Challenging State Property Sales by Russian Unitary Enterprises

September 2, 2026

BRACE Law Firm©

Agreements for the alienation of state property are high-risk transactions. This is because any transaction involving state property affects public interests. The procedure for negotiating and executing such agreements must be strictly observed, and their execution goals must be transparent and lawful.

The sale of property assigned to state and municipal Unitary Enterprises under the right of economic management, or to State (state-owned and budgetary) Institutions, as well as state-owned enterprises under the right of operational management, is particularly notable among such transactions. These property operations present the greatest legal complexity. They intersect various areas of law – civil, privatization, and antitrust – yet technically fall outside the scope of certain federal laws that establish the fundamentals of state property disposal. Consequently, some aspects of these transactions may appear entirely unregulated.

A state or municipal unitary enterprise (the "Unitary Enterprise") holds property under the right of economic management (Article 294 of the Civil Code of the Russian Federation (the "Civil Code"), Article 2 of Federal Law No. 161-FZ dated November 14, 2002, On State and Municipal Unitary Enterprises (the "Law No. 161-FZ")).

A state-owned or budgetary institution (the "State Institutions" or "Institutions"), as well as a state-owned enterprise, holds property under the right of operational management (Article 296 of the Civil Code, Clause 9 of Article 9.2 of Federal Law No. 7-FZ dated January 12, 1996, On Non-Profit Organizations (the "Law on Non-Profit Organizations")).

Property assigned to Unitary Enterprises under the right of economic management or to State Institutions under the right of operational management possesses a special status: the state is its owner, while the enterprise or institution is deemed the lawful right holder without the title of owner. This dual legal regime governing the property explains the somewhat ambiguous legislative regulation of transactions for its alienation. On one hand, state ownership implies the protection of public interests and, consequently, requires the application of privatization rules upon its sale. On the other hand, the law excludes these transactions from the scope of privatization procedures and, in some cases, generally permits Unitary Enterprises or budgetary institutions to sell the property without the owner's consent (i.e., without state approval).

This review will analyze transactions aimed at the alienation of property assigned to Unitary Enterprises or State (state-owned and budgetary) Institutions. Particular attention will be given to the following issues:

Navigating regulatory requirements for such transactions, including the extent of applicability of Federal Law No. 135-FZ dated July 26, 2006, On Protection of Competition (the "Law on Protection of Competition") and Federal Law No. 178-FZ dated December 21, 2001, On Privatization of State and Municipal Property (the "Law on Privatization");
Structuring the organization and execution of bidding procedures applied to conclude such transactions;
Securing the owner's consent for the sale of property assigned to Unitary Enterprises or State Institutions;
Handling appeals against bidding procedures for the sale of such property before the Antimonopoly Authority (antitrust practice);
Litigating the most prevalent instances of challenging such transactions in the Arbitration Court.

Applying the Law on Privatization and the Law on Protection of Competition to the Sale of Property of Unitary Enterprises and Institutions

When alienating state property assigned to Unitary Enterprises and Institutions, determining the applicable regulatory framework for such transactions is a pressing issue. To mitigate the risks of transaction challenges, one must clearly understand how the sale procedure aligns with general civil legislation, as well as with the Law on Protection of Competition and the Law on Privatization.

The most frequently raised questions include:

Do the rules established in the Law on Privatization apply when selling property assigned to Unitary Enterprises or Institutions?
Should the bidding rules set forth in the Law on Protection of Competition be applied to the alienation of property assigned to Unitary Enterprises or Institutions?
Are the bidding regulations of the Law on Protection of Competition applicable during privatization procedures?

We will analyze the interplay between these laws and regulations.

Article 17.1 of the Law on Protection of Competition governs the execution of lease agreements, free-use agreements, property trust management agreements, and other agreements providing for the transfer of possession and (or) use rights concerning state and municipal property not assigned under the right of economic management or operational management. Privatization entails a sale, meaning a change of property ownership. Therefore, the specified article of the Law on Protection of Competition does not extend to the privatization sphere and is not applied to procedures governed by the Law on Privatization.[1]

For this same reason, Article 17.1 of the Law on Protection of Competition does not apply to purchase and sale transactions of property assigned under the right of economic management or operational management when such transactions occur outside the framework of the Law on Privatization. It should be noted that Part 3 of Article 17.1 of the Law on Protection of Competition addresses the property of state enterprises and institutions, but it also cannot be utilized for purchase and sale transactions, as it regulates agreements transferring possession and use rights, not alienation.

However, the Law on Protection of Competition contains another provision specifically addressing the bidding procedure. This is the new Article 17.3, introduced by Federal Law No. 577-FZ dated December 29, 2025, On Amending the Federal Law On Protection of Competition and Certain Legislative Acts of the Russian Federation, which entered into force on July 1, 2026.

Article 17.3 of the Law on Protection of Competition regulates the general bidding procedure. The tenders or auctions specified in Parts 1 and 3 of Article 17.1 of the Law on Protection of Competition must be conducted considering this general procedure. According to the intent of Part 5 of Article 17.1 of the Law on Protection of Competition, this provision is primarily intended for executing transactions related to the transfer of possession or use rights (the transfer of ownership is not explicitly mentioned in this article of the Law on Protection of Competition). In reality, the regulatory scope of this provision is somewhat broader: it encompasses, among other things, those types of bidding that do not fall under the scope of Article 17.1 of the Law on Protection of Competition and provide for the alienation of state property.

Essentially, Article 17.3 of the Law on Protection of Competition is a brief summary of FAS Russia Order No. 147/23 dated March 21, 2023, On the Procedure for Conducting Tenders or Auctions for the Right to Conclude Lease Agreements, Free-Use Agreements, Trust Management Agreements, and Other Agreements Providing for the Transfer of Rights in Relation to State or Municipal Property, and the List of Types of Property for Which the Conclusion of Such Agreements May Be Carried Out Through Tenders (the "FAS Order No. 147/23"). In turn, this order applies not only to the transfer of state property into temporary possession and use but also to other transaction forms entailing the transfer of property rights, including ownership.

Thus, Article 17.1 of the Law on Protection of Competition does not apply to the alienation (sale) of property assigned to State Unitary Enterprises and Institutions. Conversely, Article 17.3 of the named law is entirely applicable to such transactions.

The sale by Unitary Enterprises or Institutions of property assigned to them under the right of economic management or operational management falls outside the regulatory scope of the Law on Privatization.

It should be clarified that the term "privatization" can be applied in various contexts. In a broad sense, privatization refers to any transaction resulting in property exiting state ownership and entering private ownership. In this context, any sale of state property, including property assigned to Unitary Enterprises or Institutions, can be considered privatization simply because state ownership is terminated as a result of the transaction.

However, in a more precise sense, privatization should be understood as the state property alienation procedure implemented under the rules of the Law on Privatization (i.e., with inclusion in the privatization plan, adoption of an appropriate privatization decision, and bidding conducted under the rules of this Law). In accordance with Subclause 9 of Part 2 of Article 3 of the Law on Privatization, the effect of the specified law does not extend to relations arising during the alienation by Unitary Enterprises or Institutions of property assigned to them in economic management or operational management.

Regarding this matter, there is a resolution of the Constitutional Court of the Russian Federation (the "Constitutional Court"), in which the court meticulously analyzed the relationship between privatization legislation and property sale transactions executed by Unitary Enterprises.[2]

In this resolution, the Constitutional Court established key principles:

The goals of property alienation under the Law on Privatization differ from the goals of a Unitary Enterprise alienating its assigned property. Privatization is rooted in planning ensured by the public owner (implying the mandatory formation of a privatization plan). Meanwhile, a Unitary Enterprise pursues commercial goals when selling property (recall that this legal entity is classified as a commercial organization). A Unitary Enterprise may act as the initiator of property alienation based on its business strategy;
This aforementioned distinction in alienation goals serves as the rationale for differentiated regulatory frameworks;
Subclause 9 of Clause 2 of Article 3 of the Law on Privatization does not contradict constitutional norms, as it permits the sale of assigned real estate by a Unitary Enterprise provided the transaction is not a method of circumventing privatization legislation requirements or an abuse of rights, and is conducted through bidding;
The court acknowledged the fact that a federal law specifically dedicated to the alienation of state or municipal property assigned to state or municipal Unitary Enterprises has not been enacted. In the absence of specific statutory regulation, such transactions are carried out according to the general rules of civil legislation.

