breeding animals, which are directly transformed in agricultural company of any legal type according to the Government Law, the equivalent value quotas and land quotas to be distributed to individuals shall be calculated according to the legislation. The individuals shall be given the owner titles on the equivalent value quotas and land quotas without the right to divide the land or assets of a company before its exclusion from the list established by the Government. Article (1) For privatization of the property of inter-farm companies the Privatization Commission establishes the quota in money and in %) of every founder at the time these were set up, carries out a technical and accounting inventory of the assets of a company which is attributed to every founder proportionally to its initial quota. The ownership certificates of the property quotas of the founders shall be issued by the Territorial Agency of the Ministry of Privatization and State Property Administration. (2) Reorganization of inter-farm companies (livestock complexes, associations) into the jointstock companies or entities of other legal forms shall be carried out based on the decision of the general meeting of founders. Article 41. Upon decision of the founders adopted at the general meeting of the employees, a part of their property quotas from an inter-farm company shall be transferred free of charge to employees and pensioners, as well as to the employees of infrastructure units of inter-farm company. This property quota may not be less than the quota calculated for employees of the state-owned companies, in compliance with the methods approved by the Government

13 Decision N 568 from September 7,1993. The property quota is determined pro rata to its term of service in the company. Article 42. The Privatization Commission designs the Calculation Table of the property quotas to be transferred to the founders and free of charge to employees and pensioners of an inter-farm company, in compliance with the Government Decision N 561 from August 10, The Calculation Table of property quotas shall be approved by the general meeting of founders and by the Territorial Agency of the Ministry of Privatization and State Property Administration. Article 43. Privatization of state-owned property of maintenance, construction, collection companies, suppliers and others, including inter-farm companies of argi-industrial sector is carried out in conformance with the legislation. Article 44. The property quota in agricultural companies identified by the Territorial Agency of the Ministry of Privatization and State Property Administration to be distributed to individuals deceased after January 1, 1992 is transferred as inheritance in procedure established by the legislation, including cases when the deceased had no ownership title. Part 2 Infrastructure Article 45. Privatization of the public property in the infrastructure sector of national significance (energy, transport and communications, certain public utilities, such as supply of drinking water) is carried out based on the individual projects approved by the Parliament. Article 46. Individual projects provide for the methods by which the infrastructure sector shall be opened to competition and private business participation, such as establishing jointventures, sales of shares and other activities. Article 47. Preparation for privatization of infrastructure companies may also include activities for their reorganization through the segmentation based on territorial, technological and organizational principles, observing economic and environmental requirements. Individual privatization projects may provide for the special requirements for keeping the company profile and application of a special management regime in state of emergency. Article 48. Technical, economic environmental requirements for production activities of infrastructure companies shall be approved by the Government in the established order upon proposals from the branch ministries and the State Environmental Department. Part 3 Construction Article 49. Privatization of property of general construction organizations and those specialized in construction-installation shall be carried out after possible segmentation of associations, trusts and other property complexes, based on territorial, technological and organizational principles. This method shall be applied at privatization of construction and

14 maintenance organizations of all types, as well as of companies producing construction materials. Article (1) Privatization of unfinished constructions included in Appendix 2 of the present Law shall be carried out upon decision by the Department of Privatization after receiving their design and budget documents, and the documents on expenses incurred. The beneficiary and the general contractor must submit the aforementioned documents within a month after the decision on privatization of an object is passed. In case of absence of their project and design documents they shall be re-established by the companies and the responsible bodies upon request of the Department of Privatization (2) Unfinished constructions belonging to operating companies to be privatized shall be privatized as part of these companies except those included in Appendix 2 and the dwellings with the rate of completion over 80%, as well as those built with the citizens funds. The procedure of completion and operation of those shall be established by the Government. (3) While preparing a state company for privatization the Ministry of Privatization and State Property Administration has the right to extract from it the objects of unfinished construction and to privatize them according to the Law. Part 4 Other branch aspects Article (1) Companies of trade, public catering, social services and social sector shall be privatized after reorganization and, if needed, segmentation. (2) Privatization of objects from the books trade system should be performed after reorganization and, if needed, by putting the libraries for sale as separate objects. (3) Privatization of objects indicated in part (1) may be performed using the requirements set by thedepartment of Privatization, considering the proposals of the local public administration. (4) In the joint stock companies where the State holds less than 25% of shares, these shares may be sold in the first place to the shareholders of the mentioned companies at their nominal price. The shareholders of the mentioned companies should apply for purchasing the shares before the auction or tender announcement. Buyout is made by shareholders who intended to purchase shares proportionally to their contributions in the social capital, if their agreement says otherwise. Article (1) Objects of trade, catering, social services and social sector shall be privatized along with their premises, if state-owned. Such premises shall be transferred to the balance of these objects prior to privatization. (2) Sub-divisions of trade, public catering, social sector, which are operating within the companies and are on their balance, shall be privatized along with them. Upon decision of the Government coordinated with the local public power bodies, they may be privatized separately.