These principles clearly illustrate the relationship between the Law on Privatization and property sales by Unitary Enterprises. Furthermore, a significant portion of these principles can also be applied to the sale of property assigned to State Institutions, subject to one fundamental distinction. State Institutions are non-profit organizations; therefore, they do not conduct entrepreneurial activity, but they are entitled to carry out income-generating activities.

Another problematic issue is the bidding procedure applicable for executing such transactions. FAS Russia has repeatedly indicated that the alienation by a State Institution of state property assigned to it under the right of economic management or operational management without conducting bidding constitutes a violation of the Law on Protection of Competition.[3]

At the same time, a unified and universal procedure specifically intended for the alienation of property assigned to state enterprises and institutions has not yet been codified at the legislative level.

In this regard, in 2021, FAS Russia issued an official recommendation: if the procedure for selling the property of Unitary Enterprises and Institutions is not approved by a special regulatory legal act (e.g., industry-specific, departmental, regional, or municipal), it is recommended to conduct bidding for the alienation of such property in accordance with the general bidding procedure.[4] The bidding rules established in FAS Russia Order No. 67 dated February 10, 2010, On the Procedure for Conducting Tenders or Auctions for the Right to Conclude Lease Agreements, Free-Use Agreements, Trust Management Agreements, and Other Agreements Providing for the Transfer of Rights in Relation to State or Municipal Property, and the List of Types of Property for Which the Conclusion of Such Agreements May Be Carried Out Through Tenders, are cited in this letter as the "general procedure". This order expired on October 1, 2023, but was replaced by the FAS Order No. 147/23, which also governs the general competitive procedure during the sale of state property when such a sale is carried out outside the framework of the Law on Privatization. Therefore, the essence of the FAS recommendations remains unchanged: when a Unitary Enterprise or Institution alienates its property, it is necessary to conduct bidding. If special rules for such a sale are not codified at the regional, municipal, or industry level, the procedure under the aforementioned FAS Order No. 147/23 applies.

This approach is implicitly confirmed by the title of the FAS Order No. 147/23 itself: it is intended for executing lease agreements, free-use agreements, trust management agreements, as well as "other agreements providing for the transfer of rights in relation to state or municipal property". The wording "other agreements providing for the transfer of rights" implies the possibility of applying this order to sales. In this sense, the regulatory scope of this order is broader than the scope of application of Article 17.1 of the Law on Protection of Competition.

The preamble of the FAS Order No. 147/23 contains a reference to paragraph one of Clause 2(1) of Decree of the Government of the Russian Federation No. 739 dated December 3, 2004, On the Powers of Federal Executive Bodies to Exercise the Rights of the Owner of the Property of a Federal Unitary Enterprise (the "Decree No. 739"), which establishes that federal property sale transactions are carried out according to the procedure of the FAS Order No. 147/23.

Thus, the regulatory framework of procedures for the sale of property assigned to Unitary Enterprises under the right of economic management and to State Institutions under the right of operational management can be characterized by the following principles:

The provisions of the Law on Privatization do not apply to such transactions;
The provisions of Article 17.1 of the Law on Protection of Competition also do not apply to the sale of property of state enterprises and institutions (however, if a lease or free-use agreement is concluded, this provision is mandatory for application);
Disposing of property assigned to federal state enterprises and institutions is carried out according to the rules of the FAS Order No. 147/23;
A unified (universal) bidding procedure explicitly intended for the alienation of property assigned to regional or municipal Unitary Enterprises and Institutions is not codified at the regulatory level. Regional or municipal authorities may independently regulate competitive procedures. In the absence of such regulation, the FAS Order No. 147/23 applies.

Below we will review in greater detail the procedure established in this order

Bidding Rules Under FAS Order No. 147/23

Bidding for the alienation of state property may be conducted in the form of an auction or a tender. A tender is conducted only in relation to certain types of property specified in Appendix No. 2 to the FAS Order No. 147/23 (e.g., railway transport facilities, sea and river ports, airfields, port or aviation infrastructure facilities, utility infrastructure systems and other utility facilities, subways).

The bidding is conducted electronically and is open regarding the composition of participants and the form of submitting proposals.

Only electronic platforms approved for state procurement purposes may act as bidding operators (Part 5 of Article 17.3 of the Law on Protection of Competition, Clause 3 of the FAS Order No. 147/23). The list of such platforms is established by Order of the Government of the Russian Federation No. 1447-r dated July 12, 2018, On Approving the Lists of Electronic Platform Operators and Specialized Electronic Platform Operators Envisioned by Federal Laws No. 44-FZ Dated April 5, 2013, and No. 223-FZ Dated July 18, 2011.

The bidding organizer is (Part 12 of Article 17.3 of the Law on Protection of Competition, Clause 7 of the FAS Order No. 147/23):

The property owner;
The owner-authorized holder of the right of economic management or operational management (state or municipal Unitary Enterprise, Institution);
Another entity possessing possession and (or) use rights concerning state or municipal property.

The organization of bidding may only be entrusted to a specialized organization included in the list established by Order of the Government of the Russian Federation No. 1874-r dated October 25, 2010, On Approving the List of Legal Entities for Organizing, on Behalf of the Owner, the Sale of Privatized State or Municipal Property and (or) Exercising the Functions of the Seller of Such Property (Part 12 of Article 17.3 of the Law on Protection of Competition, Clause 8 of the FAS Order No. 147/23). These specialized organizers have the right to receive remuneration, but its amount is not included in the price of the bidding subject. The remuneration is paid by the winning bidder or the entity entitled to conclude the agreement based on the bidding results.

To conduct the bidding, a tender or auction commission comprising at least 5 members is established (Clauses 11, 13 of the FAS Order No. 147/23). The commission reviews participants' applications, selects them, and formalizes protocol decisions (including protocols on the results of reviewing applications for participation, on declaring the bidding void, on summarizing the results, on evasion from concluding the agreement, and on suspending an applicant or participant). The commission's quorum constitutes 50% of the total composition; decisions are made by open voting with a simple majority of votes (Clauses 19, 21 of the FAS Order No. 147/23).

Any legal entity regardless of organizational and legal form, and any individual, including an individual entrepreneur, can be a bidding participant (Clause 22 of the FAS Order No. 147/23). However, when selling federal property, the participant must comply with the requirements of Article 5 of the Law on Privatization.

No direct fee is charged to the participant for taking part in the bidding. Nevertheless, each participant is obligated to deposit earnest money into the settlement account of the electronic platform operator. If the earnest money is not deposited, the participant is not admitted to the bidding, and upon conclusion of the agreement, the earnest money amount is offset against the payment amount (Clauses 26, 27, 29 of the FAS Order No. 147/23). This payment should not be confused with the remuneration received by the specialized entity engaged to organize the bidding (Clause 8 of the FAS Order No. 147/23):

The earnest money is transferred by every participant, whereas the remuneration is paid following the bidding results only by the winning bidder or the sole applicant (participant) who obtained the right to conclude the agreement;
The earnest money is refunded to applicants who are not admitted to the bidding or who have withdrawn their applications, as well as to participants who did not win (Clauses 65, 111, 118, 131 of the FAS Order No. 147/23);
The earnest money is forfeited by the winning bidder (as well as the sole applicant or sole participant) if they evade executing the agreement (Clauses 134 (2), 134 (6) of the FAS Order No. 147/23).

Uniform mandatory amounts for the earnest money are not established by the FAS Order No. 147/23 – the organizer determines this amount independently. However, when property assigned to federal enterprises and institutions is alienated at bidding, the earnest money is calculated according to the rules of privatization legislation (Clause 27 of the FAS Order No. 147/23, Part 6 of Article 18 of the Law on Privatization):

20% of the initial sale price of the property, if it amounts to 100 million rubles or more;
10% of the initial sale price of the property, when it amounts to less than 100 million rubles.

The bidding procedure is implemented on the website www.torgi.gov.ru (the "Official Website"). A notice of holding a tender is posted on the specified website no less than 25 calendar days in advance, and a notice of an auction – no less than 15 calendar days and simultaneously no less than 10 business days before the deadline for submitting applications for participation in the bidding (Clauses 33, 87 of the FAS Order No. 147/23).

The organizer has the right to amend the documentation or to cancel the bidding entirely. Information regarding this must be published on the Official Website no later than 5 days before the deadline for submitting applications for participation (Clauses 36, 38, 91, 101 of the FAS Order No. 147/23).

The organizer must ensure participants have the opportunity to inspect the property that is the subject of the bidding. No fee is charged for such inspection. The order establishes the frequency of inspection: no less frequently than every 5 business days from the date the bidding notice is posted and no later than 2 business days before the deadline for submitting applications (Clauses 56, 106 of the FAS Order No. 147/23).

If the bidding is conducted in the form of a tender, the commission reviews the applications for participation in the tender no later than 10 days from the deadline for submitting applications. Based on the review results, a decision is made to admit participants to the tender, and a protocol for reviewing the applications is formalized. Admitted entities are sent notices, and the earnest money is refunded to those not admitted (Clauses 62 – 65 of the FAS Order No. 147/23). The commission evaluates and compares the applications no later than 10 days from the date of signing the protocol for reviewing applications. Participants are evaluated in accordance with the criteria set forth in the tender documentation. The winning bidder is the participant offering the best conditions. Based on the evaluation results, a protocol is compiled, and a notice is sent to the winning bidder.

It should be noted that the tender procedure is primarily utilized for transferring property into temporary possession or use (e.g., lease). When it comes to alienating property, bidding is generally conducted in the form of an auction. Sale under tender conditions is stipulated in specific cases and is rather an exception to the rules (for example, the realization of heat supply facilities in accordance with Article 19.1 of the Law No. 161-FZ).

The commission reviews applications for participation in the auction no later than 2 days from the deadline for submitting applications. Based on the review results, a protocol is formed on admitting or rejecting the applicant. The electronic platform operator sends applicants notifications recognizing them as auction participants or denying them admission to participate in the auction.

An auction is declared void in the following cases (Part 17 of Article 17.3 of the Law on Protection of Competition, Clause 119 of the FAS Order No. 147/23):

No applications for participation in the bidding were submitted, or a decision was made to deny all applicants admission to participate in the bidding;
On the day of the deadline for submitting applications for participation in the bidding, only one application for participation in the bidding was submitted;
Only one applicant is admitted to participate in the bidding;
A single participant took part in the bidding;
During the bidding in the form of an auction, no bidding participant submitted an offer regarding the price of the auction subject.

The sole auction participant, as well as the sole applicant (provided that their application meets the requirements), are recognized as the entities with which the organizer is obliged to conclude the agreement. In turn, these entities also become obligated to execute the agreement.

If multiple participants are admitted to the bidding, the auction is conducted no later than 1 business day from the date of posting the application review protocol. The initial sale price increases by the auction step, which constitutes 5%. The time for accepting price offers lasts 60 minutes from the start of the auction, as well as for 20 minutes after the receipt of the last price offer. It is prohibited to offer a price below the initial minimum sale price, as well as below the previous price offer. If a participant is leading with their price offer, they are deprived of the opportunity to make the next offer. The winning bidder is the participant who offered the highest price. If within 60 minutes from the start of the auction no offer exceeding the starting sale price is submitted, the auction is declared void (Clauses 122 – 127, 133 of the FAS Order No. 147/23).

Upon conclusion of the auction, the electronic platform operator sends the electronic bidding log to the organizer within 1 hour from the moment of finalizing the acceptance of offers. The organizer posts the auction results protocol no later than 1 business day after summarizing the bidding results (Clauses 129 – 130 of the FAS Order No. 147/23).

The agreement is executed with the winning bidder of the auction (or with the sole applicant or sole participant) within a period not earlier than 10 days and no later than 20 days from the date of posting the auction results protocol (or the protocol declaring the auction void). If the winning bidder evades signing the agreement, the organizer compiles and posts on the Official Website a protocol on the evasion from concluding the agreement. The earnest money is not refunded to the winning bidder in the event of evasion. In this case, the agreement is executed with the entity that made the penultimate price offer, no later than 10 days from the date of posting the evasion protocol. If the second participant also refuses to conclude the agreement, the same procedure applied to the winning bidder is utilized: an evasion protocol is formalized, and the deposited earnest money is forfeited (Clauses 133 (1) – 134 (6) of the FAS Order No. 147/23)

Specifics of Selling Heat Supply Facilities and Systems Assigned to Unitary Enterprises

As previously noted, the procedures of the FAS Order No. 147/23 apply in those cases where special rules have not been established for the sale of property.

For example, special rules are codified for the alienation of heat energy sources, heat networks, centralized hot water supply systems, and individual facilities of such systems assigned to state, municipal, or state-owned enterprises (Article 19.1 of the Law No. 161-FZ).

The bidding is conducted in the form of a tender (unless the buyer is a state body). An information notice is posted on the Official Website no less than 30 days before the deadline for submitting applications for participation. Any legal and physical entities may be bidding participants, with the exception of the following categories:

State and municipal Unitary Enterprises, state and municipal Institutions;
Legal entities with a state participation share exceeding 25 percent;
Legal entities registered in offshore zones that do not disclose information about their beneficiaries, beneficial owners, and controlling persons.

This restriction on potential acquirers is of significant importance – it aims to protect the rights and legitimate interests of third parties, and to ensure the defense capabilities and security of the state. If such a participant concludes a transaction based on the bidding results, it will be considered void (Clauses 12, 13 of Article 19.1 of the Law No. 161-FZ).

The duration for accepting applications is no less than 25 days. Within 5 business days from the deadline for accepting applications, the issue of recognizing applicants as participants is resolved. Following this, the tender is conducted within 3 business days.

The earnest money amount is established according to privatization rules: if the starting sale price is 100 million rubles and above – 20%, if the initial price is less than 100 million rubles – 10% (Part 6 of Article 18 of the Law on Privatization). The subsequent fate of the earnest money corresponds to the standard bidding rules: the earnest money is refunded to applicants who withdrew their applications or were not admitted to the bidding, as well as to unsuccessful tender participants. The earnest money is forfeited by the winning bidder or the sole participant who evaded concluding the agreement (Clauses 27 – 31 of Article 19.1 of the Law No. 161-FZ).

The agreement is concluded with the winning bidder within 5 business days after finalizing the tender results. No later than 30 days after the full payment is made, the property must be transferred to the buyer (including the re-registration of ownership rights).

A specific feature of this tender is that the property is sold subject to the buyer's compliance with certain obligations (Clauses 38 – 47 of Article 19.1 of the Law No. 161-FZ):

Investment obligations for construction, reconstruction, and (or) modernization. The buyer must fulfill these obligations in accordance with investment programs approved (depending on the facility's purpose) for a heat supply organization, electric power industry subject, or hot water supply organization;
Operational obligations represent the duty to supply goods or render services to consumers and subscribers at regulated tariffs and to ensure the ability of consumers and subscribers to receive the corresponding goods or services. A maximum period is established for the buyer during which they may cease supplying goods (services) to consumers and subscribers, as well as an allowable volume of non-provision of the corresponding goods or services. Exceeding these limits and thresholds constitutes a material breach of the agreement terms.

The purchase and sale agreement sets forth the procedure for monitoring compliance with these tender conditions, and if the buyer subsequently sells the facility to another party, the investment and operational obligations remain in force for the new owner.

Owner Consent for the Alienation of Property Assigned to Unitary Enterprises and Institutions

Different property disposal regimes are established for Unitary Enterprises, state-owned enterprises, and state budgetary and state-owned institutions. The rules for obtaining the owner's consent vary depending on the organizational and legal form of the legal entity.

Property Disposal Regime of a State or Municipal Unitary Enterprise (hereinafter, these forms of state enterprises will be jointly referred to as the "State Unitary Enterprise"):

Alienating real estate always requires the owner's consent regardless of the property value, transaction terms, and other circumstances (Clause 2 of Article 295 of the Civil Code, Article 18 of the Law No. 161-FZ);
Disposing of movable property generally does not require the owner's consent, unless otherwise specified in the law or the enterprise's own charter (Clause 2 of Article 295 of the Civil Code, Article 18 of the Law No. 161-FZ);
Executing a major transaction requires the owner's consent. The criterion for such a transaction is the price or book value of the property if it constitutes more than 10% of the State Unitary Enterprise's authorized fund. When selling property, the larger of two values is used for comparison: the alienation price of the specified property or its book value (Article 23 of the Law No. 161-FZ);
Selling shares or participatory interests (contributions) in the charter (pooled) capital of a business society or partnership is possible only with the owner's consent (Clause 2 of Article 6 of the Law No. 161-FZ);
Entering into an interested-party transaction involving the director of the State Unitary Enterprise requires the owner's consent (Article 22 of the Law No. 161-FZ).