15 (3) Hotels shall be privatized along with retail, catering and social service entities located in the same premises, or functionally attached to the object to be privatized. Article (1) The value of hostels, social-cultural objects,, as well as boiler-rooms and water supply and sewage objects serving individuals and economic agents shall not be included in capital of privatized companies. In the event the value of the aforementioned objects has previously been included in the capital of privatized companies, at the decision of the Department of Privatization, it shall be written off in the way set up by the legislation and compensated for in equivalent amount with the state-owned shares in these or other companies. (2) Social and cultural objects which previously had been transferred to privatized companies with the right of economic management may not be alienated by the latter. The objects mentioned shall be transferred to the balance of the local public administration or other state companies, or sold in the procedure established by legislation. Article 54. Objects of the public property unsold at the auctions or tenders may be given in concession in procedure established by the Law on concessions. Article 55. Not subject for privatization are administrative buildings where administrative bodies and those of associations, consortiums, trusts and republican societies included in Privatization Lists are located, as well as buildings transferred to the balance of Central and Regional Public Associations. Article 56. Disposal of military property unused by the Ministry of Defense, Ministry of Home Affairs and Ministry of National Security shall be effected based on this Law, according to the Regulations and lists approved by the Parliament. Article 57. (1) Privatization of public property of financial institutions and banks shall be effected based on individual projects approved by the Parliament upon the Government proposal. (2) The State property which is under the management of commercial banks and not included in their capitals may be included in their capitals as the State contribution, may be leased out or sold in the way set up by the legislation. Article 58. Sale of the land plots of fruit growing associations shall be effected according to the Law on normative price for land. Article 59. Privatization of objects of uninhabitable real estate fund, such as the monuments of history, architecture and culture, except those regarded as a national patrimony, shall be effected in agreement with the State Department for Protection of Monuments and local public administration. The buyer is obliged to keep the monument in condition corresponding to the original project. Article 60. Privatization of property of the Republic of Moldova located outside its territory shall be effected by Inter-Governmental agreements considering the International Law, the Law of foreign countries where the objects to be privatized are located and the terms of this Law.

16 Chapter V Privatization of Adjacent Land of Privatized Companies Article (1) Adjacent land of privatized or to be privatized objects, including unfinished constructions and objects of the Fund of uninhabitable buildings, adjacent land of private companies, shall be sold to the owners or buyers of these objects with payment in a lump sum or by installments. At payment by installments, the initial payment made upon the conclusion of the contract is not less than 25% of the price of land. (2)The payment may be effected in term of up to 10 years. The payment by installments shall be effected in equal parts paid quarterly with the indexation of inflation rate for the date of payment. (3) In the event of the simultaneous purchase of the object and adjacent land only one purchase-sale agreement is prepared, signed on the behalf of the seller by the Department of Privatization and the respective local administration bodies. The money resulted from the payment of the price of adjacent land shall be distributed in a way set up by the legislation. Article 62. Land adjacent to the apartment buildings shall be transferred in the ownership and use of Association of Apartment Owners. Such land is to be used exclusively in compliance with technical provisions and documents. The contracts for the transfer of land from seller is concluded by the local public administration. Article 63. In case of transfer of the ownership right on buildings, constructions, premises to several persons, those persons have the right to buy the respective quota of land pro rata to the property quota of objects located on this land. Relationship between these owners shall be regulated by the legislation in force. Article 64. In case the documents confirming the right of use of adjacent land of privatized or to be privatized companies or adjacent land of private companies are missing, the local administration bodies shall consider the application on the right of use of land and shall issue the respective documents within one month from the time the application is submitted. Article 65. For adjacent land of privatized companies the following restrictions are set, under which the owner of such land shall ensure: a) free of charge use of the objects of public use (roads for pedestrians and transport, objects of engineering infrastructure, etc.), which existed as the land was transferred into its property, or the construction of which was envisaged, the respective land being reserved for this purpose by the legislation in force at that time; b) possibilities of placing on this land geodesic signs and posts and access to them; c) possibilities of access to this land of public utilities in charge of maintenance and service of the objects of engineering infrastructure of common use. Article 66. The ownership rights over the adjacent land of privatized objects and private companies starts in the way set up by the legislation.. Article 67. Documents on the basis of which the owners of privatized objects and private companies own and use the adjacent land, except the lease contracts, shall be deemed null

17 and void. Adjacent land of privatized objects as well as adjacent land of private companies shall be offered for lease only in case the owner of privatized objects or private companies doesn t conclude the contract for purchase/sale of adjacent land within three months from the date of the offer to the respective Primaria of the village or city. Chapter 6 Legal, Informational and Institutional Framework for Implementing the Privatization Program Article (1) The Privatization Program shall be implemented based on the legislation governing the privatization process, as well as post-privatization economic and adjustment processes adherent to it. (2) The Government shall periodically review the implementation of privatization and postprivatization activities and, as the case may be, prepare proposals regarding the amendments and supplements to the legislation to improve the aforementioned processes. Article 69. Marketing shall include the organizational and public information aimed to timely implement the Privatization Program and post-privatization activities. Article 70. In course of implementation of Privatization Program an ample awareness campaign shall be launched, locally and abroad, containing the marketing information on companies and other objects, including packages of shares subject to sale, the principles and methods of privatization and the legislation related. Article 71. SCSM and the Stock Exchange shall create the necessary conditions for citizens with lower incomes to participate in purchase of small amounts of state shares, using the dealer-broker companies with the local offices throughout the entire country. Article 72. Criteria and method for selection of the broker/dealer companies for sale of stateowned shares through the Stock Exchange shall be determined by SCSM along with the Department of Privatization. Article 73. (1) The Government on the proposal of the Department of Privatization approves a Regulation on establishment of the minimal selling price of the state shares at the secondary market. (2) The Ministry of Privatization and State Property Administration and Stock Exchange provides the regular information to the potential investors and public on the prices and amount of state-owned shares and to take other measures to ensure the transparency of transactions with these shares. Article 74. The State shall ensure the conditions for development of the real estate market by creating the legal framework, training specialists, licensing activities in the real estate sector, designing an automatic system for registration of transactions with the real estate.