A conflict of interest is manifested in the fact that the director of the State Unitary Enterprise, their spouse, parents, children, brothers, sisters, and their affiliated persons:

Are a party to the transaction or act in the interests of third parties in their relations with the State Unitary Enterprise;
Own, individually or jointly, 20% or more of the shares, participatory interests, or units of an organization that is a party to the transaction or acts in the interests of third parties in their relations with the State Unitary Enterprise;
Hold positions in the management bodies of an organization that is a party to the transaction or acts in the interests of third parties in their relations with the Unitary Enterprise;
Other instances of a conflict of interest may be stipulated in the State Unitary Enterprise's charter.

Thus, the owner's approval will invariably be required to sell real estate assigned to a State Unitary Enterprise. If the real estate value meets the parameters of a major transaction, the approval procedure will be implemented according to the rules for obtaining consent for the alienation of real estate. For the sale of movable property, consent is necessary if at least one of the two values (sale price or book value) falls under the criteria of a major transaction. The sale of participation interests in other legal entities (shares, participatory interests, contributions) always requires the owner's consent. If the transaction falls under the criteria of an interested-party transaction, the owner's approval is required in any case, regardless of the type and value of the alienated property. Furthermore, additional restrictions on the disposal of movable property may be codified in the State Unitary Enterprise's charter: for example, the price threshold may be tightened, or special rules may be established regarding certain types of property.

The Property Disposal Regime of a State-Owned Enterprise is more stringent compared to a State Unitary Enterprise: the alienation of any property is possible only with the owner's consent (Clause 2 of Article 297 of the Civil Code, Article 19 of the Law No. 161-FZ). This rule applies regardless of the type of property (movable or immovable) and regardless of its value.

It should be noted that in Article 23 of the Law No. 161-FZ, when defining a major transaction, a state-owned enterprise is also mentioned alongside a State Unitary Enterprise. The criterion for such a transaction includes a reference to 10% or more of the book value of the assets of the state-owned enterprise, determined according to its accounting (financial) reporting data as of the last reporting date. However, at the same time, Clause 3 of that same article mandates the necessity to obtain the owner's consent only for a State Unitary Enterprise – this merely corroborates the general rule that a state-owned enterprise is deprived of the right to arbitrarily alienate any property, even if it does not fall under the parameters of a major transaction.

Property Disposal Regime of a State Budgetary Institution (the "State Budgetary Institution").

First, the owner's consent is always necessary for the alienation of real estate assigned to a State Budgetary Institution under the right of operational management (Clause 3 of Article 298 of the Civil Code, Clause 9.2 of the Law on Non-Profit Organizations).

Second, the owner's consent is required when selling particularly valuable movable property (if this property was assigned to the State Budgetary Institution by the owner or was acquired by the institution using funds allocated by the owner) (Clause 3 of Article 298 of the Civil Code, Clauses 10-12 of Article 9.2 of the Law on Non-Profit Organizations). The types and lists of particularly valuable property are approved by the regulatory documents of the authorities overseeing the State Budgetary Institution. The book value is one of the criteria for particularly valuable property, and the parameters of this criterion depend on the property's level of ownership[5]:

For federal property, the value interval ranges from 200 to 500 thousand rubles;
For the property of constituent entities of the Russian Federation, the value interval ranges from 50 to 500 thousand rubles;
For municipal property, the value interval ranges from 50 to 200 thousand rubles.

Third, the owner's consent is necessary when executing a major transaction (Clause 3 of Article 9.2 of the Law on Non-Profit Organizations). For a State Budgetary Institution, a transaction is considered major if its price or the value of the alienated property exceeds 10% of the book value of the institution's assets according to the accounting data as of the last reporting date. The State Budgetary Institution's charter may provide for a lower threshold for the major transaction criterion. An important point: the major transaction regime applies to the property that the institution is entitled to dispose of independently. That is, a different basis for transaction approval will apply to real estate and particularly valuable property.

Fourth, a special approval regime is established for interested-party transactions (Article 27 of the Law on Non-Profit Organizations).

Interested parties are deemed to be the head of the State Budgetary Institution and a person serving on the supervisory body of the State Budgetary Institution, if said individuals have a connection with the entity acting as a party to the transaction (with the counterparty):

Maintain employment relations with the counterparty;
Act as participants of the counterparty;
Serve as creditors of the counterparty;
Have close family ties with a counterparty who is an individual.

The conflict of interest lies in the fact that such counterparties may extract a benefit from the property disposal transaction.

A distinctive aspect is that an interested-party transaction must be approved, not by the owner, but by the supervisory body of the State Budgetary Institution, which exercises the functions and powers of the founder.

The Property Disposal Regime of a State-Owned Institution (the "State-Owned Institution") is perhaps the most stringent among all public sector organizations. The capabilities of a state-owned institution are extremely limited; in this sense, a similarity with a state-owned enterprise is observed. Disposing of any property of a state-owned institution is possible only with the owner's consent (Clause 4 of Article 298 of the Civil Code). A concept such as "particularly valuable property" does not exist for a State-Owned Institution, and the categories of "major transaction" and "interested-party transaction" are also not applied.

A significant exception to the listed rules is the realization of property assigned to Unitary Enterprises and Institutions within the framework of enforcement proceedings.

In the absence or insufficiency of monetary funds belonging to the debtor, enforcement is levied against other property belonging to them under the right of ownership, economic management, or operational management.[6]

When selling property of a state enterprise belonging to it under the right of economic management through public bidding within the framework of enforcement proceedings, the owner's consent is not required, provided that[7]:

The disputed property is not withdrawn from circulation and is not restricted in circulation;
The legislation does not provide rules precluding or restricting the possibility of levying enforcement against it.

Violating the approval procedure for a state (municipal) property disposal transaction is qualified as a violation of Article 7.35 of the Code of Administrative Offenses of the Russian Federation (the "CAO RF"). State enterprises and institutions are the subjects of this violation. The following penalties are prescribed for the violation:

For officials: an administrative fine ranging from 1 to 10% of the executed transaction's price, or disqualification for a period from 6 months to 3 years;
For legal entities: from 10 to 20% of the executed transaction's price.

Procedure for Obtaining Owner Consent to Alienate Property Assigned to a Unitary Enterprise or Institution

While the permissible boundaries for disposing of state property depend primarily on the legal entity's organizational and legal form, the procedure for obtaining such approval is determined by the regional or industry level of property ownership.

The Government of the Russian Federation manages and disposes of federal property facilities, except in cases stipulated by the legislative acts of the Russian Federation. Certain powers may be delegated to federal executive bodies, as well as to the executive bodies of the constituent entities of the Russian Federation.[8]

The transaction approval rules for the federal property of State Unitary Enterprises are codified in the Decree No. 739. Federal executive bodies (the "FEBs") are authorized to approve the following actions of subordinate federal State Unitary Enterprises (the "Federal State Unitary Enterprises") (subclauses "e", "zh", "z" of Clause 1, subclauses "e", "zh", "z" of Clause 1.1 of the Decree No. 739):

Interested-party transactions;
Major transactions;
Transactions for the sale of contributions, participatory interests, shares.

If the property value exceeds 150 million rubles, in addition to the FEB's consent, it is necessary to obtain a decision from the Government of the Russian Federation to approve the transaction.

A special condition is established for Federal State Unitary Enterprises included in the list of enterprises approved by Order of the Government of the Russian Federation No. 1060-r dated June 20, 2011, On Approving the List of Federal State Unitary Enterprises for Which a Special Procedure for Federal Executive Bodies to Make Decisions is Established. If the value of the alienated property of such a Federal State Unitary Enterprise constitutes more than 25% of the book value of its assets according to accounting (financial) reporting data as of the last reporting date, a decision from the Government of the Russian Federation is required to approve the transaction.

Transactions involving the alienation of real estate are approved by the Federal Agency for State Property Management (the "Rosimushchestvo") (subclause "b" of Clause 2 of the Decree No. 739). The list of documents required to approve a real estate sale transaction of a Federal State Unitary Enterprise is approved by an Order of the Ministry of Economic Development of Russia.[9]

To obtain consent, the Federal State Unitary Enterprise submits a proposal to execute a transaction to the supervising FEB. The proposal is then forwarded to Rosimushchestvo, which approves the transaction within 15 business days, and if the property value exceeds 150 million rubles, it forwards the corresponding proposals to the Ministry of Finance of the Russian Federation for subsequent submission to the Government of the Russian Federation. If no feedback is received from Rosimushchestvo within 30 business days, the transaction is deemed approved (except for transactions requiring a decision from the Government of the Russian Federation).

Special rules are codified for property assigned to Federal State Unitary Enterprises under the jurisdiction of the Ministry of Defense of the Russian Federation, the Ministry of the Russian Federation for Civil Defense, Emergencies and Elimination of Consequences of Natural Disasters, the Administrative Directorate of the President of the Russian Federation, and the Federal Agency for Maritime and River Transport. Direct powers to approve property transactions of subordinate Federal State Unitary Enterprises have been delegated to these authorities.

Regarding property assigned to federal state institutions, the approval procedures are established by industry and departmental regulatory acts (for example, Rostekhnadzor Order No. 310 dated August 28, 2023, EMERCOM of Russia Order No. 77 dated February 10, 2026, Ministry of Digital Development of Russia Order No. 1178 dated November 11, 2021, Roskomnadzor Order No. 167 dated August 25, 2021, Ministry of Natural Resources of Russia Order No. 454 dated July 16, 2020, Ministry of Agriculture of Russia Order No. 371 dated June 30, 2020).

For enterprises and institutions of the constituent entities of the Russian Federation and at the municipal level, the procedure for obtaining consent is defined in regional and municipal acts. For example, in St. Petersburg, unitary enterprises are guided by Resolution of the Government of St. Petersburg No. 131 dated March 11, 2014, On the Exercise by the Executive Bodies of State Power of St. Petersburg of the Rights of the Owner of the Property of State Unitary Enterprises of St. Petersburg. The powers to approve transactions of State Unitary Enterprises are distributed between the Committee of Property Relations of St. Petersburg (real estate transactions) and supervising governmental bodies (major transactions and interested-party transactions).

Special administrative regulations have been approved to authorize property transactions assigned to state institutions of St. Petersburg. For instance, Order of the Committee of Property Relations of St. Petersburg No. 98-r dated August 7, 2020, On Approving the Administrative Regulations of the Committee of Property Relations of St. Petersburg for the Provision of State Services for the Approval of Transactions and Other Legally Significant Actions Involving Movable Property Executed by State Institutions of St. Petersburg Under the Grounds and Procedures Established by Legal Acts of the Russian Federation, St. Petersburg, and the Committee of Property Relations of St. Petersburg, regulates the approval of transactions with particularly valuable property and major transactions of budgetary institutions, and any alienation of movable property by state-owned institutions.

Appealing the Bidding Procedure for the Sale of Property Assigned to State Enterprises and Institutions to the Antimonopoly Authority

In accordance with Article 18.1 of the Law on Protection of Competition, the antimonopoly authority reviews complaints against the actions (inaction) of a legal entity, bidding organizer, electronic platform operator, or tender or auction commission during the organization and conduct of bidding, and the conclusion of agreements based on bidding results, when such bidding is mandatory by virtue of the legislation of the Russian Federation. These powers are vested in the antimonopoly authority by Clause 4.2 of Part 1 of Article 23 of the Law on Protection of Competition.

However, when the property of unitary enterprises and institutions is the subject of bidding, such an appeal is not always possible. The fact is that, by default, the appeal procedure under Article 18.1 of the Law on Protection does not apply to such bidding.

The rationale for this rule is reduced to the following arguments:

Only bidding whose conduct is mandatory in accordance with the legislation of the Russian Federation may be appealed in the procedure established by Article 18.1 of the Law No. 135-FZ;
A separate procedure for the alienation of property assigned to other state and municipal unitary enterprises and state institutions has not been established at the federal level;
The Law on Privatization also does not regulate such bidding;
Disposing of property assigned to regional and municipal unitary enterprises and institutions does not fall into the category of bidding that is mandatory by virtue of the legislation of the Russian Federation. This approach applies even in cases where the procedure under the FAS Order No. 147/23 was utilized during the organization and conduct of the bidding.

For these reasons, complaints related to conducting bidding for the alienation of property of unitary enterprises and institutions are not subject to review by the antimonopoly authority under the procedure of Article 18.1 of the Law on Protection of Competition.

When attempting to appeal, applicants receive a categorical refusal.[10] Antimonopoly authorities formulate the operative part of such "refusal" decisions differently. As a rule, the applicant's complaint is simply left without consideration (with the wording "leave the complaint without consideration"). Examples of such refusals are numerous in antitrust practice and are present in all regions. Thus, the Altai Krai OFAS of Russia left without consideration an applicant's complaint alleging their application was not admitted to participate in an auction due to the failure to submit earnest money.[11] The Kalmyk OFAS of Russia declined to review a complaint regarding the imposition of the obligation to pay for auction organization services onto the winning bidder.[12] The Amur OFAS of Russia declined to review a complaint regarding the non-compliance of the electronic auction documentation with legislative requirements.[13] In some instances, a complaint may even be accepted for review, but ultimately, it is still deemed unfounded (with the wording "deem the complaint unfounded").[14]

However, there is an exception to this rule. A complaint will be reviewed by the antimonopoly authority on the merits in cases where a regulatory act (e.g., at the regional or municipal level) enshrines the rules and the necessity for conducting bidding. An example is the FAS Russia decision dated March 19, 2025: within the framework of Article 18.1 of the Law on Protection of Competition, a bidding complaint was reviewed during an auction for the sale of property under the operational management of a budgetary institution. The complainant was unable to participate in the bidding due to a technical glitch on the electronic platform. The bidding procedure and rules for property assigned to unitary enterprises and institutions of the Leningrad Region are defined by a regional Government resolution. Such bidding is regarded as mandatory; therefore, the complaint was reviewed on the merits (although deemed unfounded).[15]

If violations are identified as a result of a complaint, the antimonopoly authority issues a prescriptive order (an injunction) in accordance with Clause 3.1 of Part 1 of Article 23 of the Law on Protection of Competition. Such prescriptive orders may be issued to:

The bidding organizer;
The electronic platform operator;
The tender or auction commission;
The seller of state or municipal property.

The content of the prescriptive order depends on the nature of the violation:

Rectifying violations committed during the organization and conduct of bidding;
Rectifying violations during the conclusion of agreements based on bidding results;
Canceling protocols drafted during the bidding process;
Introducing amendments to the bidding documentation and the bidding notice;
Nullifying the bidding.

An illustrative example is the Decision of the Moscow OFAS of Russia, which reviewed a complaint regarding violations in formatting auction documentation (specifically, the facility's area was incorrectly stated, and the sale price was inaccurately calculated). The bidding procedure for this property is enshrined in Resolution of the Government of Moscow No. 371-PP dated June 28, 2016, On Approving the Uniform Requirements for Conducting Bidding for the Sale of Property Owned by the City of Moscow, Bidding for the Right to Conclude Lease Agreements and Other Agreements Providing for the Transfer of Rights in Relation to Property Owned by the City of Moscow. Therefore, the complaint was reviewed, deemed partially founded, and a prescriptive order was issued to the bidding organizer and seller to cancel the bidding and correct the notice.[16]

Violating the bidding procedure (in cases where it is mandatory and regulated) constitutes an administrative violation under Article 7.30.5 of the CAO RF and envisions the following qualification variations[17]:

Violating the procedure and deadline for publishing information (or publishing inaccurate information), as well as erroneously selecting the bidding format, incurs a fine for officials ranging from 30,000 to 40,000 rubles, for individual entrepreneurs from 40,000 to 50,000 rubles, and for legal entities from 50,000 to 100,000 rubles;
Violating the procedure for providing documentation and its clarifications, the procedure for accepting applications for participation, or admission to participate in the bidding, as well as failing to observe the procedure for determining the winning bidder, incurs a fine for officials ranging from 20,000 to 30,000 rubles, for individual entrepreneurs from 30,000 to 40,000 rubles, and for legal entities from 40,000 to 50,000 rubles;
Violating deadlines for concluding agreements based on bidding results incurs a fine for officials ranging from 30,000 to 40,000 rubles, and for legal entities from 30,000 to 50,000 rubles;
If the law stipulates a prohibition on altering the terms of an agreement concluded based on bidding results, violating this requirement may incur a fine for citizens in the amount of 2,000 to 3,000 rubles, for officials from 20,000 to 30,000 rubles, and for legal entities from 50,000 to 300,000 rubles (it should be noted that the penalty threatens both parties – the seller and the buyer);
Other violations during the bidding process incur a penalty in the form of a fine for officials ranging from 2,000 to 3,000 rubles, and for legal entities from 20,000 to 30,000 rubles.

Selling state property without conducting bidding constitutes improper management of state property and is qualified as a violation under Articles 15 and 16 of the Law on Protection of Competition (executing actions or inaction that may lead to the prevention, restriction, or elimination of competition). FAS Russia indicates this in letters No. GM/112800/21 dated December 29, 2021, No. IA/40312/14 dated October 1, 2014, No. AG/30312/13 dated August 5, 2013, as well as in the explanations "Explanations on the Application of Article 17.1 of Federal Law No. 135-FZ Dated July 26, 2006 On Protection of Competition". These clarifications emphasize that failing to utilize competitive procedures constitutes a violation even in a situation where the owner (i.e., the state authority) has consented to such a transaction

In such cases, the antimonopoly authority primarily issues a warning to the entity in accordance with Article 39.1 of the Law on Protection of Competition, in which it sets a deadline for ceasing the violation and eliminating its consequences. An important point is that the presence of signs of an offense is sufficient to issue a warning, rather than a proven fact of its commission.

An example is a case from the Far Eastern Circuit. A federal budgetary institution sold a large batch of caviar without bidding. The antimonopoly authority issued a warning, ordering the institution to terminate the agreement and return the payment received for the goods to the budget. An attempt was made to appeal the warning in court, citing that the antimonopoly authority was guided by Article 17.1, which does not apply to property assigned to budgetary institutions. It was also declared that there were no legal grounds for terminating the agreement. Three instances of the arbitration court adopted the position of the antimonopoly authority, indicating the presence of signs of a violation, which are sufficient for a warning.[18]

It should be considered that appealing to the antimonopoly authority is not the only protection tool when executing an unlawful state property transaction. Bidding results, as well as an executed agreement, can be appealed in an arbitration court.

Litigating the Bidding Procedure for the Sale of Property Assigned to Unitary Enterprises and Institutions in Court

Bidding for the alienation of property assigned to unitary enterprises and institutions may be challenged in court. The general rules for such a challenge are contained in Article 449 of the Civil Code. Disputes concerning the invalidation of bidding are heard according to the rules established for invalidating voidable transactions. By challenging the bidding, the plaintiff essentially challenges the transaction itself.[19]

An interested party may challenge the bidding results. The statute of limitations is 1 year from the date they were conducted.

The following may serve as grounds for a challenge (Clause 1 of Article 449 of the Civil Code):

Unjustified suspension from participation in the bidding;
If the highest offered price was groundlessly rejected at the bidding;
The sale of property occurred prior to the deadline specified in the notice;
Other material violations of the bidding procedure that resulted in an incorrect determination of the sale price;
Other violations of the legally established rules for conducting and organizing bidding.

If the bidding is deemed invalid, this entails the invalidity of the agreement executed based on its results. In this event, the consequences stipulated in Article 167 of the Civil Code arise:

A transaction is invalid from the moment of its execution and does not entail legal consequences, except for those related to its invalidity;
A party that knew or should have known about the grounds for the invalidity of a voidable transaction is not considered to have acted in good faith;
Each party is obligated to return to the other all that was received under the transaction, and if it is impossible to return what was received in kind, to reimburse its value, unless other consequences of the transaction's invalidity are provided by law;
When declaring a transaction invalid, the court terminates its effect for the future (if this corresponds to the nature of the transaction);
The aforementioned invalidity consequences may not be applied if doing so contradicts the fundamentals of the legal order and morality.

Expenses incurred by the bidding organizer in connection with applying the consequences of the bidding's invalidity (including during the conduct of repeat bidding) are distributed among the entities that committed the violations which served as the cause for the challenge (Clause 1 of Article 449 of the Civil Code).

An example of such judicial litigation is a Far Eastern Circuit case regarding the invalidation of bidding for the sale of a real estate facility assigned to a unitary enterprise. It should be noted that the State Unitary Enterprise complied with the formal procedure for preliminary transaction approval: an order was obtained for the alienation from the Committee for the Management of State Property of the Primorsky Krai. However, the bidding did not ensure the possibility of genuine competition and was conducted merely to "create the appearance of its execution", as affiliated entities participated with the facilitation of the enterprise's officials. The procedure was organized while concealing information from a broad circle of potential participants, and the bidding scenario was predetermined. Bidding participants were entities with no intention to acquire the property. The basis for the judicial decision was also the fact that officials of the Ministry of Property Relations of the Russian Federation for the Primorsky Krai were held criminally liable for organizing a criminal enterprise aimed at acquiring rights to state real estate by controlled companies. Consequently, the facility exited the ownership of the Primorsky Krai as a result of the criminal actions of interested parties.[20]

Litigating the Sale of Property Assigned to Unitary Enterprises and Institutions Executed Without Owner Consent

The general rules for challenging such transactions are governed by Article 173.1 of the Civil Code. A transaction executed without obtaining the consent of a legal entity's body, a state authority, or a local self-government body, the necessity of which is stipulated by law (the "Unapproved Transaction"), is voidable (unless it follows from the law that it is void or does not entail legal consequences for the person authorized to grant consent in the absence of such consent). Such a transaction may be declared invalid pursuant to a lawsuit filed by the consenting entity or other entities specified in the law.

Thus, when alienating state property without the owner's approval, a voidable transaction regime applies: invalidating such a transaction requires a court decision (Clause 1 of Article 166 of the Civil Code). The statute of limitations for a claim to declare a voidable transaction invalid and to apply the consequences of its invalidity is 1 year from the day when the plaintiff knew or should have known of the circumstances constituting the grounds for the challenge (Clause 2 of Article 181 of the Civil Code).

An Unapproved Transaction may be declared invalid if it is proven that the other party to the transaction knew or should have known of the absence of necessary consent at the time the transaction was executed (Clause 2 of Article 173.1 of the Civil Code). If an entity provided the legally required consent to execute a voidable transaction, it is subsequently not entitled to challenge the transaction on a ground that this entity knew or should have known about at the time consent was expressed (Clause 3 of Article 173.1 of the Civil Code).

These principles are reflected in special norms governing the disposal of property by unitary enterprises and state institutions.

For example, for a budgetary institution, the consequences of executing a major transaction without approval are codified in Clause 13 of Article 9.2 of the Law on Non-Profit Organizations:

Such a transaction may be declared invalid upon a lawsuit by the State Budgetary Institution or its founder, if it is proven that the other party to the transaction knew or should have known of the absence of approval;
The director of the State Budgetary Institution bears liability to the budgetary institution in the amount of damages caused, regardless of whether this transaction was declared invalid.

Clause 4 of Article 27 of the Law on Non-Profit Organizations details the consequences of arbitrarily concluding an interested-party transaction:

Such a transaction may be declared invalid by a court;
The interested party bears liability to the state institution in the amount of damages caused (if there are several such parties, the liability is joint and several).

A transaction of a unitary enterprise in which the director holds an interest and which is executed in violation of legal requirements (including regarding approval) may be declared invalid upon a lawsuit by the unitary enterprise itself or the property owner (Clause 3 of Article 22 of the Law No. 161-FZ).

Clause 9 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 10 and the Plenum of the Supreme Arbitration Court of the Russian Federation No. 22 dated April 29, 2010, On Certain Issues Arising in Judicial Practice When Resolving Disputes Related to the Protection of Property Rights and Other Real Rights, contains some clarifications regarding the voidable transaction regime for unitary enterprises:

Those transactions of a State Unitary Enterprise that are voidable may be declared invalid upon a lawsuit by the enterprise itself or the property owner, rather than any interested party. The defendant is entitled to claim the expiration of the statute of limitations for declaring such a transaction invalid;
An owner's lawsuit to invalidate a transaction executed without obtaining the consent of the owner required by law or charter is not subject to satisfaction if the case file contains evidence of such approval, including subsequent approval.

A voidable transaction is recognized as invalid only subject to its invalidation by a court, unlike a void transaction, which is invalid regardless of a court decision (Clause 1 of Article 166 of the Civil Code). In this regard, it must be considered that the general voidability regime for property alienation transactions of unitary enterprises and institutions contains exceptions – many categories of such transactions are void.

First, a property disposal transaction (both movable and immovable) by a unitary enterprise that deprives the State Unitary Enterprise of the ability to carry out the activities, goals, subject, and types of which are defined by its charter, is void (Clause 3 of Article 18 of the Law No. 161-FZ). An example is an East Siberian Circuit case regarding the execution of a building purchase and sale agreement. As a result of the facility's alienation, the enterprise lost the ability to carry out the activity of organizing terminals (bus stations) stipulated by its charter, which led to a violation of public interests.[21]

Second, a unitary enterprise's transaction for the alienation of heat supply facilities and systems is void if the buyer had no legal right to such an acquisition (Clause 12 of Article 19.1 of the Law No. 161-FZ). This rule is mandated by restrictions on the circle of potential acquirers of such property, which are established in Clause 9 of Article 19.1 of the named law.

Third, sham transactions (executed merely for appearance without the intention to create corresponding legal consequences), as well as feigned transactions (executed to conceal another transaction), are considered void (Article 170 of the Civil Code). It should be noted that such transactions are often concluded with formal compliance with procedures, in the presence of owner approval, and by conducting bidding. The invalidity of such transactions is rooted in their unlawful objective (e.g., purposefully transferring property into the ownership of a specific entity).

Fourth, transactions for the owner's withdrawal of property from the economic management of unitary enterprises are considered void (such actions are recognized as transactions; therefore, the consequences of declaring a transaction invalid may be applied to them).

Examples of such transactions will be reviewed below.

Disputes Over the Owner's Withdrawal of Property Assigned to a Unitary Enterprise Under the Right of Economic Management

When reviewing disputes regarding the alienation of property of unitary enterprises and institutions, special cases of without-contract alienation should be highlighted. This refers to a situation where the owner, on their own initiative and through a unilateral decision, withdraws property from a unitary enterprise. Such a property operation is also recognized as a transaction. Owner decisions to withdraw property from the economic management of State Unitary Enterprises are frequently challenged; hence, a distinct category of judicial cases has formed in arbitration practice.

Often, such withdrawal is accompanied by subsequent reassignment, meaning the property is withdrawn from the enterprise and simultaneously transferred to another entity under the right of economic management or operational management. Occasionally, this transfer may be accompanied not only by a change in the right holder but also by a transition to another level of ownership (e.g., transferring property from federal ownership to municipal ownership, from the ownership of a constituent entity of the Russian Federation to federal ownership, etc.). Such reassignment is also recognized as a transaction; therefore, sometimes this property operation is challenged alongside the withdrawal.

Pursuant to the intent of Article 295 of the Civil Code, an owner, having transferred property into the possession of a unitary enterprise, is not entitled to dispose of it regardless of the presence or absence of such enterprise's consent. Furthermore, the law does not provide for an enterprise's voluntary relinquishment of property assigned to it under the right of economic management, especially if this deprives the enterprise of the ability to carry out activities, goals, subjects, and types of which are defined by the charter. The withdrawal of excess, unused, or improperly used property is permissible only with respect to property assigned to a state-owned enterprise or institution under the right of operational management (Clause 2 of Article 296, Clause 3 of Article 299 of the Civil Code). Clause 40 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 6 and the Plenum of the Supreme Arbitration Court of the Russian Federation No. 8 dated July 1, 1996, On Certain Issues Related to the Application of Part One of the Civil Code of the Russian Federation, establishes:

The owner (or an authority empowered by them) is not vested with the right to withdraw, lease out, or otherwise dispose of property held in the economic management of a state (municipal) enterprise;
Acts of state bodies and local self-government bodies concerning the disposal of property belonging to state (municipal) enterprises under the right of economic management must be declared invalid upon the claims of these enterprises.

According to Clause 74 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 25 dated June 23, 2015, On the Application by Courts of Certain Provisions of Section I of Part One of the Civil Code of the Russian Federation, an agreement whose terms contradict the essence of the legislative regulation of the corresponding type of obligation may be qualified as entirely or partially void, even if the law does not contain a direct indication of its nullity.

Thus, a transaction aimed at withdrawing property transferred to a unitary enterprise under the right of economic management is void by virtue of a direct legislative prohibition, regardless of whether it is executed on the enterprise's initiative or by the decision or with the consent of the owner. This premise serves as the foundation when reviewing disputes related to withdrawing a unitary enterprise's property upon its owner's initiative.

A prominent example is a decision of the Arbitration Court of the Central Circuit. An interregional territorial administration of Rosimushchestvo resolved to withdraw movable property from the economic management of a municipal unitary enterprise for the purpose of transferring it to federal ownership. Subsequently, the disputed property was assigned under the right of operational management to an agrarian university. The court established that the property constituted agricultural equipment (harvesters), while the statutory goal of the Municipal Unitary Enterprise was the technological support of the district's agricultural production. The court applied the consequences of the transaction's invalidity and ordered the agrarian university to return the property.[22]

In some cases, such property withdrawal is formalized and presented as a voluntary relinquishment of the right of economic management by the State Unitary Enterprise itself. However, the presence of such a voluntary relinquishment does not alter the courts' approach to this issue. An example is an East Siberian Circuit court decision regarding the withdrawal of a non-residential facility from economic management. The owner argued that they did not withdraw the facility from the unitary enterprise, but merely accepted the specified property from the debtor in connection with a relinquishment. The reason for such relinquishment was the excessive area of the facility, which was not used in the enterprise's statutory activities. Nevertheless, the court deemed such a withdrawal unlawful.[23]

Challenging the Sale of Property of a Unitary Enterprise or Institution Initiated by the Prosecutor's Office

It must be noted that a prosecutor's office authority frequently acts as the initiator of a judicial process to challenge transactions involving state property. This is due to the specific status of unitary enterprises and institutions – their primary functions, statutory goals, and tasks are geared primarily toward fulfilling state needs and interests, thereby affecting public interests, which the prosecutor's office protects.

By virtue of Article 52 of the Arbitration Procedure Code of the Russian Federation, a prosecutor is entitled to petition the court with a lawsuit to invalidate transactions and to apply the consequences of the invalidity of a void transaction executed by state authorities of the Russian Federation, state authorities of the constituent entities of the Russian Federation, local self-government bodies, state and municipal unitary enterprises, and state institutions. These powers are reflected in Article 1 of Federal Law No. 2202-1 dated January 17, 1992, On the Prosecutor's Office of the Russian Federation, as well as in Clauses 1 and 10 of the resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation No. 15 dated March 23, 2012, On Certain Issues of the Prosecutor's Participation in the Arbitration Process.

Challenges to state property transactions initiated by the prosecutor's office are highly prevalent; this practice has long been established and is traditional.

For example, based on a prosecutor's lawsuit, a purchase and sale agreement resulting in a unitary enterprise alienating real estate assigned to it under the right of economic management was declared invalid. The transaction was executed without approval from the territorial administration of federal property.[24]

Another example is a case from the Arbitration Court of the Moscow Circuit. The prosecutor's office filed a lawsuit regarding the invalidity of assigning non-residential premises to a unitary enterprise, as well as the invalidity of the subsequent purchase and sale agreement for these facilities. The district administration issued an administrative document on transferring the real estate facilities into the economic management of the Municipal Unitary Enterprise. Concurrently, the facilities were not physically transferred into the enterprise's possession and use, nor were they utilized in its operations. A few days later, the municipal body approved transactions for alienating these premises to a business society via a direct agreement, without conducting bidding. The prosecutor declared that the disputed transactions were void, as they violated legislative provisions and public interests: their goal was to sell state property to an organization while circumventing competitive procedures. The ultimate acquirer of the facilities was obligated to return them back to the district administration. The court satisfied the prosecutor's claims.[25]

A similar approach was applied by the Moscow Circuit court regarding share transactions challenged by a prosecutor. A 100% block of shares was transferred into the economic management of a federal unitary enterprise. Subsequently, the shares were sold to a business society without conducting bidding, and without the requisite approval procedures. The court indicated that such assignment of shares to the Federal State Unitary Enterprise, considering their subsequent alienation into private ownership, is void; these actions are interconnected and aimed at concealing a transaction for the privatization of state property in circumvention of privatization legislation.[26]

These examples confirm that the voidability principle for property sale transactions of unitary enterprises and institutions does not apply in all cases. If property was alienated without the intent to create legal consequences, or if the owner intended to conceal another transaction with such a sale, the rules of Article 170 of the Civil Code come into effect, under which a sham or feigned transaction is void.

Key Findings

In conclusion, one can infer that the procedures for selling property assigned under the right of economic management to unitary enterprises and under the right of operational management to state institutions occupy a distinct position among state property transactions. Their regulatory framework possesses specific features and is quite contradictory:

Purchase and sale agreements for property assigned to state unitary enterprises and institutions are not governed by the Law on Privatization. Therefore, the rules of this law do not apply to such transactions. Specifically, selling the property of a unitary enterprise or institution does not require including this transaction in the privatization plan. Furthermore, privatization rules are not applied during the organization and conduct of bidding when a unitary enterprise or institution alienates property assigned to them;
Article 17.1 of the Law on Protection of Competition does not regulate property alienation transactions of unitary enterprises and institutions. However, this provision must be applied in instances where a State Unitary Enterprise, State Budgetary Institution, or State-Owned Institution transfers property under a lease agreement, free-use agreement (or upon another transfer into possession and use without transferring ownership);
Article 17.3 of the Law on Protection of Competition applies to the sale of property of state unitary enterprises and institutions, as it governs the general bidding rules for state property. If special bidding rules are established by a regulatory act for the property of a State Unitary Enterprise, State Budgetary Institution, or State-Owned Institution, Article 17.3 of the Law on Protection of Competition will apply to the extent it does not contradict the specified rules;
The sale of property assigned to unitary enterprises and institutions should be carried out through conducting bidding. Special, unified, and standardized competitive procedures strictly tailored for the property of State Unitary Enterprises, State Budgetary Institutions, or State-Owned Institutions are not established by law. Therefore, the rules codified by the FAS Order No. 147/23 apply to such bidding. For selling the property of federal unitary enterprises and institutions, this order is mandatory. At the regional or municipal level, state authorities are entitled to regulate their own property sale procedures.

As observed, the regulatory framework for property alienation transactions of unitary enterprises and institutions exhibits a certain autonomy.

The contradiction in legislative regulation lies in the fact that, on one hand, there is a direct recommendation from FAS to execute the realization of such property through bidding, and to conduct competitive procedures according to the rules of the FAS Order No. 147/23. On the other hand, the law does not classify such bidding in the mandatory category, which substantially restricts the possibility of appealing it to the antimonopoly authority. A complaint will be reviewed only if a regulatory act explicitly enshrines the necessity for bidding and the procedure for conducting it (for example, such an act may be issued at the regional or municipal level).

Another specificity that must be considered: the owner's consent is not required for all sale transactions of state property assigned to unitary enterprises and institutions. The approval regime depends on the legal entity's organizational and legal form, as well as on the type of property (movable or immovable). Briefly, the formula for the necessity of owner consent can be summarized as follows:

Selling real estate assigned to State Unitary Enterprises and State Budgetary Institutions invariably necessitates the owner's consent (regardless of the value of such property);
Selling the movable property of a State Unitary Enterprise does not require the owner's consent (although additional restrictions may be provided by the enterprise's charter). A State Budgetary Institution is more restricted in disposing of movable property: without the owner's consent, a State Budgetary Institution is not entitled to alienate particularly valuable movable property;
Consent is required if the purchase and sale agreement is a major transaction or a transaction in which an interest exists. These rules apply to transactions concluded by State Unitary Enterprises and State Budgetary Institutions;
A State Unitary Enterprise is not entitled to sell its participation interests in other legal entities (participatory interests, contributions, shares) without the owner's consent;
A state-owned enterprise and a state-owned institution always require the owner's consent for the alienation of any property (regardless of the type and value of the property).

A transaction for the sale of state property may be challenged in an arbitration court. The most common reasons for litigation include violating the bidding procedure, concluding an agreement without conducting bidding altogether, and lacking the owner's consent to execute the transaction.

Such transactions are voidable, but there are exceptions to this rule. For instance, a void transaction would be the sale of property of a unitary enterprise that impedes the execution of its statutory activities. However, the most prevalent examples of void transactions are property alienations pursuing the hidden goal of transferring it to a specific entity while circumventing the law. Such a transaction may manifest not only in concluding an agreement without bidding, but also in conducting bidding in a manner that intrinsically fails to ensure the existence of competition.

A special subcategory of judicial disputes is the litigation over an owner's actions in withdrawing property from a unitary enterprise (and sometimes the subsequent reassignment of this property to another entity). The law prohibits an owner from withdrawing property assigned to state unitary enterprises; therefore, such a transaction is declared void.

_______________________

References

Clause 10 of the Explanations of FAS Russia on the Application of Article 17.1 of Federal Law No. 135-FZ dated July 26, 2006, On Protection of Competition.
Resolution of the Constitutional Court of the Russian Federation No. 17-P dated April 24, 2025, On the Case Concerning the Review of the Constitutionality of Subclause 9 of Clause 2 of Article 3, Clause 4 of Article 5, Subclause 2 of Clause 1 and Clause 5 of Article 13 of the Federal Law On Privatization of State and Municipal Property in Connection with the Complaint of Citizen V.P. Balyabina.
Letters of FAS Russia No. ATs/422 dated January 13, 2011, No. AG/30312/13 dated August 5, 2013, On the Alienation of Property Belonging to State and Municipal Unitary Enterprises Under the Right of Economic Management or Operational Management.
Letter of FAS Russia No. GM/112800/21 dated December 29, 2021, On Sending Recommendations When Reviewing Issues of Property Realization of Unitary Enterprises and Institutions.
Resolution of the Government of the Russian Federation No. 538 dated July 26, 2010, On the Procedure for Classifying the Property of an Autonomous or Budgetary Institution into the Category of Particularly Valuable Movable Property.
Part 4 of Article 69 of Federal Law No. 229-FZ dated October 2, 2007, On Enforcement Proceedings.
Clause 9 of the Information Letter of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 101 dated December 22, 2005, Review of the Practice of the Resolution by Arbitration Courts of Cases Related to the Invalidation of Public Bidding Conducted Within the Framework of Enforcement Proceedings.
Subclause "g" of Clause 1 of Article 114 of the Constitution of the Russian Federation, Clause 15 of the Resolution of the Supreme Soviet of the Russian Federation No. 3020-1 dated December 27, 1991, On the Delineation of State Property in the Russian Federation into Federal Property, State Property of Republics Within the Russian Federation, Krais, Oblasts, the Autonomous Oblast, Autonomous Okrugs, the Cities of Moscow and St. Petersburg, and Municipal Property.
Order of the Ministry of Economic Development of Russia No. 264 dated May 7, 2019, On Approving the List of Documents Required to Obtain Consent for the Execution of Transactions Specified in Subclause "b" of Clause 2 of Resolution of the Government of the Russian Federation No. 739 Dated December 3, 2004, On the Powers of Federal Executive Bodies to Exercise the Rights of the Owner of the Property of a Federal State Unitary Enterprise.
Decision of the Orenburg OFAS of Russia dated January 30, 2024.
Decision of the Altai Krai OFAS of Russia No. 022/10/18.1-84/2024 dated February 1, 2024.
Decision of the Kalmyk OFAS of Russia No. 008/10/18.1-125/2024 dated June 17, 2024.
Decision of the Amur OFAS of Russia No. 028/10/18.1-276/2026 dated April 1, 2026.
Decision of the Vladimir OFAS of Russia No. 033/10/18.1-837/2023 dated November 24, 2023.
Decision of FAS Russia No. 04/10/18.1-295/2025 dated March 19, 2025.
Decision of the Moscow OFAS of Russia No. 077/07/00-12770/2023 dated October 5, 2023.
Resolution of the Mari OFAS of Russia No. 012/04/7.32.4-102/2024 dated February 29, 2024.
Resolution of the Arbitration Court of the Far Eastern Circuit No. F03-3344/2020 dated October 22, 2020, on Case No. A24-6984/2019.
Clause 44 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 10 and the Plenum of the Supreme Arbitration Court of the Russian Federation No. 22 dated April 29, 2010, On Certain Issues Arising in Judicial Practice When Resolving Disputes Related to the Protection of Property Rights and Other Real Rights.
Ruling of the Supreme Court of the Russian Federation No. 303-ES20-4949 dated May 7, 2020, on Case No. A51-3808/2018.
Ruling of the Supreme Court of the Russian Federation No. 302-ES23-26310 dated December 28, 2023, on Case No. A19-27882/2022.
Resolution of the Arbitration Court of the Central Circuit No. F10-5168/2023 dated November 8, 2023, on Case No. A09-9023/2019.
Resolution of the Arbitration Court of the East Siberian Circuit No. F02-4488/2023, F02-4489/2023, F02-4490/2023 dated October 11, 2023, on Case No. A10-701/2021.
Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 12805/05 dated February 28, 2006, on Case No. A45-1240/05-33/43.
Ruling of the Supreme Court of the Russian Federation No. 305-ES18-393 dated November 13, 2018, on Case No. A41-81779/2016, Resolution of the Arbitration Court of the Moscow Circuit No. F05-16089/2017 dated July 18, 2018, on Case No. A41-81779/16.
Ruling of the Supreme Court of the Russian Federation No. 305-ES17-4320 dated May 12, 2017, on Case No. A40-142657/2014.